WHAT IS AN LLC?

What are a Delaware LLC’s Advantages?

Since the formation of the first ever Limited Liability Company in Delaware in 1, October 1993, the number of LLCs has risen over millions and today 2/3 of the companies in the State of Delaware are LLCs.

Delaware is considered as the most popular and reliable state both in the U.S. and in the world; therefore, many investors and entrepreneurs from around the world incorporate or invest in Delaware to grow their capital. In this context, the majority of LLCs among the companies in Delaware in number gives an undeniable clue about the advantages of forming your Limited Liability Company in Delaware.

 

What is a Delaware LLC?

LLC is the abbreviation for Limited Liability Company; which, as the name suggests, burdens the owner(s) of a company with limited liability both financially and administratively.

Unlike a corporation, the members of an LLC have utmost freedom to attain the roles, responsibilities and the liabilities of the single members of the company. Through the Operating Agreement which is written and signed by the members of the LLC, the owners of the company can determine their respective roles.

The main difference between a corporation and an LLC is that a corporation can raise capital through the stocks in the market; while an LLC can be shared only by its members. You should have a deeper look at the differences between the company types that you can start in Delaware.

 

What are it advantages?

Firstly, a Delaware LLC is the most flexible type of business entity that you might possibly start anywhere in the world. Be a single entrepreneur, a family business, or a partnership with many members, LLCs fit into any situation to start a business.

  1. Flexibility

The Operating Agreement of an LLC which is created by its members and enters into force after the signing allows a Delaware LLC to set its own rules and procedures. By this, the members identify their roles, set forward any procedure regarding the administration of the company and so forth…

 

  1. No Personal Liability

As the name suggests itself, the members of a LLC are not held accountable for the financial liabilities of the company. Of course, they manage the company; therefore, any loss cause them a financial loss at business naturally; however, it is the business itself who must pay for the liabilities. For instance, in case of a bottleneck, the personal assets of the members remain untouched.

  1. Asset Protection against Creditors

As the assets of the members are under protection against any litigation, the assets of the LLC are protected against any judgement of a member. That means, if a member of the company is judged, s/he cannot attack the LLC nor acquire any portion of the LLC’s assets.

 

  1. Different Taxation Options

After formation, an LLC can choose to be taxed as a sole proprietorship, an S corporation, a partnership or as a C corporation depending on some variables in ownership. This gives a flexibility on the taxation of the company which enables the owners to choose for a taxation that demands less.

 

  1. Privacy

Privacy is what makes Delaware unique and preferable in general; however, privacy is provided to its fullest under a LLC. The members of a LLC are not required to disclose any personal information in order to form and maintain their companies. This privacy can also save you money if you need to add, drop or transfer members to or from the company in the future. Since you don’t have to make amendments to the Operating Agreement in which there is not any personal information that needs to be changed, you would not have to pay for extra procedures any time you make a change.

 

  1. Simplicity

It is easy to form and maintain a LLC in the State of Delaware. The procedure takes a very short time, even a day in some cases, if you work with an experienced team. Also the maintenance requires only the presence of a Registered Agent of the company and the payment of an annual Franchise Tax which can be delivered by the Registered Agent for the owner of the company.

 

How to Form a Delaware LLC?

Forming a LLC in the State of Delaware is almost as easy as starting an account on social media. Sure, you do have to go through some procedures; but it is quite simple to do.

The first step is to choose a company name which must be unique. Then, this name is to be registered at Delaware Division of Corporations. You can see the related document to handle this procedure here. Also, you can check if the name you have chosen is unique and untaken and reserve it until you form your business here.

The second step is to fill the required application form provided by the Delaware Division of Corporations.

Then, you need to write a cover letter for your application which will provide the adjudicator with the necessary business summary for your enterprise. Here is a sample for the cover letter.

Lastly, you need to prepare an Operating Agreement in which you describe the rules and procedures regarding the administration of the company. You can amend this document any time you want. Therefore, at the initial stage you can use a sample; however, it would be smart to think the rules and procedures in detail at first.

You can contact us to handle all these procedures and help you with the preparation of an Operating Agreement for the best interest of you and your business. You can also ask for an expedited process as an extra service to finalize your incorporation, even in a day.