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The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.

You Can Form a Limited Partnership Online
By Michael Bell Tuesday, June 24, 2014

You made the suggestion, and we listened. Harvard Business Services, Inc. is proud to announce you can form a limited partnership and sign up for our Registered Agent service for a Delaware limited partnership via our website. When we revamped our site in February, we said we would continue to make it easier for our clients to do more online. This is just the start of many new things to come.

A limited partnership is generally comprised of both general and limited partners. Here is some brief information about the entity:

  • The limited partners' personal assets are separate from the entity's liabilities, and are therefore protected. Typically, limited partners cannot participate in the management of the company.
  • The general partner is typically involved in the company's daily activities, but their personal assets are not protected from the liabilities of the business. For that reason, a number of attorneys file a Delaware LLC or a Delaware corporation to act as the general partner.
  • The limited partnership structure is often chosen by groups of investors in endeavors such as real estate development projects or business opportunities that are syndicated to private investors.
  • Limited partnership investors only participate to earn a return on their investment. For various reasons (including taxes), they have no desire to be active participants in the business's daily management.

For more information, please visit our limited partnership page.

We offer four formation packages to help you form and file your Delaware limited partnership. The following is included in all of our packages:

  • All Delaware fees
  • Name check and clearance
  • Preparation of articles
  • Same-day electronic filing
  • Certificate of limited partnership
  • Digital copy of documents
  • One complete year (12 full months) of Delaware registered agent service
  • Lowest Delaware agent fee guaranteed $50/year
  • Lifetime customer support
  • FREE compliance coaching
  • Much more!

The process to form a limited partnership is very simple. All we need to know is:

  • The name of the company
  • Contact person
  • Street address
  • Email
  • Phone number
  • Name and address of all general partner(s)
  • Shipping/billing address
  • Method of payment

Ready to form your Delaware limited partnership today? Get started with our easy-to-use online order form. You'll be done in minutes.

If you have any questions about the process or limited partnerships in general, please call (800-345-2677), email or live chat with us.

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How to Cancel a Delaware LLC Before July 1
By Brett Melson Monday, June 23, 2014

Everyone at Harvard Business Services appreciates the opportunity to help entrepreneurs from all over the world start companies to fulfill their life’s dreams. However, not all businesses are successful. In fact, more than 60 percent of the 100,000 companies we’ve formed over the past 33 years have ceased business along the way.

It is important to minimize the loses incurred when winding down the operation. Want to know how to cancel a Delaware LLC without paying a lot? Here’s one way to trim those costs: You can save $50 if you cancel your Delaware LLC before July 1.

On April 15, 2014, Delaware's Governor Jack Markell signed an increase of the Delaware corporation and LLC franchise tax for the 2014 franchise tax year. (The franchise tax, which is due on June 1 of every year, is the price paid to Delaware for the right or privilege to have a Delaware LLC.) As of July 1, 2014, all Delaware LLCs will pay $300 per year compared to the $250 for previous years. However, if you want to cancel the LLC, now is the time to act! By filing the cancellation with the Division of Corporations before July 1, 2014, the $50 increase will not apply and only the $250 franchise tax for 2014 would need to paid.

Harvard Business Services offers a service to help you. Through this service, we will prepare the Certificate of Cancellation as well as pay the state of Delaware filing fee and 2014 franchise tax. The document will be drafted and emailed for a signature of just one member. Once executed by the member, the document can be emailed, faxed, or mailed back to our office.

The filing is then made with Delaware Division of Corporations and approved with the time/date stamp from the Division of Corporations, Secretary of State’s office. This document can be provided to the bank, vendors, and government agencies showing that the LLC no longer has a legal existence.

Once the cancellation is processed, the next step is to inform the IRS. Clients can close the EIN by writing a letter addressed to: Internal Revenue Service, Cincinnati, Ohio 45999. In the statement, include an explanation as to why the EIN needs to be closed, the EIN number, the address of the LLC, and the correct name of the LLC. Clients will typically enclose a copy of the Certificate of Cancellation from the state of Delaware that we will provide.

It is very important to follow the procedures to officially cancel an LLC. We will help guide you through the process and save you $50 by acting before July 1, 2014! Please call (800-345-2677), email, or live chat with us for assistance.

MORE:
How to Close a Company
How to Dissolve a Delaware Corporation

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New Delaware Franchise Tax Rates
By Amy Fountain Tuesday, June 17, 2014

If you could make one prediction about tax rates in general, what would it be? Most likely you would say that taxes will eventually rise. Well, that is exactly what the state of Delaware has done to their annual Franchise Tax fees. They have passed House Bill Number 265, which increased various fees and Franchise Taxes.

The new Delaware Franchise Tax rates will be in effect as of July 1, 2014 for the tax year 2014 and thereafter. Below are highlights of the bill. The amount of the new Franchise Tax Fee is dependent upon the entity type.

Limited Liability Company/Limited Partnership:

  • Every domestic and foreign limited liability company (LLC) and limited partnership (LP) registered in the state of Delaware will now owe $300 per year. The previous amount was $250 annually

Corporation:

  • Every domestic corporation that has 5,000 authorized shares or less will now owe $175 per year. This is an increase of $100 over the previous amount of $75 annually, plus the required annual report fee of $50
  • Every domestic corporation that has more than 5,000 authorized shares, but less than 10,000 authorized shares will owe $250 (instead of the previous amount of $150) plus $75 on each 10,000 authorized shares or part thereof. This is in addition to the required annual report fee of $50

In summary, the bill increases the Franchise Tax amounts assessed on limited liability companies and limited partnerships by $50. It also raises the  corporation Franchise Tax amounts by $100 for those entities that file using the authorized shares method.

Per the revised law, the Franchise Tax on any corporation for a full taxable year will not be more than $180,000 or less than $175 for corporations that file on the authorized shares method. Or, if the corporation files on the assumed par value method, the Franchise Tax on any corporation for a full taxable year will not be more than $180,000 or less than $350. The $50 annual report fee will also be imposed on either method.

Since the law is in effect for the 2014 year, these new rates will be due in 2015. Specifically, a  corporation must pay the new rate by March 1, 2015 and a limited liability company/limited partnership must pay by June 1, 2015.

For more, please visit our Delaware Franchise Tax informational page. If you have additional questions about the new Delaware Franchise Tax rates, feel free to call Harvard Business Services, Inc. at 1-800-345-2677.

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Is a Chobani IPO on the Horizon?
By Brett Melson Monday, June 16, 2014

Almost every entrepreneur knows that Delaware has the well-deserved reputation as the best state to incorporate and form an LLC. But did you know that Delaware is also the most popular state to file an IPO (initial public offering)? In fact, Delaware is the launching point for most of the recent large IPOs. According to recent reports, a Chobani IPO might be next.

An IPO is a type of offering where shares of stock are sold to the public on a securities exchange for the first time, which transforms the business into a "public" company. This can be a bit of a gamble, but many think the move is imminent for Chobani, which recently incorporated in Delaware.

Chobani is New York’s yogurt king, headquartered in Norwich, NY. The company, founded by Turkish immigrant Hamdi Ulukaya, is one of the top-selling Greek yogurt brands in the U.S.

The company's recent move, along with a recent $750 million loan from the private equity firm TPG, is fueling publicly mentioned rumors that Chobani is planning to begin an initial public offering or a stock market launch. Of course, these major moves often involve headaches. Founder Ulukaya’s former wife, suing for a stake in the company, is reportedly afraid that defaulting on the TPG loan, along with forming the Delaware company, will not be beneficial for her position. Chobani’s spokesman said that worry is baseless and stated, "Chobani became a Delaware limited liability company to permit greater flexibility in operating and growing its business."

Delaware attracts IPO candidates due to the flexible options surrounding the shares of stock, such as blank check preferred stock, founders’ stock, flexible voting and dividend rights, and ironclad shareholder agreements.

If the biggest yogurt IPO is imminent, it will join such popular giants as Facebook, Twitter, and Kayak, who operate from other states, but are incorporated in Delaware. By forming their company in Delaware, they benefit from the state’s modern and flexible corporate laws, highly respected Court of Chancery, business-friendly state government, and customer service-oriented staff of the Delaware Division of Corporations.

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The Delaware Division of Corporations 2013 Report
By Brett Melson Tuesday, June 10, 2014

It is that time of year again when the Delaware Division of Corporations and Delaware Secretary of State Jeffrey Bullock report and summarize the highs and lows of the previous year.

Some of the major highlights from the 2013 Delaware Division of Corporations annual report:

- 83% of all new U.S. initial public offerings (IPOs) were in incorporated in Delaware.

- The percentage of the Fortune 500 companies incorporated in Delaware rose to 65%

- Delaware introduced legislation to allow for the formation of the public benefit corporation

- New LLC formations increased 5.7%

- New corporation formations increased 5.6%

- New Delaware limited partnership (LP) formations grew only 1.5%

- Overall new entity formations including trusts, LLCs, LPs, LLPs, and corporations increased 5%

- Active business entities incorporated in Delaware finally surpassed the 1,000,000 mark. They're now at 1,052,000

- 24% of all of the state of Delaware's income was generated by the Division of Corporations. A total of $776,700,000 was generated in the 2013 calendar year.

Andre Bouchard was appointed the new chancellor of the Delaware Court of Chancery

The state of Delaware continues to set the bar high as the premier state in which to create new corporate entities. By incorporating in Delaware, your business will benefit from the established Delaware entity legal structure as well as the renowned Delaware Court of Chancery. That, coupled with Harvard Business Services, Inc. as your Delaware Registered Agent, ensures that you’re starting your business off on the right foot! Feel free to contact us with any questions about all aspects of Delaware entities. We're here to help you.

View the entire report online.

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