Advantages of Incorporating Your Company in Delaware, USA

Last Updated at: Dec 23, 2020
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Delaware’s investment and compliance laws are in line with qualified investor standards. Even if you are launching your startup in Delaware as an LLC, one can easily transfer the LLC to a C corp with one state filing and one IRS filing.

 

On March 18, 2020, the Delaware Supreme Court upheld the validity of exclusive federal forum provisions (FFPs) included in a Company Incorporation Certificate. Henceforth, companies incorporated in Delaware will need to file actions arising under the Securities Act of 1933 (the Securities Act) in Federal court instead of a State court.

 

Deleware is the small state in the USA which has enormous importance in the globe of corporations. Trade companies and Fortune 500 companies are incorporate in Deleware. From 10 years, it is to estimate as to the best legal climate for the United States corporations. When the business is weak in the US, then the Deleware corporations will not collect corporate taxes. Get to know more about why register company in Delaware and Delaware company registration details. Incorporating a business in Delaware will be the best option.

As an Indian, have you ever wondered if you can incorporate your company in the USA? How will it benefit you? Where in the USA should you incorporate your company? If you have had such questions, this article can answer them all and help you gain insights on incorporating companies in the USA and the advantages that come along with it.

Listed below are some of the legal services provided at Vakilsearch. If you find them useful, feel free to contact us.

 

Incorporation in Delaware

Incorporating your venture in the USA is possible which reaps loads of benefits and if there is one state which is ideal to take off, it is Delaware.

Register Your Startup

Delaware is a small state, but it has enormous significance in the world of corporations. Almost half of the United States publicly traded companies and Fortune 500 Companies such as Coca-Cola, Walmart, Apple, Google etc. are incorporated in Delaware. It is often quoted as the best legal climate for corporations in the United States for 10 years straight.

Some of the advantages of incorporating your business in the USA are as follows:

Investors Friendly

Delaware corporations are most sought after by the investment bankers and venture capital investors compared to other states and business structures. For initial public offerings (IPO) Delaware corporations are preferred by the investment bankers.

It is better to incorporate your business here if you are considering venture capital funding or going public, instead of having to adapt your business when that’s demanded by a venture capitalist or investment banker.

Ideal for Start-up incorporation

For a new business seeking to attract external investment from angel investors, private investors and venture capitalists, incorporating in Delaware is often the ideal route to get there. Many people are just willing to invest in a Delaware C company, so starting from the outset of a Delaware company will save a lot of legal and accounting problems later. Delaware’s investment and compliance laws are in line with qualified investor standards. Even if you are launching your startup in Delaware as an LLC, one can easily transfer the LLC to a C corp with one state filing and one IRS filing.

Ideal for Virtual Companies

With the introduction of cloud storage, smart devices and fast file sharing, many enterprises are distributed across the nation or the globe. The best place to incorporate for a highly mobile company is in a jurisdiction where there are few intertwining regulations, such as complex, mandatory yearly franchise tax reports to be filed – even when no business is conducted in that state. Because Delaware does not tax businesses working outside its boundaries, it is simpler for a Delaware corporation to register or unregister in other states whenever required.

Court System

The court system is also well recognized and highly appreciated. It has a separate Court of Chancery which concentrates in corporate matters and uses judges instead of juries. By this, we can tell that if your business involves in any kind of litigation you can get a judge with a huge proficiency in complicating corporate law matters. Thus, your company attorney is likely to already acquainted with Delaware law, as conflicting to laws in a different state.

Tax Haven

We call it as the tax haven as it has many business-friendly tax laws. When you don’t do business in Delaware, then the state does not collect any corporate taxes. It doesn’t levy a tax on royalty payments, intangible assets etc. These kinds of tax policies assure benefits for the corporation.

The owners also have a chance to choose in which way their business should be taxed such as partnership, C Corporation, S Corporation or sole proprietorship.

The flexibility of corporate structuring. 

The statutory laws in Delaware are rather versatile as to how you will organize the representatives of the company and board.  Delaware allows a single person to be a corporation’s sole director, shareholder and officer. In other states, you may need at least three individuals to fill the roles of officer and managers or directors.

Gold standards for companies

Corporate lawyers around the US are well versed in Delaware law, so if your business wants to get professional advice or other supporting documents you’ll have a benefit. Delaware receives one-third of its state budget from the incorporation company, including registration fees, annual fees and taxes, and the legal research involved. You should be confident that the state has an interest in holding the laws up-to-date, responsive to the needs of today and ensuring that all the participants in the environment are highly integral.

 

Privacy policies

There is no requirement of disclosing information about the possessor or formation documents of a Limited Liability Company (LLC) to the Delaware state or Harvard business service, Inc. in order to practice or maintain an LLC.
Delaware protects information like no other US states. Here, the only requirement is for one to have a registered agent and designated contact person.

Flexible Business Structure

Firstly, corporate statutes are flexible in terms of the structuring of the corporation and board members. For instance, directors, officers, and shareholders need not necessarily be residents of Delaware.
A single person can start a company where he can hold the positions of a director, officer, and shareholder which is not the case with other states. However, they require a minimum of three people to hold all these three positions.

Maintenance and Filings

The maintenance cost of a company is very minimal, simple and not very expensive. In Delaware secretary of state, every year an annual franchise tax fee of $300. Also, one must pay a simple fine. Along with this, one must also pay the registered agent fee.

Filings are processed in less than an hour whereas in other states it takes more than 24 hours and is very expensive. Moreover, Delaware is the most beneficial state in the USA to incorporate your company.

The home state is always to consider as the best option while incorporating a business. But what if you are not a resident of the USA? Still does not matter. Moreover, go ahead and incorporate your company in Delaware!

Conclusion

There are various advantages of Delaware company registration in the USA. They are investors friendly, the court system, a tax haven, privacy policies, flexible business structure, maintenance and filings. Indeed, investment bankers prefer incorporating in Deleware corporations. Deleware has lots of business-friendly laws and thus called a tax haven. However, Deleware is the best beneficial state for incorporating your company in the USA.

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