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Being one of the smallest states, Delaware is located on the East coast of the US. Delaware’s business-friendly legislation makes it really popular with entrepreneurs who see registering a company in Delaware as a great way of entering the US market. More than half of all US companies listed on stock exchanges are incorporated in Delaware.

Starting a business in the state of Delaware doesn’t require its founders to reside in Delaware nor travel there. Except for Cuban, Iranian, South Korean or Syrian citizens, any foreign individuals may remotely register a company in the state of Delaware.

LLC vs Corporation

Those seeking to open an LLC in the state of Delaware should keep in mind that their company’s ownership is going to be in the form of member interests; members, in their turn, will be deemed an LLC’s owners. Individuals considering establishing a corporation in the state of Delaware should bear in mind that their corporation’s ownership is going to be in the form of shares owned by stockholders. Physically generating share certificates isn’t required - a simple written statement indicating the number of shares owned by shareholders would be enough. Elected by shareholders, directors select a president, treasurer & corporate secretary.

Running a corporation will require filing an annual return & paying a franchise tax with the DDC; running an LLC will only require paying an annual tax.

Delaware: Company Registration

Name Selection

Before registering a company in the state of Delaware, its owners are required to pick a name for it. A chosen name is going to be automatically assigned to a company/corporation after it’s registered.

Hiring an Agent

Once a name has been chosen, a company's owners will have to hire a local registered agent. A registered agent is responsible for receiving mail on a company’s behalf. Appointing a registered agent is also necessary for maintaining a good reputation of a Delaware company. Agents must have a physical address & maintain particular business hours. 

Registration Certificates

Which certificate a company will have to apply for depends on its organizational & legal form. A certificate of incorporation is issued to a corporation, while a certificate of organization is issued to an LLC. Documents required for registering a company in the state of Delaware can be submitted in 2 ways: by fax or by mail. Quite a few foreign nationals elect to set up a corporation in the state of Delaware because this form is more consistent with their countries’ laws.

EIN

Paying taxes in the US requires Delaware companies to apply for an EIN. After receiving a confirmation that their incorporation documents have been processed, they can submit Form SS4 to the IRS. Please note that applications are accepted by phone, mail or online. 

Taxation

After registering a Delaware corporation, its founders will be subject to the same income tax as other US corporations. Corporations are also required to pay taxes on income earned abroad. Since they’re registered in the USA, corporations must pay taxes as US companies; their owners must also complete Form 1120.

LLCs are only taxed on income that they’ve earned in the US. Those seeking to open a Delaware LLC should keep in mind that they’ll have to pay a 30% tax on profits earned in the USA. They'll also have to fill out & submit 1040-NR form to the IRS at the end of the fiscal year.

LLCs are required to appoint a tax agent who will verify that a correct amount is indicated in the form. Because of this requirement, quite a few foreign nationals elect to set up a corporation in the state of Delaware. They'll only establish an LLC in the state of Delaware if they need to conduct business abroad (that way they won’t need to pay taxes in theUnited States). 

Normally, registering a US company can take up to 3 weeks.

Seeking to open a company in the state of Delaware? Need advice on company registration in the state of Delaware? Why not contact IQ Decision UK?