The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
It’s a new month and a new quarter! We had so much success last quarter with the launch of our new green package that we're extending the special $30 discount we offered for the package in March into the month of April.
This discount is available from 12:01 a.m. EST starting on April 1 through 11:59 p.m. EST on April 30. Simply enter the discount code "GREEN" when filling out our easy-to-use online order form and you'll receive $30 off!
If you're not familiar with our green package, it's the most economical and environmentally-friendly way to form a Delaware company—everything is paperless.
Clients who order the package will receive the following:
For more details, please visit our green package page.
Delaware LLCs can operate in any U.S. state and all over the world. In fact, the great majority of Delaware LLCs operate outside of the state of Delaware.
The advantages to forming a Delaware LLC go on and on, and both the legal and corporate worlds agree that Delaware is the state in which you want to form your LLC, regardless of where you intend to do business.
People often underestimate the importance of this step. Each state has its own unique fees, requirements and guidelines in order to be granted Foreign Qualfiication status, and this is a necessary process to complete to ensure you qualify for the numerous benefits of owning a Delaware company while operating your foreign entity doing business in Texas.
We can prepare your application, submit it to Texas and pay the state fee for an LLC. The turnaround time to process your application for Foreign Qualification in Texas is often about two business days.
Texas, unlike many other states, will not need a Certificate of Good Standing from Delaware. The signature on the application will not need to be original, which helps to speed up the process as well. An authorized person for the LLC will need to sign.
If the entity is a series LLC, different forms will need to be filed. We will make sure to prepare and file the correct forms for your company. There is no publication requirement, unless specifically required by the county in which your Registered Agent resides in Texas.
Some business owners elect to act as their own Registered Agent if they have a physical address in Texas. If so, any correspondence from the Texas Secretary of State will go directly to them. It will be their responsibility to keep up with annual filings and requirements.
Your Registered Agent will receive notice of the Texas reporting requirements. You are required to submit an information report when filing your annual Franchise Tax. This report can be complicated--people often need the help of their accountant in order to calculate the tax and submit this report.
Your Texas Franchise Tax report will be due on May 15 of the year after you register in Texas. There is a $50 late fee if this report is not filed on time, and Texas will also charge a 5 percent penalty on the tax. After the tax is 30 days late, the state charges an additional 5 percent.
For additional questions on registering your Delaware LLC as a foreign entity in Texas, call 1-800-345-2677, Ext. 6130 or email firstname.lastname@example.org.
If you're a Delaware LLC doing business in California, your company is considered domestic to the state of Delaware and foreign to California. To take advantage of strong corporate law structure, Delaware is by far the most popular domestic choice.
If your business will have a physical presence by operating, hiring employees, banking or even holding an asset in California, you will typically need to qualify the business to operate there through a process known as Foreign Qualification.
The Foreign Qualification process enables a company to transact business in California. If you're a Delaware LLC doing business in another state (including California), failure to adhere to local compliance regulations may put the protection of your company at risk.
California will require a limited liability company application for registration form, your approved Certificate of Incorporation from Delaware and a Certificate of Good Standing from Delaware. The Certificate of Good Standing can be no more than six months old.
California will also require you to have a Registered Agent in California. A Registered Agent is your liaison with the state, and provides a physical address within the state for the purpose of receiving any legal documents or service of process from the state.
Some people elect to be their own Registered Agent while others enlist the support of their Delaware Registered Agent. Often, the Delaware Registered Aagent will also provide the service in California. The California Registered Rgent will not need to sign the filing.
California will require a person with the authority to sign under the laws of the state of organization of the LLC to sign the application. Keep in mind that they will require this person’s name and address.
All information provided to California will be made public; however, there is no publication requirement unless specifically required by the county in which your Registered Agent resides.
Once registered in California, your company will have reporting requirements. The initial report is due within 90 days of your filing, and the biennial reports are due on the last day of the month in which you filed.
The cost of this filing is $20 initially and is the same for the biennial report. Please keep in mind that California has a late fee of $250 if this requirement is not met on time. California also has a well-known minimum franchise tax of $800/year.
One way that California varies from other states is that a foreign LLC may not render professional services in the state of California. California will often advise you to contact your licensing authority before filing with the Secretary of State if your business is required to be licensed, registered or certified.
For the past 11 years, the U.S. Chamber of Commerce has ranked the 50 states’ legal systems and corporate law structure as a whole. The Delaware legal climate is unique in that it has ranked No. 1 for the 11th year in a row.
The survey, generated by the United States Chamber Institute for Legal Reform, polled judges, attorneys, professors, and others for opinions on which state offers the best structure. Many states that are supposedly "corporate friendly," such as Nevada, are buried deep in the list and continue to decline year after year, while Delaware flourishes.
The report also pointed out cities or regions with the least favorable business environments. Chicago/Cook County, Ill., Los Angeles, San Francisco, the state of California in general, and Philadelphia, were voted as having the worst jurisdictions.
After reading this report, it's not surprising that a good portion of our business comes from California, considering their law structure is one of the absolute worst! Residents of Delaware are grateful for the strong corporate law structure their state has created because it benefits each and every resident. Over 25 percent of Delaware’s income can be attributed to the Division of Corporations.
This strong corporate law structure protects individuals behind the company--the shareholders, the Directors and the officers--which is why people from all around the world come to Delaware to incorporate. The state of Delaware will continue to keep its legal infrastructure on the cutting edge through consistent judgments, andby keeping a reasonable and fair legal environment for Delaware corporate entities. Review the full report here!
If you own a Delaware company and would like to start operating in the state of New York, your first step is to register as a foreign entity.
This process enables a company to transact business in a jurisdiction other than the one where it was formed. Failure to adhere to local compliance issues may put your company at risk.
If you're interested in registering a Delaware company in New York, you're probably wondering, "What does New York require in order to register my Delaware LLC as a foreign entity?"
In order to file for Foreign Qualification, the state of New York requires you to fill out what is called an Application for Authority form, provide a Certificate of Good Standing from Delaware and pay a filing fee.
New York also requires your company to retain a Registered Agent for the purpose of receiving any legal documents or service of process from the state. Some clients elect to be their own Registered Agent while others enlist the support of their Delaware Registered Agent.
Often, the Delaware Registered Agent also provides the same service in New York. However, the Registered Agent is not required to sign the filing.
New York requires a member of the Delaware company, or an authorized representative for the member, to sign the application; in addition, this person’s name and address must be provided to New York.
Keep in mind that New York has an expensive publication requirement. Within 120 days after filing as a foreign entity, a foreign LLC must publish a copy of its Application for Authority for eight weeks, in two separate newspapers, both of which are located within the county in which the LLC is located.
The affidavits of publication, certificate of publication form and filing fee must be filed with the New York Department of State.
Once you have registered your company in New York, you will have the opportunity to apply for local licenses, such as resale permits, business licenses, et al. Your company will have to remain in good standing in New York as well as Delaware.
Keep in mind that New York has a biennial report that is due every two years on the anniversary of the month your company filed the Application for Authority in New York. The filing fee for this statement, which is filed by an officer, member or manager, is $9, and it is sent to the company's Registered Agent.
For more information on how to register your Delaware company in New York, or for assistance with the New York Foreign Qualification process, please contact Harvard Business Services, Inc. at 800-345-2677, Ext. 6130.