Benefits of a Delaware LLC
By Andrew Millman, Michael Bell
Tuesday, December 3, 2019
What are the benefits of a Delaware LLC, and what makes a Delaware LLC so easy to manage and operate?
There are a number of reasons a Delaware LLC is uncomplicated to form and maintain. The Delaware LLC is well-known for its unmatched flexibility and low maintenance requirements.
12 Benefits of Forming a Delaware LLC:
- Creating an LLC is simple and straightforward. All you have to provide is your company name, your contact information and the names of the members of the LLC.
- You can elect to be taxed as a partnership, S Corporation or Sole Proprietorship.
- You can have one owner or as many owners (members) as you would like, with different classes of members posessing separate rights and responsibilities.
- The state of Delaware does not require the names of the members to be listed on the Certificate of Formation or on annual Franchise Tax filings. Therefore, they are not part of the public record.
- Both U.S. and Non-U.S. citizens can form and be members of a Delaware LLC.
- A Delaware LLC is easy to manage because many of the formalities of corporations, such as annual meetings and recording minutes, can be minimized.
- There is no annual report required when filing the Franchise Tax for a Delaware LLC, as opposed to the requirement for corporations.
- The cost to maintain a Delaware LLC includes a $300 Delaware Franchise Tax and your Registered Agent’s Fee. If you select us as your Registered Agent, you pay only $50 per year for Registered Agent service, which is guaranteed to remain fixed at $50 for the life of your company (as long as it remains in good standing).
- If you don’t operate your LLC in Delaware, the state does not require you to file an annual tax report. You simply pay a flat $300 Franchise Tax every year on June 1, regardless of your LLC's income for that year.
- When taxed as a partnership or an S-corp, the profits and losses are passed through the entity to the owners/members; therefore the company does not pay United States federal income tax on its profits.
- The LLC legally exists as a separate entity from the owners/members, which protects the owners from being held responsible for the LLC’s debts and/or liabilities.
- The LLC Operating Agreement is a confidential agreement that allows you to manage your company however you see fit, including adding or removing members. This is called "freedom of contract."
Delaware LLCs are, in a word, extraordinary; when you compare them to other business entities, none of which include the level of privacy, flexibility or cost-efficiency, it is easy to see why two-thirds of all companies formed in the state of Delaware are LLCs.
If you have any questions about forming a new Delaware LLC, feel free to contact us 800-345-2677 or email us at firstname.lastname@example.org.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
More By Andrew Millman More By Michael Bell
There are 2 comments left for Benefits of a Delaware LLC
Asuzu kingsley chinedu said: Monday, July 9, 2018
Very very educative and informative
HBS Staff replied: Tuesday, July 10, 2018
We're glad you found our blog helpful. Thanks for reading!
Svante Johansson said: Monday, September 21, 2015