Delaware LLC Registration: A Comprehensive Guide

Why Delaware LLC Registration is the Best Choice for Incorporating Your Business

Clients often ask us this question at Enterslice: Is Delaware in the U.S. best known for its business entities? Thus, it is quite impressive that Delaware LLC's incorporation has received more attention. LLC formation in Delaware was not allowed until 1991 when Delaware passed its Delaware LLC Act. Since that time, Delaware has been offering asset protection and taxation advantages for Delaware LLC corporations. Moreover, it is evident that Delaware LLC registration is one of the best corporations on the animal planet as Delaware Formation offers simpler, private and more flexible business incorporation options for small businesses across the world. During FY 2020, Delaware State, in the US, witnessed an additional registration of approx. 2, 50,000 new businesses worldwide, which increases the volume of businesses by over 1.7 million. Delaware is well known for International Corporation's home, including Google, Amazon, Tesla, Walmart, American Express, Disney, and many more. It is best for Delaware LLC registration as Delaware is the second smallest US state in size and one of the least populated states. Delaware State is offering impressive incentives for businesses to stay with lenient taxation policies, fewer restrictions, and simplified and well-organised corporate laws. Our highly experienced Delaware LLC incorporation experts will help you in forming your Delaware LLC. When you are ready to start your Delaware LLC, we will help you complete the filing process for Delaware LLC formation in a more easy and efficient manner. Our team at Enterslice offer Delaware LLC formation services and can assist you with each and every step of Delaware LLC incorporation. We are here to help you with the wide range of Delaware LLC incorporation services, which includes registered agent service, use of an address for LLC formation papers, customized LLC documents, a secured online account, and a speedy and fast delivery of Delaware LLC documents. In case someone wants to handle the entire process of Delaware LLC formation independently, we also provide appropriate guidance.

Delaware LLC Formations for Non-Residents

To incorporate a Delaware LLC, you don't need to live in or even visit the state of Delaware to form a Delaware LLC company. Delaware State has restricted several countries, including Cuba, Iran, Syria, North Korea and Russia, from forming a company. Other than these countries, any country's citizens or residents are free in Delaware company formations as non-residents and can easily operate their business lawfully from sitting at any corner place worldwide. It is not necessary to be an American citizen/resident to incorporate a Delaware LLC or operate any Delaware company. It is true that more than millions of businesses worldwide are incorporated in Delaware. Delaware has a well-respected and organised corporate court system, a business-friendly taxation system, and legal and regulatory policies.

Should You Incorporate an LLC in Delaware?

The answer totally depends upon several advantages of Delaware LLC registration. In fact, for venture capitalists and angel investors, Delaware incorporation can easily make it easier to do business at less expense. Moreover, many start-up business owners who are looking for venture capitalists can incorporate in Delaware. Forming or incorporating an LLC in Delaware is beneficial for business owners, as the Delaware diamond state is widely known as the best state to start an LLC. Delaware offers many advantages to small businesses and large corporations. Take, for example, Delaware's specific business or corporate courts, which produce most of the business case law in the country. If you choose to go with a Delaware LLC, registration will be good enough for your business. Delaware is the state in the US where most (2/3^rd) of the US companies are incorporated just because of its more beneficial taxation policies.

What is a Delaware LLC?

Delaware Limited Liability Company (LLC) is a kind of business entity duly created and regulated under the Delaware LLC Act. Delaware LLC is a hybrid of a corporation and a partnership, which enables management and ownership to be structured in such a manner as to eliminate the bureaucracy. Delaware LLC incorporation offers liability protection to its owners. There is no such requirement for formal meetings, and it offers a wide range of taxation advantages to Delaware LLC formation owners. An LLC, which stands for a Limited Liability Company or Corporation, is a popular form of legal business entity that holds all the personal, partnership, and other managerial liability of its members or owners. An LLC in Delaware is categorized as a single-member LLC (a single-member corporation or venture or legal entity), a multi-member LLC (a partnership firm or a corporation with multi-membership like family business and estate planning business), and a Series LLC (established to form a series of different Limited Liability Companies (LLCs) under a parent LLC. According to Delaware Division of corporation, most of newly businesses are registered in the form of Delaware LLC which itself increases by 70% of its volume. It is evident that most of the businesses in Delaware are formed without the visiting of its LLC members to Delaware.

Delaware LLC formation Structure

Delaware LLC registration starts with the filing of an LLC formation certificate. All ownership and management are duly controlled and managed by a private internal operating agreement. In a broader sense, an operating agreement is a kind of internal company agreement signed by the owners of the LLC (members), which showcases the rights, duties, and allocation of profits and losses for the following members in Delaware LLC registration. An LLC agreement is required to form a Delaware LLC at the time of documentation. Our Delaware LLC formation team at Enterslice helps prepare a professional operating agreement to form a Delaware LLC. However, Delaware LLC members are flexible in structuring their operating agreements in accordance with their business objectives and requirements. Moreover, Delaware LLC registration has very few statutory requirements as compared to Delaware Corporation. Delaware LLC Formation offers less paperwork in general as it does not require the LLC members to hold annual general meetings or file annual reports. A Delaware LLC acts as a separate legal entity from its members and develops protection to safeguard the LLC owners from individual liability beyond their investment for the LLC's financial obligations. This also means that creditors who obtain any judgment against the Delaware LLC members can be entitled to receive that member distribution from the LLC and not get a voting interest, nor can the creditor of a member order the liquidation of such LLC. Moreover, in Delaware LLC formation, the LLC members have greater limited liability protections rather than the shareholders in a corporation.

Can a Delaware LLC formation have one member?

Yes, a Delaware LLC formation can have one member, which is termed a single-member LLC. Additionally, Delaware LLC formation allows for multiple members, offering flexibility in taxation and operational structure, with operating agreements enforceable by courts.

Single-member Delaware LLC formation

A single-member Delaware LLC registration is an LLC with one member. Although it can be treated as a corporation under taxation purposes (filling IRS Form 8832 and elected to be termed as C-Corporation, or termed as S-Corporation through filing IRS Form 2553 and electing subchapter S). This classification is termed as a 'disregarded entity', which does not require its own taxation returns, but instead of including the profits and losses on a single member taxation return. In a single-member Delaware LLC formation, the ownership is not restricted to one member. Further, more members can be easily added to a single-member Delaware LLC formation. Our experts at Enterslice suggest this Delaware LLC registration for a single-owner business as it offers appropriate safeguards and flexibility. Under a single-member Delaware LLC, it is quite possible to share profits with employees and other members without being a member of the LLC via contract. This Delaware LLC registration facilitates maximum control of its owners.

Multi-Member Delaware LLC registration

It is evident that the number of members is not limited to registering a Delaware LLC company. A multi-member Delaware LLC can be taxed under Partnership, C-Corporation, or S-Corporation. Moreover, the flexibility in Multi-member Delaware LLC formation is great, which means that the courts will enforce the operating agreement that the parties have written. However, Delaware Courts interpret the operating agreements to address the disputes later.

How are the registered Delaware LLCs managed?

The registered Delaware LLCs are not required to be managed either by their owners or an outsider, while the other states in the US are required to elect one or another for this purpose. However, in Delaware LLC formation, the LCC members, by majority, hold the right to manage, even if an outsider is selected for the manager's purpose. Such great flexibility is still evident in Delaware LLC's formation, which motivates the business owners to go for Delaware LLC incorporation.

Manager-Managed Delaware LLC

In the Delaware LLC operating agreement, the members are free to mention one or more outsiders to manage the LLC. A manager-managed Delaware LLC is a type of LLC duly operated by a non-member company officer. However, the roles, responsibilities, and duties of a manager are mentioned in the Delaware LLC's formation operating agreement.

Member- Managed Delaware LLC

In Delaware LLC's formation operating agreement, the LLC can easily specify one or more members who will oversee the day-to-day affairs of the business. A Delaware LLC, which is being managed by its members, is known as a member-managed Delaware LLC. The rights, limitations, and responsibilities of each Delaware LLC member are specified in the LLC operating agreements. However, the operating agreement of Delaware LLC can create different classes of members, such as voting members and non-voting members.

Benefits to Incorporate Delaware LLC.

Delaware LLC formation facilities with lower costs, affordable taxation regime, and other benefits such as assets protection, no source income taxation, and ensure member liability limitations, which makes a Delaware LLC an ideal structure for businesses that are looking for legal and financial flexibility. Delaware provides LLC incorporation benefits as follows-

Simple and Secure process

Delaware LLC registration is well known and consisting a very easy and simple manner to form. The Delaware Division of Corporation Body requires certain information in the Delaware LLC formation document, which is also known as the Delaware LLC certificate of formation. Such a set of minimal information required by authority not only makes it easy to start a Delaware LLC in Delaware State but also helps you to keep your personal information and identity secure. As we know, a very small amount of information is required to start a Delaware LCC registration, which means that your personal information shall not be published on a public document. We at Enterslice provide proper assistance and guidance in Delaware LLC incorporation and provide you with registered agent services on demand. We provide Delaware LLC registration services in such a manner as to provide as much personal privacy and security as permitted by the rule of law. One thing that is also important while making a Delaware LLC incorporation is that after successful registration, Delaware LLCs are not required to submit an annual report; this will definitely let your personal information remain safe and secured.

Delaware Corporation Taxation Exemptions

Instead of several business-friendly states in the United States, Delaware is notably considered a tax haven for business entities. Moreover, Delaware has tried to maintain a healthy atmosphere for business growth and facilitates a wide range of benefits which other states in the U.S. are not providing at all. Here, LLC registration in Delaware can easily take such advantages. Delaware State has always become an attractive place for businesses to incorporate a Delaware LLC as it doesn't impose taxation on intangible incomes such as patents and trademarks. Delaware has provided some incentives for those Delaware-formed LLCs that do not operate a business in Delaware. Take an illustration- As per § 1902, you are not required to pay State taxation on income until your Delaware LLC is not operating business in Delaware.

Avoid Double Taxation

Making a Delaware LLC registration and further operations provides greater flexibility in terms of taxation options. Moreover, a Delaware LLC can select the option to be taxed as a pass-through entity, an S Corp, or a C Corp. Although business corporations in Delaware and somewhere else are taxed by default as C corporations. But, it (tax structure) does not make any good sense for small businesses, as C corp can easily be taxed twice (firstly on corporate income) and further on personal income). This is not with Delaware LLC registration, as Delaware LLCs are not taxed in such a manner. Delaware LLCs can easily pass their business profits directly to their potential members, and here, the LLC's profits can be taxed only once on the basis of members' personal income. Moreover, a Delaware LLC can also choose for state taxation as an S Corp or a C Corp if Delaware LLC members choose, adding to the LLC's flexibility as a business entity.

Strong Delaware Business Laws.

One can easily get attracted to Delaware state to form a Delaware LLC registration just because of the best and the most well-known and most studied Delaware business Laws in the United States. Delaware has a long history of creating strong business codes and legal statutes. Delaware has its own business courts, which are well known as the Court of Chancery. Business cases in Chancery courts are argued before the judges, and all kinds of business legal disputes must be settled or decided accordingly.

No Need for a Business License

As per the Delaware State’s code, under Section 2301(b) & (d), if a, registered Delaware LLC, is not doing business in Delaware, then there is no such requirement to get a business license, register with the Revenue Department, or pay the Delaware's gross receipts tax.

Less Legal Formalities

Starting a Delaware LLC registration possibly gives huge advantages to businesses as Delaware LLC requires fewer legal formalities, which is quite perfect for small businesses. Operating Delaware LLCs do not need to submit an annual report (LLCs pay a flat $300 annual tax) as of the due date of 1^st June each year and are free to pay such taxation online. Delaware LLCs are required to complete less documentation or paperwork and fewer administrative legalities than corporations. LLCs in Delaware are not required to hold annual shareholders or directors meetings. Notably, Delaware LLCs tend to be the simpler entities in the United States.

Forming Your Delaware LLC

Whenever you feel like starting your business and are ready for Delaware LLC registration, in that situation you need Enterslice expertise to file your Delaware LLC process in the most efficient manner. We have a team of experts who are well-versed in Delaware LLC incorporation laws and are associated with the Divisions of Corporations on a regular basis. We help you with each and every step of Delaware LLC formation. We will make the entire Delaware LLC registration process a one-stop shop for you, where our experts will showcase and deliver step-by-step guidance and instructions to register your new business in Delaware and support you in completing the necessary paperwork. We help in-

• Choosing your business entity types.
• Reserve your business name.
• File the necessary paperwork.
• Submit your LLC incorporation forms to the Division of Corporations.
• File a BOI Report if needed.
• Helps in securing a certificate of Delaware LLC incorporation.
• Provide Post registration guidance to submit annual tax report and other requisite taxes (Franchise Tax) on a timely manner.

In a broader sense, to start a Delaware LLC, you need to file the certificate of formation with the Division of Corporations, which includes necessary information such as the LLC's name, registered agent information, and office details. Such documents must be duly signed by an authorised individual and must mention the formation date. Submission of such forms can be easily made online via email or on the Division's website by paying requisite fees. Following these formation rules, through 1^st January 2024, the new Delaware LLC need to comply with the federal regulations by filing a Beneficial Ownership Information (BOI) report to Fin CEN within a period of 30 days (90 days for 2024 Delaware LLC formations). BOI report is free to file and necessarily needs to disclose confidential ownership information, including the name, address and tax identification of LLC members.

How to form your Delaware LLC online (Step-wise)

Whether you go for Delaware LLC formation on your own or take an easy and simple way to incorporate your business by using a Delaware LLC formation Service by Enterslice incorporation experts, it is necessary to be informed about the Delaware LLC registration process. We knew that it might be possible for individuals or business owners to choose the best entity in Delaware. We at Enterslice help you opt for the best Company incorporation types in Delaware. Moreover, Delaware LLC formation starts with the following process-

1. Name your Delaware LLC

The Delaware LLC registration process starts initially by name, and this is the first step to forming a Delaware LLC with the Delaware Division of Corporations. The applicant is required to choose a unique name for his or her Delaware LLC, which must end with 'Limited Liability Company' or its short form with LLC. You need to ensure and check the name of your LLC with Delaware's Division of Corporations LLC to find out whether the name is available or not.

Suppose your LLC name consists of any non-English name; then it becomes necessary to translate the name with the Delaware LLC filing.

Here are the key points regarding restrictions on LLC names in Delaware:

• Avoid words related to "bank" or "medical" without proper approval.
• Words clear of lewd, racist, or inappropriate language as determined by the Delaware Secretary of State.
• Do not use terms like "Incorporated" or "Inc." that may mislead others about your LLC's legal structure.
• Avoid words or acronyms that may confuse your Delaware LLC with government entities such as NSA or IRS.

Choose your Delaware LLC name carefully, as this will be the foundation of your brand identity. Although, it is advised to business owners or individuals, if in case of their LLC’s name is available, must get experts assistance to comply with the federal and state trademarks rules. It is necessary to initiate an additional research while incorporating a Delaware LLC, and such efforts could be made possibly by Delaware LLC incorporation experts. 

Note- If in case, you are not ready to file your Delaware LLC incorporation, then you are allowed to keep your LLC name preserved for a period of 120 days to prevent others from using such LLC name. You need to file another application namely reservation for LLC name by paying additional fees.

Using a DBA in Delaware State

On successful completion of the Delaware LLC name search, you now need to consider the fact that you want to operate a business through the same Delaware LLC name you have chosen or if you would like to choose the name as a doing business as (DBA) fictitious name. There might be a situation in which your company may specialise in doing business in more than one industry, so you must choose a formal name for the Delaware LLC (especially the last name of the founders) to eliminate confusion. For that purpose, you are free to register DBA names for each of the individual businesses. Moreover, it is required to register DBA with the Delaware state where your Delaware LLC is operating. Here at Enterslice, our Delaware LLC incorporation experts can help you file a Registration of Trade, Business and Fictitious Name Certificate Form in each of the concerned courts under whose jurisdiction you are operating your Delaware LLC business.

2. Designate a Registered Agent

The second step starts in Delaware LLC registration with the registered agent, to whom you designate an individual or an entity to act as a registered agent on your behalf. In a broader sense, a registered agent is authorised to receive your Delaware LLC formation legal documents, which include the service of process and other requisite official documents on your behalf.

Similar to other states in the U.S., strict requirements are imposed for whoever can be a registered agent for a Delaware LLC incorporation. Delaware State mandates that such a registered agent must be a Delaware resident having the proper physical address to communicate in Delaware. However, some Delaware LLCs choose to elect members to act as registered agents, but most Delaware LLCs prefer to go with the third party, who is an outsider to the LLC. In simple words, a registered agent service is usually provided at the time of incorporating a Delaware LLC formation just to keep your LLC organised.

3. Submit the Delaware LLC Certificate of Formation

In the next step to incorporate your Delaware LLC, the person or business owner is required to file a Delaware Certificate of Formation Form, which is well known as the Articles of Organisation. When you have the LLC certificate of Formation, then the Secretary of State will be more likely to validate your business and index the necessary and important details of your business/Company. The certification must consist of the details below.

• LLC’s Name.
• Registered Agent Name and Physical Address.
• Name and sign of the authorised person completing this form.
• Cover Page.

You can choose to leave the cover page, but the cover page during Delaware LLC incorporation provides you with the proper opportunity to mention specific conditions and restrictions within your LLC formation documents. This provision under the Delaware LLC incorporation is unique and new, enabling the LLC to establish liability-limited protections separate from the parent organisation.

Foreign LLCs Operating in Delaware

 Suppose you have an LLC operating in different states of the United Nations, and you wish to get it registered within Delaware to commence the same business activities. Instead of filing a Delaware LLC registration document likewise for a new LLC, here you require to file a Certificate of registration of a foreign Limited Liability Company (LLC) /foreign qualification Form. At that time, you need to submit the existence certificate of your LLC from your home state.

4. Draft an Operating Agreement

It is the most crucial step in understanding How to start a Delaware LLC. Delaware itself comes under the range of 5 states that need the Delaware LLC operating Agreement in case of more than one member in the company. Although Delaware LLC registration does not require the company to submit the operating agreement to the State, whenever you register your Delaware LLC with the State, you need to have this just to govern your company. Moreover, the LLC operating agreement is a legally binding document, like a contract, which outlines the way a Delaware LLC will operate and the specific rights, roles, and responsibilities of associated Delaware LLC members. It defines the LLC as a separate legal entity, and more likely, an operating agreement is helpful in safeguarding the assets from company liabilities.

Common operating agreement attributes, such as.

• Classes of Interests:

Different classes of members may have varied rights (voting, etc.).

• Management:

Specify management structure (board, individual, multiple members, appointed manager, etc.).

• Fiduciary Duties:

Default fiduciary duties may apply unless modified or limited.

• Profits and Distributions:

Allocations of profits and losses among members and related details.

• Transfer of Interest:

Rules and stipulations for member transfers or withdrawals.

• Raising Money and Adding Members:

Procedures for raising funds and admitting new members.

• Dissolution:

Conditions and process for LLC cancellation.

5. Obtain an Employer Identification Number (EIN) for Delaware LLC

It is obvious that a Delaware LLC may have more than one member or employee. Then, in that situation, it becomes mandatory to get a Federal Tax ID number, which is commonly known as an Employer Identification Number (EIN), from the concerned authority, i.e. the Internal Revenue Service (IRS). The EIN consists of 9-digit numbers and is required at the time of filing tax. Moreover, it is also required to operate different business activities, including- 

• Employees hiring.
• Open a bank account in Delaware.
• Doing business with vendors
• Availing a business loan.

Thus, it becomes mandatory for Delaware LLCs that even a single-member LLC must consider and apply for an Employer Identification Number (EIN) instead of keeping your personal information at risk. We at Enterslice help you file your application for an EIN number in a faster and easier manner.

6. Opening a Bank account for Delaware LLC formation.

To open a bank account and getting a business credit card for your Delaware LLC registration could be the most important step after your Delaware LLC get approved, and the operating agreement is in place. Keeping your Delaware LLC's assets in a separate account from the personal assets is always an important step to secure the liability offered by the LLC structure. This will be helpful over time; if someone sues you and wins the legal cases, then the winning party is able to touch the assets in the Delaware LLC bank account. Your personal account will be safe and secured by the limited liability feature of an LLC. While setting up an LLC in Delaware, the owner of the LLC is free to open a bank account wherever it is more convenient. It is possible for Delaware LLC owners living in another state can easily open a bank account for their Delaware LLC, and the whole process is very simple and easier than opening a U.S. bank account in another state.

The following documents requires at the time of opening a Delaware LLC bank account-

• Certificate of Formation/Incorporation
• Federal Tax ID Number (EIN)
• Photo ID (e.g., passport)
• Proof of address
• Banking resolution document
• LLC Operating Agreement
• Corporate bylaws

Our Delaware LLC formation experts specialise in delivering an approved Delaware LLC registration/incorporation certificate. You can choose our diverse international business set-up package and get assistance in obtaining a Federal Tax ID Number (EIN), a bank account with many other services-

• Operating Agreement
• Registered Agent Service
• EIN
• Bank account Assistance
• License Reports
• LLC Compliance
• Expert Help
• LCC Taxation Advisory
• Tax Preparation
• Guarantee of Acceptance