Thinking about starting a business in Delaware? One of the first things to consider when starting a business in the United States is the state of formation. This decision must be carefully made, considering its long-lasting impacts on the success of the prospective business to be formed.
Delaware has become a popular choice among entrepreneurs due to its business-friendly laws and policies. Notably, large corporations derive the greatest interest from Delaware’s conveniences which is why most Fortune 500 companies are incorporated in Delaware. Moreover, angel investors and venture capitalists are more drawn to Delaware corporations.
Among the below-referenced benefits, there are also drawbacks of starting a business in Delaware depending on the type of business to be formed. While Delaware offers advantages, business owners should carefully evaluate the costs, objectives, and preferences before making a decision since some benefits may not apply to certain circumstances.
1. Simple Formation Process
When forming a Delaware corporation or an LLC, very little information is requested by the state and Delaware allows a single person to hold multiple officer positions in the company.
2. Tax Savings
Incorporating in Delaware has tax advantages that significantly scale down the tax burden on corporations. Delaware does not impose a tax on a corporation’s profits unlike most other states; hence, there could be certain exceptions. However, forming a Delaware company comes with an annual franchise tax requirement.
3. Confidentiality & Identity Protection
Unlike many other states, Delaware does not ask businesses to disclose director and officer information to publicly display on the state website. However, the privacy benefit is more applicable to LLCs. Corporations need to provide the names and addresses of the officers and directors when submitting an annual report with the franchise tax payment, and these documents are publicly available upon payment of a small fee.
4. Advanced Business Court System
Delaware is known for its well-established legal system that prioritizes corporate lawsuits. Disputes corporations encounter in Delaware are resolved through the Court of Chancery. Moreover, the court is made up of judges instead of juries; and their familiarity with corporate cases speeds up the dispute resolution process.
5. Residency Is Not Required
Delaware does not require officers, directors, or shareholders to be Delaware residents or U.S. citizens; therefore, making the state a viable option for foreign entrepreneurs
Start Your Delaware Corporation with Manay CPA
Deciding for your business might be a daunting task, but don’t hassle. Manay CPA is here to assist you through every step of your business formation process.
For further assistance on how to start your Delaware company, call us today at 404-900-1040 or schedule an appointment now to evaluate your options with our team of experts.