As home to the most business-friendly laws in the country, Delaware is undoubtedly the preferred state for establishing a business presence in the United States. Whether a mining company, a start-up or a Fortune 500 entity, over 1.6 million corporations are currently registered in Delaware.
This insight sets out some of the reasons why Delaware is such a popular choice, and also some issues to be aware of before establishing your Delaware entity.
Why select the State of Delaware?
The key advantages of incorporating in Delaware include:
• Tax benefits – which includes no state income or sales tax for companies operating out of state.
• Court of Chancery – handling only corporate cases decided by specialist corporate judges.
• No Residency – Officers, directors, and shareholders don’t need to be residents of Delaware.
• Quick Filing – Delaware offers several choices for speed of filing, depending on needs and budget.
• Privacy – companies are not required to disclose details of the members in the formation documents.
• Simplified Structuring – a single person may hold the role of officer, director, and shareholder.
• Investors Preference – Delaware’s securities and management laws are familiar to investors.
Are there disadvantages to selecting Delaware?
While the advantages are many, here are some factors you might also consider
:• Franchise Tax – the franchise tax increases as the number and value of shares increases.
• Multi-State Compliance – you must meet tax requirements of other states where conducting business.
• Registered Agent – a registered agent must be appointed, to accept filings on your behalf.
While Delaware offers many benefits, companies must consider the nature of their activities, goals, tax structures, and customers, among other factors. The best step is to speak with a legal and tax advisor, particularly as there are other States that offer similar benefits to Delaware.
Ready to establish in Delaware?
At Serus Legal, we have a team of lawyers that advises domestic and international clients on establishing business entities in Delaware. We help clients with selecting the right entity and prepare financing and shareholder agreements.
Serus is an international law firm that uses technology and lower overheads to provide quality legal services at a significantly better value.
For more information, please get in touch with us by emailing felix@seruslegal.com or info@seruslegal.com.
The contents of this insight do not constitute legal advice. All information provided is subject to review and input from a lawyer.