What Are the Benefits of Forming an LLC in Delaware?
Over 63 percent of all Fortune 500 companies call Delaware home, as explained by the Delaware Department of State website. Delaware is known as a favorable place to form and operate a business due to the state's pro-business environment and a variety of tax advantages. Delaware Limited Liability Companies enjoy a number of advantages, such as ease of formation and a lack of operating formalities.
Other People Are Reading
-
Courts
-
Delaware's court of chancery is very knowledgeable in dealing with various business issues. The court of chancery uses judges or chancellors to decide business cases, as opposed to allowing a jury to decide the outcome of a business court case. The judges or chancellors have more experience in handling complicated business issues in comparison to a jury. Part of the experience factor lies in the number of businesses in Delaware, since over 850,000 businesses have legally formed in Delaware, according to the Delaware Department of State website.
Profits and Formalities
-
Delaware LLCs have the ability to divide company profits in any manner selected by the members of the company. For instance, a member may have a 10 percent membership interest in the business, but the other members may give him 15 percent of the company's profits and losses. In addition, LLCs in Delaware do not have to hold company meetings or record minutes from LLC meetings. A Delaware LLC can operate from anywhere in the world. An LLC formed in Delaware does not have to maintain a physical office in the state.
-
Considerations
-
The members of the LLC maintain confidentiality, since Delaware does not require an LLC to list the names of the company's members. Furthermore, the certificate of formation does not require members of a Delaware LLC to list the amount of their contribution to the business. An LLC in Delaware can have a written or an oral operating agreement to indicate rules and regulations for running the company.
Formation
-
A Delaware LLC is an easy business entity to form. A fill-in-the-blank certificate of formation has to get filed with the Delaware Department of State to create an LLC in Delaware. It costs $90, as of 2011, to form an LLC in Delaware, whereas states such as Illinois charge $500, as of 2011, to form an LLC. The Delaware Department of State allows business owners to submit a certificate of formation by fax, mail or in person at the Delaware Department of State's office. Individuals may obtain membership in a Delaware LLC without making an initial contribution to the business. All businesses, with the exception of financial institutions and insurance companies, can form an LLC in Delaware.
-
