Two issues need to be considered when selecting the optimal State of incorporation. First, a financial analysis is in order. Compare the costs of incorporating in the State of operations versus qualifying to do business as a foreign corporation operating there. Second, consider the advantages and disadvantages of each State's corporate laws and tax structure. The decision usually falls between the State in which the business operates or the State of Delaware. Delaware's Chancery Court system often becomes the deciding factor. Delaware's court system is very business-friendly.
If you have any questions on where to incorporate, please call our office. We may be able to assist.
Incorporating in Delaware (back to the top)
Delaware leads the nation as the major corporate domicile for American and international corporations. More than 350,000 companies are incorporated in Delaware, including more than half of the Fortune 500.
Many companies active in the world economy of the new millennium are discovering the advantages of incorporating their business activities. These advantages include greater liability protection, corporate deductions, and privacy. Unfortunately, corporate law varies widely throughout the United States.
There are a number of reasons why so many companies incorporate in Delaware. First, they include the Delaware General Corporation Law which is one of the most advanced and flexible in the nation. Second, Delaware courts and in particular, the Court of Chancery, have over 200 years of legal precedent as a maker of corporation law. Third, the State legislature takes its role seriously in keeping the corporation status and other business laws current. Lastly, the office of the Secretary of State operates much like a business, rather than a government bureaucracy, with its modern computer imaging and customer service oriented staff.
Reasons Why Delaware is the International Corporate Choice (back to the top)
There are so many reasons why it is advantageous to incorporate in Delaware. However, the basic reason is Delaware has passed incorporation and tax laws that are favorable to all types of businesses. Prime examples are service organizations and manufacturing companies, mail order companies and franchises, large enterprises and even one-person professional corporations. These are companies headquartered and/or operating in every one of the fifty states of the United States and its territories, as well as thousands of companies based in over one hundred other countries. The following are reasons why it is so advantageous to incorporate in Delaware:
In the area of corporate law, the State of Delaware is the United States most influential jurisdiction.
You can form a Delaware Corporation (or Limited Liability Company) by phone or fax without ever coming to Delaware by using the services of a Delaware Registered Agent such as Nancy J. Wolf, CPA. We can complete your incorporation by fax within 24 hours, after receiving payment.
One single individual may simultaneously hold all the executive offices and titles of a Delaware Corporation (or Limited Liability Company) including chairman of the board, president, vice president, secretary, and treasurer. Unlike states that require as many as three different individuals to hold the posts of officers and/or directors, Delaware permits you to be a one-person corporation.
You may operate anonymously as the owner of a Delaware Corporation (or Limited Liability Company) if you wish - never revealing your identify to the State of Delaware.
Quarterly or annual meetings may be held anywhere (including a telephone conference call) at the option of your Delaware Corporation's director(s). Instead of such formal meetings, director(s) and/or shareholders may act by "unanimous consent."
The bylaws of your Delaware Corporation may be formulated or altered at any time by its director(s).
There is no minimum capital investment required to form a Delaware Corporation (or Limited Liability Company). Your investment may be as low as zero.
Your Delaware Corporation will automatically have "perpetual existence" unless otherwise specified in your Delaware Certificate of Incorporation.
Your Delaware Corporation stock can be privately owned or publicly traded on any stock exchange anywhere in the world when properly registered.
The Delaware Corporate/Limited Liability Company franchise tax is minimal and is not based on earned income. The Delaware Corporate Franchise Tax is only $30 a year for Delaware Corporations with 3,000 shares or less of stock. There is an additional $20 filing fee. All fees charged by the State of Delaware to Corporations are kept low to attract incorporation business.
You are not required to maintain a Delaware business office address aside from the address of your Delaware Registered Agent which is required for service of process. However, if you would like to have a Delaware business address where you can receive business mail (in addition to service of process), we are pleased to provide one, as well as your own private phone line and fax number. Please ask us for details.
Delaware has a separate court system - the Court of Chancery, which was established by virtue of the State's Constitution of 1792 - to exclusively adjudicate corporate litigation plus a fully established corpus of case law and a very capable corporate bar. Delaware's Court of Chancery is one of the most important corporate law courts in the country, second only to the Supreme Court of the United States, in its impact on corporate law. Delaware's corporate laws are regularly reviewed, revised and simplified by the Delaware State Bar Association and the Delaware Legislature. Their goal is to provide a corporate legal climate conducive to the growth and profitability of the more than 356,000 companies chartered as Delaware corporations. Delaware's Court of Chancery celebrated 200 years of existence in 1992.
A Delaware director shield law permits Delaware Corporations (and Limited Liability Companies) to shelter their directors/members from personal liability in connection with their actions as board members.
Your Delaware Corporation (or Limited Liability Company) can be set up to be an all-purpose Corporation (or Limited Liability Company) to conduct various types of businesses, to manufacture and/or market any products, to offer all kinds of services, simultaneously or sequentially. A statement of purpose such as The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware offers this flexibility.
You do not have to be a United States citizen or resident of the United States to set up a regular standard-type Corporation (or Limited Liability Company) in Delaware.
There is no state corporate income tax in Delaware on goods or services provided by Delaware Corporations (or Limited Liability Companies) operating outside of Delaware.
There is no sales tax in Delaware. Whether your Corporation (or Limited Liability Company) is physically located in Delaware or not, as a Delaware Corporation, your purchases in Delaware are not subject to sales tax.
There is no state corporate tax on interest or other investment income in Delaware, when earned by a Delaware Holding Company. We also provide management services for Delaware Holding Companies.
Delaware has no personal property tax. There are no State real property taxes, and the local real property taxes are very low.
Delaware has no ad-valorem or value-added taxes (VATs).
Delaware has no taxes on business transactions (TBTs), which are essentially VATs that exempt retailers.
Delaware has no use tax, inventory or unitary tax.
There is no State of Delaware inheritance tax on stock of Delaware Corporations operating outside of Delaware held by non-residents of Delaware.
There is no Delaware capital shares or stock transfer taxes.
The city of Wilmington in Delaware has no city sales tax.
Delaware permits S Corporations, which, with the federal tax laws of 1986, can be very advantageous. Resident non-United States citizens may form S Corporations.
As of October 1, 1992, Delaware recognizes Limited Liability Companies (LLCs) and you may form an LLC in Delaware. LLCs combine the best aspects of the corporation and the limited partnership. This form of organization protects individuals from liability (as does a Corporation) and allows the participant to write off losses and actualize gains (as does a limited partnership).
Your Delaware Corporation may be based, headquartered and/or operated in any state or territory of the United States.
Delaware Corporations are permitted, under certain circumstances, to pay dividends out of net profits if there is no surplus.
The director(s) of a Delaware Corporation are permitted to set the sales price on any stock the Corporation issues and plans to sell.
Delaware Corporations may purchase shares of their own stock, hold, sell and transfer them.
The director(s) of a Delaware Corporation may determine what percentage of the consideration received from the issue of their stock is to be considered capital. This is important because it gives the directors greater flexibility regarding the use of funds obtained in a public offering, so that large amounts are not tied up in the capital account.
The liability of a shareholder of a Delaware Corporation is limited by the amount of his investment in the Corporation plus the corporate tax liability - provided that the Corporation has conducted its business according to all applicable state and federal laws.
Your Delaware Corporation may own - without limitations as to amount or value - stocks, bonds or securities of other corporations located in Delaware or outside of Delaware as well as real estate personal property. This means that your Delaware Corporation can be set up as, or later become, a Delaware holding company.
Corporate Name (back to the top)
Choose the name of your corporation carefully. For some business ventures a name can portray the lasting image you want for your corporation.
The name you select must not be deceptively similar to any existing corporation in the state of incorporation. For example: if a corporation named Web Corp. exists in Delaware, you would not be permitted to name your business Web Corporation. It is possible the name you select will not be distinguishable. Therefore, when you submit your choice for corporate name, we suggest you give us a second and third choice.
In Delaware the name of your corporation must include one of the following words: Association, Club, Company, Corporation, Foundation, Fund, Incorporated, Institute, Limited, Society, Syndicate, Union, or one of the following abbreviations: Co., Corp., Inc., or Ltd.
Limited Liability Company Name (back to the top)
For a Limited Liability Company (LLC) any of these corporate words can be included in the company name, exclusive of the word Incorporated. The following company word or abbreviation must be included in the company name: L.L.C., LLC, or Limited Liability Company.
Registered Agent (back to the top)
You are not required to reside in Delaware to incorporate in Delaware. Delaware law requires every corporation to have and maintain a Registered Agent in the State of Delaware. This may be an individual resident in the State of Delaware whose office is identical with the corporation's registered office, or a domestic corporation, or a foreign corporation authorized to transact business in the State.
Your Registered Agent is your representative in the State of Delaware who is responsible for receiving legal documents on behalf of your corporation. Basic services performed by a Registered Agent include providing a street address for service of process in the State of Delaware, and forwarding official state documents such as the Annual Franchise Tax Report when required. The Registered Agent also provides an additional buffer between the State of Delaware and your corporation, allowing you greater personal anonymity.
As native Delaware residents and a Certified Public Accounting firm, we serve as Registered Agent for Corporations and Limited Liability Companies worldwide. We also manage the entire Incorporating and LLC formation process quickly and accurately. Our firm is dedicated to performing quality personal service. We take your Delaware Incorporation and LLC process seriously - we live and work here.
Forming a Corporation or LLC in Delaware (back to the top)
To have us form your Delaware Corporation, you need only give us the following information:
Name of the corporation (include second and third choices for corporate name, in case your first choice is not available)
Number of shares authorized and No Par (or Par) value
Stock designation (Common, Preferred, Undesignated)
To have us form your Delaware Limited Liability Company, you need only give us the following information:
Name of the limited liability company
Your corporation or LLC is formed within 24 hours. Your Filing Receipt is mailed to your Registered Agent within a week or two. As your Registered Agent, we will mail this document to you immediately.
Once your corporation or LLC is formed, there are a few items you need to conduct business. We include all necessary items in our corporate kit (and LLC kit).
The corporate kit is customized for each corporation and is shipped to you within 2 weeks. The corporate kit includes:
Heavy-duty sturdy, handsomely designed 3-ring binder with efficient D-ring. Corporate name is stamped in gold on the spine. We normally provide a black binder (green or brown binders are available upon request)
Corporate seal (required by most banks to open a corporate bank account)
Heavy 24 lb. laser-compatible paper
Tabs printed on heavy, reinforced stock
State specific by-laws and operating agreements
20 customized stock certificates imprinted with corporate name, authorized corporation issue and pertinent information. We normally provide green stock certificates (blue, red, or brown stock certificates are available upon request)
Stock transfer ledger
Printed minutes and by-laws
Special forms including Federal Forms, IRS requirements for sub-chapter selection, annual meeting forms
The limited liability company kit is customized for each LLC and is shipped to you within 2 weeks. The LLC kit includes:
Heavy-duty sturdy, handsomely designed 3-ring binder with efficient D-ring. LLC name is stamped in gold on the spine. We normally provide a black binder (green or brown binders are available upon request)
Seal
Heavy 24 lb. laser-compatible paper
Tabs printed on heavy, reinforced stock
Operating agreement
Membership certificates
Maintaining the proper records is vital in assuring limited liability to corporate shareholders. Every corporation should keep a record book that contains a copy of the Articles of Incorporation, By Laws, initial and subsequent minutes of directors and shareholders meetings and a stock register.
Apostle (back to the top)
As your Delaware Registered Agent, we can obtain an Apostle if your business needs require this (for a nominal fee). An apostle is a document issued under the Great Seal of the State of Delaware by the Secretary of State that is attached to a certified copy of your Certificate of Incorporation. Many foreign countries require this document as evidence of Delaware incorporation.
Corporate Office and Director Services (back to the top)
Please be aware that any strategies used to reduce your corporate taxes, protect yourself from liability, or render yourself judgment proof, would be at serious risk if your Delaware Corporation failed to be a viable, operating Delaware entity. It may become essential for your Corporation to establish an actual "presence" in Delaware. An empty Corporate shell is not nearly as effective as an active Corporate presence.
Be aware that in this age of computer networks, the power and authority of State taxing agencies are rivaling even that of the Internal Revenue Service. With new treaties, foreign nations are getting into the act. These taxing agencies are becoming more and more proficient at tax collection. It is almost imperative that with certain corporate entities, you will need the ability to prove your Delaware Corporation meets all the requisites of conducting business in the State of Delaware. Unless your Corporation establishes a certain degree of "nexus" in Delaware, you could be leaving large gaps in your well-planned corporate structure through which savvy revenue agents can and will invade.
Finally, for some corporations, privacy in business activity is essential to success. A good example would be a corporation assembling properties necessary for expansion, or the acquisition of another company. A Delaware Corporation can provide the privacy needed for the financial success in negotiations and transactions.
We offer a range of services to assist our clients' corporations achieve their goals. Our services include, but are not limited to, the following:
The use of our Wilmington, Delaware business (street) address that can be printed on your corporate letterhead and business cards.
We can set up, furnish, equip, and maintain an office for you to meet your needs and budget.
Mail forwarding on a weekly basis, or in accordance with your instructions.
Provide telephone service with a phone number that we answer on our equipment, and is listed in the local telephone directory. Voicemail that you can assess, or you can receive your phone messages forwarded to you at your designated email address or facsimile number.
Fax forwarding of documents.
Accounting and/or secretarial services.
Arrangements for your annual Board of Directors meetings.
Assistance in setting up an account with one of the local financial institutions (banks). This will provide a record of all your corporate funds and finances passing through Delaware.
Banking services that can include maintaining the checkbook, paying bills, and transfer of funds.
Professional service as a Board of Director member in Delaware, on salary or fee basis compensation.
Conduct board meetings via teleconference.
Prepare annual federal and state income tax returns.
Service as your Delaware Registered Agent.
A combination of the above support services can demonstrate a day-to-day operation of your Delaware Corporation. We can customize a program of services that will meet your individual on-going requirements, while remaining flexible so as to adapt to changing business needs.
Our reasonable fees are an excellent value for the money. Fees are based on annual or quarterly retainers for basic services, payable at the beginning of the period for the upcoming period. All other services are negotiable and are payable at the beginning of the month for the upcoming month.
Shelf (or Aged) Corporations (back to the top)
We are able to offer a limited number of corporations that have already been formed. In Delaware we refer to these as Shelf Corporations. If a corporation is needed immediately, you can purchase a Shelf (or Aged) corporation in a matter of minutes. These active corporations come with all the basic features of a corporation, along with a name and a history of its having paid State Annual Franchise Tax in Delaware. Shelf Corporations have no assets or liabilities, and the corporate name can easily be changed in the future. Shelf corporations have histories of having been in existence for several years.
International Incorporations (back to the top)
A properly structured foreign corporation can offer asset protection from vicious lawsuits and creditors, as well as considerable tax reduction, deferral, or even complete tax freedom. This can be accomplished in such a way that the individual or business can maintain privacy, asset protection, and enjoy a greatly reduced tax liability.
This type of corporate structure is not for every entity; it depends on the nature of domestic and international business being conducted. A unique solution is required for each individual business entity. A number of factors need to be analyzed prior to incorporating such as cash flow, currency exchange, banking regulations, corporate status, tax laws, compliance issues, treaties, and political climate.
After forming your corporation, we highly recommend setting up systems for audit and review that can detect, prevent, control and recover any losses. Establishing relationships with the right professionals will enable you to adjust for business changes and growth. After all, the goal here is to maximize profits by reducing tax liabilities, protecting assets, and avoiding any litigation by government taxing agencies.
We are members of various societies and professional associations of independent firms who are committed to providing quality service and value for your money. We offer businesses a viable alternative to the large international accounting, tax consulting, and legal firms who charge outrageous fees.
Warning: As tax problem resolution specialists, we see far too many individuals and small businesses who have fallen prey to smooth-talking salespeople promoting illegal tax shelters. These innocent victims have lost assets, tens of thousands of dollars, and suffered years of anxiety. Beware of those touting "easy steps to never pay taxes again." These scams are still out there and people are still duped and misled by these people. Minimizing taxes legally is one thing; never paying taxes again is just plain illegal.