LLCs can be formed in every state in the nation, yet many entrepreneurs decide to form an LLC in Delaware, even though they never intend to operate there. In this article, we explain eight benefits to forming a Delaware LLC.
Delaware is home to some of the most business-friendly laws in the country. These statutes are regularly updated in consultation with practicing corporate lawyers to ensure that Delaware is at the forefront of business-law developments. Did you know? One of our founders, Josiah Marvel, was a prominent Delaware lawyer at the turn of the 20th century. Cases before this court are decided by judges specializing in this area of law, not juries.
It should come as no surprise, then, that the case law on that subject is well-developed in the state. This enables Delaware corporations and other entities to better plan for the future.
One of the most appealing advantages of a properly formed LLC is the liability protection it offers business owners. The available options are:. What about Delaware state tax? It offers three big advantages for out-of-state businesses organized as Delaware LLCs:. Whatever they choose, Delaware law offers them flexibility in defining the powers and duties of their management team. The privacy afforded to owners of Delaware corporations and LLCs is also incomparable.
The state of Delaware allows you to file your company without listing the names of the owners , which protects the owners' identities, personal information and privacy in general.
There are only two circumstances in which a Delaware Registered Agent would be compelled to reveal this information: in the event of a legal proceeding or at the request of law enforcement. The state of Delaware is also very flexible in a variety of ways that benefit the owners of Delaware companies. Why else do companies incorporate in Delaware? Looking for more reasons to consider a Delaware company over one formed in your home state? Read this article about what kind of company benefits most from choosing Delaware.
Have you ever wondered why so many companies incorporate in Delaware, and why you should think about doing so as well? In this video, our founder and CEO, Rick Bell, tells you how Delaware's Court of Chancery is different from courts in other states, from being run by judges to having the most complete body of case laws, and how anyone can form a Delaware LLC or corporation, regardless of where a company does business. Since , Harvard Business Services, Inc. Harvard Business Services, Inc.
Harvard can provide assistance throughout the life of your company. These custom services are the most popular with our clients:. Part of the bi-partisan political consensus in Delaware is to appoint and confirm the best qualified corporate law experts to the Court of Chancery. And part of the legal culture in Delaware is to honor appointment to the Court of Chancery as the highest and most respected form of public service.
Other states can, and some have tried, to create similar courts dedicated to resolving corporate disputes. They, too, can resolve to appoint only their best legal experts to these courts. Chandler, III, has announced his retirement from the court after 22 years.
Post-Industrialization , huge firms like Standard Oil and the Whiskey Trust began to consolidate fractured markets. To combat this, many states set up laws aimed at regulating monopolies through heavy taxation.
A flood of conglomerates took up this offer and New Jersey earned so much from taxes that it was able to pay off its entire state debt. Delivered weekdays plus a bonus Sunday feature. Unsubscribe whenever. Pressured to incentivize businesses to stay, other states offered their own lenient corporate tax policies. In the ensuing decades, many other states including New Jersey reneged a bit on their corporate leniency.
Today, the state is still the incorporation zone of choice for corporations. The climate is so favorable that even international firms seek respite there. In Delaware, intangible assets — think trademarks, copyrights, and leases — are free from taxation.
Companies will often transfer these assets to a Delaware subsidiary and pay their own subsidiary for the rights to use said assets. This saves them money on both ends:. As any Delaware tax attorney will attest to, the system is a bit more complex than this. But the process can generally be simplified as such:. Twenty years ago, the national chain formed a Delaware subsidiary — Geoffrey LLC — and paid the subsidiary an annual fee for the rights to use its own name and mascot. When a company wants to incorporate in Delaware, it works through a registered agent — a person in the state who acts as a middleman, collecting paperwork and providing the company with a physical address.
Delaware has the most secret companies in the world and the easiest to form. This expediency, coupled with the allure of anonymity, has attracted a slew of shady enterprises to Delaware in recent years:. Of course, the vast majority of Delaware corporations and LLCs are legit enterprises. And for these firms, the courts are a major draw. Delaware has what is called a Court of Chancery. Many legal experts claim that these courts are overwhelmingly favorable to corporations — particularly when it comes to shareholder disputes.
But there is no denying that the state is part of a broader trend that has seen the US shift away from financial transparency in recent decades.
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