Business law attorney and client

Should I Incorporate My LLC in Delaware?

  • Posted on: Sep 30 2022
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When you’re forming a limited liability company (LLC), you can choose to do so in any state. So, why do so many businesses choose to do so in Delaware – even when they don’t reside there? The short answer is because of the benefits. Here are some of the reasons why you may want to incorporate your LLC in Delaware.

1. Delaware regularly updated its laws in favor of businesses.

The state is known for having some of the friendliest laws for businesses. This is because Delaware’s statutes are updated regularly by corporate lawyers in order to maintain some of the biggest corporate developments.

2. Lawsuits involving DE’s business entity statutes are resolved efficiently.

When there is a lawsuit involving a Delaware business entity statute, it is heard by the Court of Chancery, for which a judge who specializes in this area of law and is known for his or her knowledge and efficiency, presides over these cases. These cases are not decided by a jury.

3. DE has expansive and developed case law. 

With more than 1,000 civil lawsuits decided on annually by the Court, the relevant case law in Delaware is well-established. With clear precedent, companies know what to do in a variety of situations. 

4. DE offers business owners strong protection from liability.

LLCs are so often preferred because they protect business owners from being held personally liable (i.e. their personal property unrelated to the business cannot be seized when someone wins a judgment against the business). Delaware improves upon this by also establishing the opposite: preventing the LLC members’ creditors from taking from the LLC itself. 

5. You can choose how your LLC’s income will be taxed.

Another big reason to incorporate in Delaware is that LLC members can choose how the company will be taxed. Additionally, when it comes to Delaware state tax, there are benefits for out-of-state companies that are organized as LLCs in Delaware.

  • If the LLC doesn’t conduct business in Delaware there is no income tax (aside from an annual state franchise tax of $300);
  • If the LLC doesn’t conduct business in Delaware there is no sales tax; and
  • If the LLC owns intellectual property, they don’t have to pay tax on intangible income, such as trademark royalties. 

6. You can maintain more privacy.

Whereas some states require that you make public your company’s members or managers when filing your formation documents, Delaware does not. The state requires all LLC certificates of formation to include 1) the name of the LLC; and 2) the name and address of the Delaware registered agent.

The Law Offices of Brian L. Fox, APLC Help Those Who Are Looking to Form a Business

If you are looking to form a business, it’s in your best interest to consult with a qualified California business law attorney who can help. By setting everything up the right way from the start, you can avoid an expensive and stressful situation later on. 

At the Law Offices of Brian L. Fox, APLC, we can help you to form your business the best way to meet all of your goals. To learn more or to schedule a free consultation, contact us today!

Posted in: Business Law