Operating in the incorporation capital of the world for more than 40 years, the experienced staff members at Harvard Business Services have fielded a lot of client questions. Here is a list of the top ten most popular questions that we hear at Harvard Business Services, Inc. (HBS) when assisting clients with Delaware formations.
1. Do I need to live/operate in Delaware in order to form a Delaware company?
Business owners do not have to live in, or visit, the State of Delaware to form a Delaware company. Other than residents of restricted countries (Cuba, Iran, North Korea and Syria), anyone can form a Delaware company and operate lawful business activities from anywhere in the world. You do not have to be an American citizen to form and/or operate a Delaware company. Shareholders, Directors and Officers of a Corporation and Members of an LLC do not have to be U.S. residents.
Many companies are formed in Delaware and are not physically operating inside of the state including: Disney, Facebook (Meta), and Google. These companies conduct business activities around the world, but are not physically operating inside of Delaware.
2. How long does it take for the entity to be approved in Delaware?
Typically, it takes 3 to 5 business days for the Delaware Secretary of State to approve formation documents. 24 Business Hour express approval is also an option for an additional fee.
3. What’s on Public Record in Delaware?
For a Delaware LLC, the state does not require that the names and addresses of LLC Members or owners be listed on the Certificate of Formation filed in Delaware. The Delaware Certificate of Formation will generally include the name of the LLC and the name and address of the Delaware-based Registered Agent.
Click here to access a helpful link regarding what’s on record in Delaware. Corporations can be filed in Delaware through a Registered Agent without listing shareholders, directors or officers on the public record. However, after the initial filing, every Delaware corporation is required to file a Franchise Tax report on or before March 1 of each year and, in doing so, must list the names and addresses of the company's directors and one officer. This information is required even if your Delaware Registered Agent pays your Franchise Taxes for you. Therefore, this information may be obtained by anyone requesting it from the Delaware Division of Corporations for a $10 payment. Note that while some states post this information on their websites, Delaware does not.
The Certificate of Incorporation includes the name of the Corporation, the name and address of the Delaware Registered Agent and the Corporation Stock Structure.
4. Can one person own the entire company?
It is not uncommon for one individual to form and own a Delaware company. A Delaware LLC can be formed as a single-Member LLC or a multi-Member LLC. Members are typically the owners of the LLC, but they may be other individuals or companies, as well. A Delaware Corporation can be formed with a single Director or multiple Directors and shares of stock can be issued internally to shareholders to show ownership within the Corporation. Directors are individuals. Shareholders can be other individuals or other entities. The Directors run the company and are responsible for the company's overall management. They take responsibility for all major business actions, such as the issuance of stock, the election of officers, and the hiring of key management. The shareholders are the owners of the company, but they do not manage the company. It’s also not uncommon for the shareholders, directors and officers to be the same individuals.
5. Can Ownership Change within the Company in the Future?
Changes in ownership or membership within an LLC can be handled internally, within an LLC Operating Agreement. The operations and management of the LLC are governed by a written agreement among its owners that is not required to be publicly filed or disclosed to the Delaware Division of Corporations. As a result, an LLC allows the ability to create a customized management structure, which prescribes the economic relationship among owners.
For a Corporation, shares of stock can be issued or transferred internally within the Corporation to establish ownership. Directors and Officers can be added or removed internally within a Corporation.
6. Can you obtain an EIN for the Company even if I do not have a U.S. Social Security Number?
Yes, each day HBS assists clients with obtaining an EIN for their Delaware or U.S. companies, even when the responsible party listed has neither a U.S. address, nor a U.S. Social Security Number (SSN).
If you do not have a U.S. Address or U.S. SSN, you will be required to provide a copy of the passport or government-issued ID for the person listed as the "responsible party" after submitting your order.
7. Can you open the Bank Account for my Company?
A bank account can be opened anywhere in the world and does not have to be in the U.S. or in Delaware. Usually, banks require that someone shows up in person with approved formation documents that HBS provides and the tax id number for the company.
For our International clients, one of the most common and inflexible requirements for opening a business bank account in the U.S. is showing up in person. Some International clients are able to travel to the U.S. to open an account. Other business owners have had success by finding a branch of an American bank that is located near them to facilitate the opening of an account. HBS does not have a service to open and manage a business bank account. Clients often contact a few banks to determine what documents and information they need to open the business bank account prior to visiting the bank that they select.
8. Do you provide a Delaware Address?
While HBS does not offer a Physical Business Address, we do offer an additional Delaware Mail Forwarding Service those whom we serve as a Registered Agent. As part of this service, we receive, scan and email mail to our clients in a timely manner. When a Delaware company signs up for the Delaware Mail Forwarding Service, it gains the ability to use the HBS address as the mailing address for the company, but not for the physical business address. The principal place of business address is where the company physically operates, even if based outside of Delaware and the US. Here is a helpful link regarding the address. Click here to view our Delaware Mail Forwarding Services.
9. When are the annual Delaware fees due?
The annual fees for maintaining an LLC in Delaware include our $50 Registered Agent Service fee (If HBS is the Delaware Registered Agent) and the $300 Delaware Franchise Tax. The $50 annual registered agent fee is due 1 full year after the LLC is filed and by the anniversary date of the formation of the company each year. The $300 Delaware Franchise Tax is due on or before June 1st of each year.
If forming a Delaware Corporation, the corporation will owe two annual fees in Delaware. The first fee is our registered agent fee, which is $50 and due one full year after the corporation has been filed (If HBS is the Delaware Registered Agent) and by the anniversary date of the formation of the company each year. The second fee is the franchise tax, which is imposed by the state of Delaware and due by March 1 of every year. The franchise tax fees are based on the number of shares the corporation has authorized. A company with 1-5,000 authorized shares is assessed $225 franchise tax; a company with 5,001-10,000 authorized shares is assessed $300 franchise tax; and a company with more than 10,001 will be assessed a minimum of $450 franchise tax. The Delaware franchise tax is typically the only tax paid to Delaware if not physically operating in Delaware.
Delaware Franchise Tax is the fee imposed by the state of Delaware for the right or privilege to own a Delaware company. The tax has no bearing on income or company activity; it is simply required by the state of Delaware to maintain the good standing status of your company.
10. Do I need to Foreign Qualify my company in another state?
By establishing a company in Delaware, you have taken a first step toward future success. In some cases, the next step is registering the company locally as a foreign entity. While HBS cannot inform you of whether or not you should foreign qualify your Delaware entity in another state, clients obtain this service if their business will have a physical presence in a state other than the State of Incorporation— by operating, hiring employees, banking or even holding an asset. The foreign qualification process enables a company to transact business in a jurisdiction other than where it was formed.
If you have any questions or need assistance with forming a Delaware company, we can be reached at 1-302-645-7400 or 1-800-345-2677 ext. 6900 or via email at firstname.lastname@example.org. We can also be reached via skype at delawareinc.
*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 sourceâ€™s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
There are 2 comments left for Top 10 FAQ's About Forming a Delaware CompanyDarsh K said: Sunday, December 26, 2021
Hi, we are based out in Mumbai, India, planning to register a Company in Delaware , US. Can you please send us an elaborative email for the registration charges & documents required for the same. Any additional information from your side shall be helpful.HBS Staff replied: Monday, December 27, 2021
Thank you for reaching out. We have another blog on our website that lists the steps for Non-US residents to register a Delaware company. You can find that here: https://www.delawareinc.com/blog/forming-delaware-company-as-non-resident/
Also, here is a list of our international formation prices: https://www.delawareinc.com/ourservices/compare-international-packages/Jaice Jacob said: Monday, December 20, 2021
I would like to register a for profit company "INC" for a client, who is a national of India and resident of UAE. He has no SSN. Please advise how can he set up the company in Delaware and get the EIN Number. He can provide a US address in US @ New Jersey. But the Registered agent service in Delaware will be required. Please advise with the cost and timeline for the process and EIN. Regards Jaice Jacob.HBS Staff replied: Tuesday, December 21, 2021
A member of our sales team will reach out to you via email. Thank you for your inquiry!