The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
"Should I reserve a company name with Delaware prior to filing?" We hear this question almost daily. Traditionally, it’s easier (and less expensive) to just go ahead and file the new company. However, in some cases this may not be an ideal solution. Albeit rare, you could be in a situation where it’s a good idea to reserve the name. Maybe you have fallen in love with the company name and you want to make sure someone else isn’t going to beat you to the punch, but at the same time, you aren’t ready to move forward with filing your Delaware LLC or corporation quite yet. In other cases, clients may have already determined that the birthday of the new company must be Jan.1, 2015, for example, and you want to secure the name until then. Whatever the case may be, if you have deemed it necessary to reserve the name you have a couple of options:
Aside from scenarios such as these, in almost all cases, it’s often best to just move forward with the company registration. Why?
When you file your company through Harvard Business Services, we check the name in real-time. If the name is available, we file the company almost instantly, which will then lock down the company name. We generally have the company to the state of Delaware and back, approved, within two to three business days.
If you have any questions regarding reserving the name for your new Delaware corporation or LLC, call us today at 800-345-2677. We’re ready to help you!
Perhaps you are applying for a bank loan or filing for Foreign Qualification in another state. Maybe you are entering into a contract with a third party, or maybe your corporation is merging with another corporation.
Regardless of the reason, you will need to perform a quick search to ensure your LLC or corporation is still considered active and in good standing with the state of Delaware.
Companies that do not meet certain qualifications are unable to proceed with transactions such as these, and they are deemed to not be in good standing with the state of Delaware.
Your search may begin directly with the state of Delaware website. The website provides limited information about entities formed in this state. You will be able to determine the exact name of the entity, the Delaware state file number, the formation date, the type of entity, the residency and the details of the Registered Agent.
These are basic details about the entity, and do not reveal any internal information regarding the company. Upon viewing the search results, the state of Delaware website explicitly states, "This is not a statement of good standing."
Do not worry, this does not mean your company doesn't qualify. It simply means the details noted on the website are not the equivalent of an actual Delaware Certificate of Good Standing.
The state of Delaware has an official document called a Certificate of Good Standing, which is also known as a Certificate of Existence. This document is printed on special paper, indicates several specific points about the entity and is signed by the Secretary of State of Delaware.
Generally, this is the legal document that will be needed in order to prove the entity (whether it is an LLC or a corporation) is in a good standing status with the state of Delaware.
Therefore, you will not be able to use the quick search results on the state of Delaware's website to validate the status of your entity. If you need to provide proof of your status, you must obtain a Delaware Certificate of Good Standing.
If you need to determine the status of your Delaware entity, you can simply contact Harvard Business Sevices, Inc. and we will be happy to assist you. We have direct access to the state of Delaware's database and we can tell you immediately whether or not your company is in good standing with the state of Delaware.
Should you need to order a Certificate of Good Standing in Delaware, we can obtain a copy for you. You can visit our Good Standing section and place an online order for the document. We will obtain it from the state and send it to you on the same business day.
If it is determined your entity is not in a good standing status, we can also provide you with the necessary information to help you restore the company, and take care of all the paperwork for you.
If you have any questions about how to order a Certificate of Good Standing in Delaware, simply contact our office at 1-800-345-2677, Extension 6904, and a representative will gladly help.
Image Attribution: Jossifresco
March 1, 2015 is a Sunday. Why do you need to know this? Because every corporation (not LLC) that is incorporated in the state of Delaware is required to file an annual report and pay a Franchise Tax Fee by March 1 of each year. Just because the Delaware corporation Franchise Tax due date falls on a Sunday does not mean the state of Delaware will extend the due date until Monday.
You must file and pay the Delaware corporation Franchise Tax report by March 1 or the state of Delaware will automatically impose a $125 late penalty plus interest.
Harvard Business Services, Inc. can assist you with filing your Franchise Tax annual report for a small service fee. If you have not yet paid and filed your Delaware Franchise Tax report yet, you need to take care of this immediatley. Pay your Delaware corporation Franchise Tax by clicking here.
To get started with the online Franchise Tax filing, you simply need your exact company name and Delaware state file number. We can perform the Franchise Tax filing, regardless of whether we are your Delaware Registered Agent.
To ensure all Franchise Tax filings are properly filed with the state bythe Delaware corporation Franchise Tax due date, we must impose a cut-off time. This will allow our office to accurately process all annual reports in our possession before the state's deadline.
Our office schedule on Friday, Feb. 27 is as follows:
After 8 PM EST on Feb. 27, we will no longer be able to take any Franchise Tax payments in any form. You will need to contact the state of Delaware directly to make your payment and filing arrangements. Their direct contact details are as follows:
If you have any questions about Franchise Taxes and the deadline, please telephone our office at 1-800-345-2677 or 1-302-645-7400, Extension 6904. You can also email your questions to email@example.com.
Once a Delaware LLC has its Certificate of Formation stamped and approved by the state of Delaware, the next step is to obtain a Federal Tax ID Number, also known as an EIN, from the IRS.
An SS-4 form should be completed and submitted to the IRS in order to generate the Federal Tax ID number. When applying for the EIN, you will be required to answer a number of questions in order to complete the SS-4 application.
Here is a list of information you'll be asked to provide:
Name of the LLC: The exact name submitted to the Delaware Division of Corporations office; be sure to include the full name with "LLC" at the end.
To whom should notifications be sent: The IRS would like to know with whom they should communicate; this person can be located anywhere in the world. Some examples could be the LLC’s member, manager, tax professional or attorney.
Mailing address of the LLC: Where tax-related correspondence should be sent; this does not have to be an address in the United States.
County and state where principal place of business is located: The IRS needs to know exactly where this will be. The principal place of business can be located anywhere in the world and does not have to be in the United States.
Name and Social Security number of the responsible party: Typically this is one of the members of the LLC. Keep in mind that a member of a Delaware LLC does not have to be located in the U.S. or even a citizen of the U.S. The member can be located anywhere in the world. If the member does not have a Social Security number, that is acceptable; however, if the member does have a Social Security number, it must be provided.
How the LLC is going to be taxed: This is a crucial step and can have drastic tax consequences for the LLC. Typically, the LLC will automatically be classified as a partnership if it has more than one member.
If there is only one member, the classification is a sole proprietorship (for a single-member LLC) for federal tax purposes; this means the LLC will have the asset protection the LLC affords but the taxation is the same as a partnership (for a multi- member LLC) or a sole proprietorship (for a single-member LLC).
An LLC will typically be required to file the same federal tax forms as a partnership or sole proprietorship when it comes time to prepare and file the federal tax returns with the IRS.
An LLC may elect to be treated and taxed as an S corporation or a C corporation by the IRS. It may be a good idea to consult a tax professional regarding the consequences and benefits of making the S or C corp election with the IRS.
Clients can change the classification with the IRS at any time in the future with the help of a tax professional.
Date the business was started or acquired: This is typically the date of formation of the Delaware LLC.
Closing month of the accounting year: To keep things simple, most of our clients choose December, unless specifically instructed by their tax professional to choose otherwise.
Highest number of employees expected: This information can always be updated and is hard for new companies to gauge since there are many factors that come into play. Clients typically do their best to estimate this figure.
Select a category the LLC best falls into: There are 12 categories. Do your best to choose one. If you're unsure, there is an option for "Other."
Brief description of the business: Do your best to tell the IRS a little bit more about what the LLC will be doing. If Construction was selected as a category, what type of construction? If Other was selected as a category, provide a brief description of the activities.
Don't let the process of obtaining a Tax ID number for your Delaware LLC intimidate you. We offer a service to quickly and easily obtain a Tax ID number for a new Delaware LLC. Let us handle the process for you, so you won't have to manage the stress and aggravation of dealing with the IRS.
You’ve formed your business entity, obtained your tax ID number, and foreign qualified in your home state...now what? You may be wondering, "Do I need a business license?" Before you can open your doors you must obtain the necessary business licenses and permits required for your business. Licenses may be required by the federal, state and local governments, depending on the type of business. Don’t get caught without the proper licenses! Failure to obtain these licenses can result in costly penalties and even potential closure of your business.
A business license is an approval or permit issued by a government agency that authorizes a business to operate within a specific jurisdiction. This license is often an additional requirement beyond the registration of a business at the state level. Whether a business is required to have a specific license depends on such factors as the activities of the business, types of products sold, and location. Government authorities use business licenses to regulate business behavior and protect the public. License fees are also commonly used as a way to tax businesses operating within certain jurisdictions.
Some licenses are required of all businesses operating within a jurisdiction. These include:
Many licenses are industry specific. Commonly licensed industries include:
And many more…
State regulatory agencies take great pains to identify and penalize unlicensed business operations. Unlicensed businesses diminish the integrity of the profession, create undue competition for properly licensed businesses, and often provide inadequate goods and services. What are the consequences of not having a business license? Any business operating without a license, or with an expired license, may be subject to penalties, such as harsh fines and/or cease-and-desist orders.
With over 40,000 different licensing jurisdictions, determining and obtaining the proper licenses can be a daunting task. We can help! Through a strategic partnership with LicenseLogix, a leading license compliance firm, we will meet all your business licensing needs! Please visit our business license page for details.