Setting Up a Delaware LLC

2008-10-27 12:03:46

( Business )



Features of a Limited Liability Corporation

A limited liability company, or LLC, is like a cross between a partnership and a corporation, and combines the best features of each. The partnership feature is most evident in the fact that investors of an LLC get certain tax advantages, and are taxed only once unlike a corporation's stockholders.

The LLC also enjoys the limited liability feature of corporations, where its members are not personally liable for any outstanding debts and liabilities that the LLC owes. LLCs do not have to dissolve completely just because one member leaves. Like corporations, LLCs can just prepare amendments to acknowledge the changes of ownership and members.

Perhaps the only disadvantage of forming an LLC is its cost, which is higher than that of either a partnership or corporation. There is also more paperwork involved because you have to keep separate accounts and records for each LLC member, but this can be remedied with a properly organized record keeping system.

Advantages of Delaware LLC Formation

The state of Delaware has become one of the best places to register LLCs and other types of companies. This is because the state has an open-minded and business-friendly attitude towards company creation. Its LLC and corporation laws are quite flexible and lenient.

In fact, you don't even have to be a Delaware resident or even go there to form your LLC. You don't need to list all your company officers, directors or shareholders. Listing only one member of your LLC would be sufficient for Delaware incorporation.

Delaware LLC incorporation is also one of the cheapest in the country. Delaware LLCs don't need to file income taxes there, as long as their business activities are carried out elsewhere. The only thing you need to pay is the state franchise tax. At two hundred dollars a year, it is a lot smaller than income taxes.

Delaware LLC Laws and Policies

You can form a Delaware LLC just by phone, fax or e-mail. You have to submit your business name, articles of incorporation and pay the first of the annual franchise tax. You also need to get a registered agent, preferably a law firm, who could represent your firm in case of any issues or lawsuits against your LLC. The registered agent usually charges an annual fee for his services.

It will be best to consult a law firm based in Delaware as your registered agent. He will be the best person to assist you in the process of forming your LLC.


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