Top 5 Things to Consider When Forming a Delaware LLC
Setting Up an LLC in Delaware: Key Considerations for Business Success3 min read
When setting up a limited liability company (LLC) in the state of Delaware, there are key considerations to be aware of in order to ensure the successful establishment of your business. Delaware is one of the most business friendly states in the US and offers a variety of robust LLC laws. It’s also one of the most popular states to establish corporations, serving as the legal domicile for over 50% of Fortune 500 companies. This popularity is due in part to the wealth of benefits offered to those who form LLCs in Delaware, from robust protection and flexibility to tax savings. When it comes to forming a Delaware LLC, here are the top 5 things to consider.
1. Understand the Benefits of Incorporating in Delaware
When considering incorporating your business, the benefits of forming an LLC in Delaware might be too hard to pass up. Delaware offers a wealth of benefits which have led to it being one of the most popular places to incorporate. These benefits include:
Robust corporate laws: Delaware’s corporate laws are some of the most flexible in the US and provide business owners with the ability to structure their businesses to best suit their individual needs.
Ability of a single person to form a corporation: This adds convenience and flexibility.
Protection from personal liability: LLC owners are shielded from personal liability for debts incurred by the LLC.
Tax savings: By forming a LLC in Delaware, you may be eligible for savings on taxes.
No state income tax: You may not have to pay a state income tax if the LLC does not have any business in Delaware.
Wide variety of corporate services: Delaware offers a wide variety of corporate services for LLCs, from registered agents to legal support.
These are just a few of the many benefits of forming an LLC in Delaware. It’s important to understand all the advantages that come with forming in Delaware and decide if they are right for your business.
2. Choose a Registered Agent in Delaware
In order to form a Delaware LLC, you must name and appoint a Delaware Registered Agent. A Registered Agent is responsible for receiving service of process and other official documents on behalf of the LLC. The Registered Agent must have a street address located in Delaware and must be available during normal business hours. The Registered Agent can be either an individual or a business entity authorized to transact business in Delaware.
3. File the Delaware Articles of Organization
Once you have selected and named a Delaware Registered Agent, the next step is to file the Delaware Certificate of Formation (Article of Incorporation) with the Division of Corporations. To file the Certificate of Formation, you will need to provide the following information:
The LLC's name and address
The name and address of the Delaware Registered Agent
The management structure of the LLC
The purpose of the LLC
The authorized capital of the LLC
The name and address of the LLC’s incorporating officer
4. Create an LLC Operating Agreement
Once the Articles of Organization have been filed, the next step is to create an LLC Operating Agreement. The LLC Operating Agreement is a legal document that outlines the rights and responsibilities of the members and managers of the LLC. It is important to put this agreement in writing as it will serve as the foundation of the LLC and can help avoid any disputes or misunderstandings.
5. Hire an Experienced Attorney
When it comes to forming an LLC in Delaware, it is important to consult an experienced attorney for guidance on all legal matters related to the formation and ongoing operations of the LLC. It is especially important to consult an experienced attorney if you are based in New York, as they will have the local knowledge and experience of current regulations in Delaware to ensure that the LLC is legally compliant.
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