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Many people who form an LLC or corporation in Delaware want to know exactly what information is private and what is public, and if Delaware LLC privacy is real.
A Delaware LLC filed through a professional Registered Agent affords you the highest level of confidentiality. Only the company name and the name and address of the Registered Agent typically appear on the Certificate of Formation, along with the date of filing and the company file number.
Here is what Delaware LLC privacy offers:
Your Delaware Registered Agent is required, however, to maintain a record of the contact person for the LLC, including the contact person's address. The contact person must be an actual person (not another company) who is at least 18 years of age. The contact person does not have to be a member or manager of the LLC and does not need to reside in the United States or be a United States citizen.
In Delaware, members and managers are not required to be named in, nor to execute, the Certificate of Formation. Preparation, execution and filing of the Certificate of Formation must be handled by an authorized person or entity. This is an individual or entity that forms an LLC on behalf of the members by filing the necessary formation documents with the Delaware Secretary of State and then providing the certified documents to the members of the LLC.
Typically, the authorized person is the LLC’s Registered Agent. The powers of the Authorized Person are merely to execute the filing of the document with the Delaware Division of Corporations. Once the document is filed, the Authorized Person delivers the LLC to the initial member(s).
The legal instrument that releases the LLC to the initial member(s) is called the Statement of the Authorized Person. This statement is prepared and signed by the Authorized person and is not provided to the state of Delaware. It is not required to be filed in Delaware public records.
After the initial formation, a Franchise Tax of $300 for the prior year's Franchise Tax is required to be paid, on or before June 1 of each year. If the Franchise Tax is not paid on time, a $200 penalty is assessed on June 2, and interest is assessed immediately.
The state of Delaware records all Franchise Tax payments, including the date and amount of each payment. If you pay your Franchise Tax on the state's website, the state will then have a record of the transaction, including the credit card number used.
If we are your Registered Agent and you take advantage of our service to pay the Franchise Tax through our website, the state will not have your credit card number, since we pay many companies' Franchise Taxes in bulk payments via our direct deposit account with the state of Delaware. Again, in this case, neither your member nor your management data will appear on any Delaware public records.
For Delaware LLCs formed and maintained through Harvard Business Services, Inc., the state of Delaware's public record will, therefore, contain no information about your LLC's members and/or managers. Your Delaware LLC privacy level will be 100%.
The fundamental terms of an LLC's ownership, operation and management are set forth in an LLC Operating Agreement. An LLC Operating Agreement can be a written document or merely an oral understanding.
A written Operating Agreement, however, is typically used because it memorializes the understanding and agreements of the members which, in the event of a later dispute, misunderstanding, litigation or death, is an invaluable protection for all parties involved.
Although each LLC Operating Agreement is different, an LLC Operating Agreement generally sets forth certain fundamental terms, such as:
Delaware does not require an LLC Operating Agreement to be filed or added to the Delaware public records.
Corporations can also 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 payment 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). Some states post this information on their websites, but Delaware does not.
When self-filing either type of entity directly with the Delaware Division of Corporations, individuals are required to list their name and address as the incorporator of the company on the formation documents.
These documents can be viewed on the Delaware public record from the first day the company is formed and will remain on the Delaware public record for the life of the company.
Privacy and confidentiality regarding the public record should not be mistaken for invisibility in the eyes of the authorities, should fraud occur and be discovered. The Delaware Attorney General's Office is diligent in punishing the fraudulent use of Delaware companies.
The necessity of possessing the ability to shield a company's ownership from public records plays a valid role in today's business world. Business is very competitive by nature, and the element of confidentiality can be crucial in many perfectly legitimate business transactions that would not happen without strict confidentiality.
*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.
There are 6 comments left for Delaware LLC Privacy: What's on Public Record?jenn said: Monday, April 20, 2020
Hi! I know that using you as a Registered Agent means that our name/address won't show up on the Certificate of Formation. Does this therefore ALSO mean that our name/address will never show up on any public business filing records?HBS Staff replied: Monday, April 20, 2020
As far as the State of Delaware's public database, no names of an LLC's members will appear on public record and only the address of the LLC's registered agent will be shown. Corporations have some additional disclosures on their annual reports (noted in this article). Please feel free to call, email or live chat with us if you have specific concerns we have not addressed.David said: Wednesday, March 4, 2020
Am I still required to pay the Franchise Tax for the second year if the LLC folds in the first 9 months?HBS Staff replied: Thursday, March 5, 2020
Delaware requires that LLCs pay the full franchise tax amount ($300) even if the company existing for just one day of the year. For example, if you closed your company in January 2019, the state still assesses the $300 tax due by June 1, 2020.M S Mohideen said: Saturday, November 30, 2019
Do I have to provide a credit card authorization in order to register a Delaware LLC?HBS Staff replied: Tuesday, December 3, 2019
If you incorporate through Harvard Business Services, you can pay us via credit card, check, or Paypal. We then pay the state of Delaware from our own account.Diego said: Wednesday, November 6, 2019
So if you contact the Delaware Division of Corporations and someone pays usd 10, they will be informed about the directors ? This point is not clear at all for me., Thank you.HBS Staff replied: Thursday, November 7, 2019
Yes, after the corporation's first annual report and franchise tax payment (March 1st of the year following the year of incorporation), the report (containing the corporation's directors' information) will be available for purchase by the public. This applies to Delaware corporations but not Delaware LLCs.Julianne Fox said: Thursday, July 18, 2019
Julianne, the information provided for the EIN is for the IRS use only and it’s not public record. It’s confidential and the IRS will not release any information to a third party without an authorization from the responsible party/owner listed on the account with them and it’s not posted on the IRS website.
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