The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
Square, the well known mobile payment start-up is launching Square Market. It opens up a ton of possibilities for local businesses to offer their goods to the world without a lot of hassle. See article excerpt below:
Move over, Etsy and Shopify. Popular mobile-transactions startup Square is branching out beyond processing in-person payments. It wants to help businesses sell their wares online, too. Square has created Square Marketplace, an ecommerce service allowing businesses to sell their products and services online.
"People are already using Square on their smartphones and tablets to sell things offline," says Jack Dorsey, co-founder of Square and Twitter. "With Square Market, they have an online marketplace that enables … local businesses to go from neighborhood to national in an affordable way."
The idea is to eliminate the time and expense required for business owners to create their own dedicated ecommerce websites, says Ajit Varma, Square's director of discovery. Any business -- whether it is already using Square's mobile payments reader and app or not -- can set up a page for free. The page includes information such as the company's name, contact information, photos and items it is selling.
On the Square Marketplace site, customers will be able to search for individual merchants or by the items they are looking for, Varma says. Business owners will be able to promote the items and services they're selling over Twitter and other social media.
Customers can make purchases directly through the marketplace using the Square Wallet app or by entering their credit card information. When a product or service is sold, Square's fee is 2.75 percent of the sale price -- the same rate Square charges for its mobile payments service.
One of our readers sent us this info graphic on what's hot in the world of Start ups, check it out.
The Delaware LLC is a unique business entity; some of its uniqueness stems from the fact that the state of Delaware requires very little information about the LLC to be divulged before, during or after the creation of the LLC.
Many people are amazed at the miniscule amount of information the state of Delaware requests in order for people to create a new Delaware LLC. We are happy to share our experience and knowledge and discuss why the Delaware Division of Corporations requires so little information in order to create an LLC, and why this is beneficial to business owners.
In most states, the company's purpose is required to be listed on an LLC's Articles of Organization as well as the LLC's Certificate of Formation. Chapter 18 of Delaware's Limited Liability Act states, "A limited liability company may carry on any lawful business, purpose or activity, whether or not for profit [...]," which means the LLC is free to conduct any type of lawful business activity without having to publicly list its purpose on the company's Certificate of Formation.
While other states require a list of all the members' names and addresses to be included on the filing to create the LLC, the state of Delaware only requires the name of the LLC and the Registered Agent's name and address to be listed on the Certificate of Formation.
Most states require the principal place of business to be listed on the LLC's Certificate of Formation; however, this is not a requirement when creating a Delaware LLC—the principal place of business of a Delaware LLC does not have to be listed on the Certificate of Formation.
When creating a new LLC in Delaware, you do, of course, have the option of listing the purpose of your LLC, along with the members' names and addresses, as well as the LLC's principal place of business.
However, doing so can prove to be very expensive later in the life of the company.
For example, should the Delaware LLC want to branch out and delve into a different type of business, an amendment must typically be filed in order to update the purpose of the company.
Should the member(s) change, or the address of a member change, another amendment usually needs to be filed in order to update this information. The same holds true if the principal place of business should change.
Sometimes in life, the less we explicitly state, the better off we are, and this certainly holds true in the formation of a new Delaware LLC. Why put the purpose, name(s) of the member(s) or the principal place of business on the initial LLC filing if you do not have to?
The cost for filing an amendment in order to update the information is $200, so why bother listing the information in the first place if it is not required?
If you don't list the information, you won't need to change it; this can help you save hundreds, even thousands, of dollars throughout the life of the company.
Unlike many other business formation services, we do not list any additional information on the Certificate of Formation, other than what the state of Delaware mandates.
Feel free to contact me, or any of our expert customer service representatives, with any questions or concerns you may have about forming a Delaware LLC. You can call me at 800-345-2677, email me at firstname.lastname@example.org or talk to me via LiveChat.
The State of Delaware Division of Corporations has released the 2012 Annual Report, summarizing the year as a whole. The Division’s 2012 Annual Report reviews progress, developments, and marketing efforts which keep Delaware the premier state for incorporations.
Here are some of the highlights:
-The State of Delaware is now home to 64% of the Fortune 500 companies, up 1% from 2011.
-Overall new entity formations grew 8.9 % in 2012 compared to 13% in 2011.
-New LLC formations grew 10.8%
-New Corporations grew 2.9%
-New Limited Partnerships grew 11%
-90 % of all new US Initial Public Offers were Delaware corporations. Some of the notable IPOs were Facebook, Kayak, Restoration Hardware and Yelp.
-Division of Corporations revenue of $867.2 million made up 26% of the State’s general fund for 2012 compared to 24% in 2011.
-The Delaware Division of Corporations was hoping to hit the mark of 1 million active legal entities in 2012, which unfortunately did not happen until March of 2013.
-Delaware’s international marketing outreach included worldwide trips and conference leadership promoting the Delaware Advantage to India and South Africa.
Delaware’s total package, combining Delaware’s General Corporation Law and LLC law, Court of Chancery, and Division of Corporations working together, make Delaware the premier home of choice for entities today.
Click here to view the complete report.
The Delaware Series LLC offers a unique structure that allows for the creation of an LLC which can then internally create different series. Each series is treated as a separate entity, meaning the debts, liabilities, obligations and expenses of one series cannot be enforced against another series of the LLC, or against the overall LLC itself. For instance, a real estate investor purchasing 10 properties could create one Delaware series LLC, and then internally add 10 separate series for each property purchased. The Delaware Secretary of State charges an annual Franchise Tax of $300 per LLC. Harvard Business Services Inc. charges an annual $50 Delaware Registered Agent Fee per entity (the lowest Registered Agent Fee in the industry and guaranteed to remain fixed at $50 for the life of the company).
Utilizing the series LLC structure can save people thousands of dollars. Below, we compare the costs involved to create 10 traditional Delaware LLCs compared to one Delaware series LLC.
For the creation of 10 LLCs, along with the annual Franchise tax and Registered Agent Fee, the following costs would be incurred:
Now compare that to forming and maintainging a Delaware series LLC:
That's a savings of $7,011 per year!
However, the Delaware series LLC is not for everyone. Certain regulations must be followed, and you must maintain a separate set of accounting books for each series. In addition, the series LLC may not be accepted in every state, so be sure to research and complete due diligence if you are contemplating utilizing this type of entity.
If you would like to form multiple LLC entities in order to hold assets or operate multiple/different types of businesses, consider the Delaware Series LLC. Feel free to contact Harvard Business Services, Inc. at 800 345 2677 or email@example.com. Our company formation experts will be happy to discuss any questions or concerns you may have about the Delaware series LLC. If you'd like to do some further reading, we are happy to provide you with more information: