Incorporate llc in delaware : Manageable and Convenient

2007-03-08 10:33:40

( Business )



If you decide to incorporate Delaware, to incorporate llc might be your most logical choice.

Why? What are the advantages if you incorporate llc?

A special act in Delaware allows you to incorporate llc in Delaware, which, if it is properly structured, will allow you to qualify for flow-through treatment in terms of income tax.

If you incorporate llc when you incorporate Delaware, you, as the owner, won’t be liable for debts and obligations incurred by the llc.

This is different to limited partnerships, which are not taxed as an entity but all partners are liable, and corporations where stockholders have limited liability and which are taxed as an entity (unless it is an S-corporation).

The act providing for a limited liability company permits members to have the greatest discretion when they draft their agreement. Statutory answers are only used when members have not specifically made provision in the company agreement.

According to this provision the llc members can freely:
- decide amongst themselves regarding the governing of internal affairs, including:
• establishing classes of members
• voting and procedure at meetings
• consideration of issues without meeting.

Because of the extreme flexibility of this act, many entrepreneurs and investors have decided to incorporate llc when they incorporate Delaware.

Formation
An llc in Delaware is a membership entity.

Any:
- person
- association
- entity
May be a member.

It has to be formed by a limited liability company agreement. This agreement governs its internal affairs and the way it does business, and does not need to be filed publicly.

Not only must you form an agreement but you must also file the certificate of formation with Delaware’s Secretary of State. The agreement, however, is effective before, during or after the certificate is filed.

The certificate must state:
- the llc’s name
- registered office address
- registered agent’s name and address.

It can include other matters that the members desire.

You only have to disclose information by which the public is informed of the llc’s formation.

You don’t need to state:
- member identity
- member addresses
- member investments
- nature of business
- capital structure
In the certificate of formation.

An llc in Delaware can do anything in terms of lawful activity, purpose or business, as long as it doesn’t involve:
- granting insurance policies
- assuming insurance risks
- banking.

The agreement must have provisions to deal with the
- powers and
- purposes
Of
- the llc
- the members and managers
and must outline restrictions in terms of llc activities.


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