As a business owner in Dallas, you may be considering forming a Delaware corporation. Delaware specializes in supporting corporate entities, with favorable tax regulations and courts that specialize in corporate law, making it an attractive option for business owners. Before you declare a corporate form of business, there are a few things you should know. This guide will discuss the top five considerations for participants in forming Delaware corporations.

Taxation is one of the primary concerns when considering a Delaware corporation. Delaware has joining income tax for non-resident shareholders of Delaware corporations since Delaware does not consider out-of-state interest to be “doing business” in the state. Moreover, Delaware does not have a state corporate income tax. Delaware only applies a franchise tax known as the ‘’Delaware Annual Report Fee’’ which is a flat fee that all corporations must pay, regardless of where they are incorporated.

The second consideration when forming a Delaware corporation is minimal corporate formalities. Delaware requires minimum filing, disclosed information, and any corporate action has to be approved by a small majority. This makes Delaware’s government regulations much lighter than other states, making Delaware friendly to business formation.

Third, Delaware allows for a unique type of corporate entity that has become popular in recent years, the limited liability corporation (LLC). Delaware's LLC laws are considered some of the most flexible and comprehensive in the country. It allows for a combination of operating agreements and partnership structures, allowing LLCs to have more control over their own operating and tax structure.

A fourth consideration when forming a Delaware corporation is the convenience of using the Delaware legal system. Delaware has specific courts to handle corporate justice and litigation, making their process extremely streamlined and less confusing to follow. Specifically, the Delaware Chancery Court is the state’s primary court to deal with corporate cases. This court is well-known for speedily and efficiently settling complex corporate disputes.

Finally, Delaware is widely known as the preferred choice for large, public corporations due to a stockholder friendly and corporate simplicity laws. These laws allow large corporations to easily access the capital they need to rapidly grow and stay ahead of the competition. Also, Delaware has no restrictions on transfers of ownership, which allows for a much more efficient way to build an effective management team.

When it comes to forming a Delaware corporation, LLC, or other corporate entity, it's important to get the right guidance. That's why it's important to seek legal advice from a firm experienced and knowledgeable in business law. The lawyers at UpCounsel can provide experienced legal counsel with a comprehensive understanding of Delaware corporate law and an familiarity with the local laws in Dallas. No matter how simple or complex your legal needs may be, UpCounsel provides a unique combination of affordability, ease, and quality, with experienced lawyers specializing in corporate law, tax law, contract law, intellectual property law, and more.


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