The main differences you’ll notice between running a corporation or LLC in Delaware won’t be the difference between stocks and ownership percentage. What you’ll most likely notice is that corporations are much more formal than LLCs. Corporations require resolutions and shareholder meetings, and the recording and filing of forms showing meetings were held and voting majorities made the decisions. LLCs are much more flexible. They don’t require annual shareholder’s meeting, and you can file forms with the IRS to be taxed as an S corporation or a C corporation. Corporations are by default taxed as “C corps” and can register with the IRS to be taxed as an “S corp.” To some investors, however, a Delaware corporation does carry some prestige, and if you want to raise money, some investors will feel more comfortable with stock agreements as opposed to buying a percentage of ownership in the LLC. The final decision, of course, as whether you should incorporate in Delaware or start an LLC will best be decided by you.
Member or Manager managed Delaware Limited Liability Company
The Delaware LLC is formed by filing a certificate of formation. The Delaware LLC certificate of formation does not require listing the members and managers, thus making it private. As your Delaware registered agent, we are required to maintain the member and manager information and contact details of these people. The state of Delaware has worked very hard to make filing Delaware LLCs easy and simple. The Delaware LLC is not truly private because the state or the courts can order your registered agent to produce this documentation.
A lot of people form Delaware LLCs because the state does not list member or manager info online and technically, the state never asks for this information. You don’t list them on the public documents and you don’t list them when you pay your annual $300 Delaware LLC fee.
Many clients ask us how they actually know the Delaware LLC is theirs then? That’s a great question!
We give all our clients the option when we form the DE LLC to actually list this information publicly on the Delaware certificate of formation. It still won’t show up online when people search your name, but if someone ordered a certified copy of your articles it would show up there. Most people want to be as private as possible, so most people don’t want this listed.
After we form the Delaware LLC, we provide you initial resolutions where we show a chain from us signing as organizer to you as the member(s). We appoint the member(s) and manager(s) on this document as well as the Delaware LLC operating agreement. You sign the Delaware LLC operating agreement as the member(s). So randomly picking a website to form your Delaware LLC is quite a gamble. What you file with the state is only really the beginning and basically worthless without the proper internal documents.
We do from time to time hear of people getting their LLCs hijacked… Technically, you could easily prove that the LLC is yours with the chain of documents from the certificate of formation to the initial resolutions to the operating agreement. But imagine if you went with a budget incorporator and didn’t have this paperwork.
Non-US citizens cannot be shareholders in an S corp, so this limits your taxable business entity choices. Mostly, non-US residents will choose between LLCs and corporations taxed as C-corps.
If you form a corporation in Delaware, your corporation will be taxed as like any other US corporation. The corporation will pay the same taxes that any other US corporation would on all US-sourced income and your Delaware corporation would also be taxed on all foreign earnings, in accordance with US Treasury regulations. Since the corporation was formed in the United States, it is taxed as a domestic corporation and you will file Form 1120.
As a non-US resident, your Delaware LLC will only be taxed in the US on income from US sources, meaning that income from other countries will not be taxed by the US. If you choose to form an LLC, any profits US-sourced income will be taxed by 30%. This 30% goes to the IRS. At the end of the year, you will file your US taxes on Form 1040-NR with the actual amount due. If the amount due is less than the 30% initially taxed, the IRS will issue a refund in the amount overpaid. To make sure the LLC is sending the proper amount to the IRS, the LLC must designate a tax withholding agent to calculate the proper amount that must be sent to the IRS before any of the money is released. Because of these difficulties, many non-US residents choose to form corporations, unless they are forming the LLC to do business strictly outside of the US, in which case, the LLC would not owe any US taxes.
If you choose a Delaware LLC, your ownership of the company is in the form of membership interests. The members are the owners of the Delaware LLC.
If you choose a Delaware corporation, your ownership of the company is in the form of shareholder stocks. These stock certificates do not need to be physically made. They can just be documented on paper as to how many each shareholder owns. The shareholders elect the directors of the corporation. The directors elect the officers such as president, treasurer, and secretary of the corporation. If you are doing a Delaware corporation, we ask you for all this information, and as the incorporator, we elect the directors and officers on your behalf, and you sign the corporate bylaws as the shareholders.
Neither US citizenship nor residency are requirements for forming a Delaware LLC or Delaware corporation. You can start a business in Delaware from anywhere in the world. In fact, many of our clients are not living in America.
We do not charge foreigners more money for filings, however, we would encourage you to review our resources section to make the whole process easier for you, specifically checking our Delaware LLC and Delaware Corporation pages.
There are a couple ways to get an employer identification number (EIN) or federal tax ID with the IRS.
- You can get it yourself through the IRS website online, you can fax in the SS-4 form, or you can mail it in. The IRS website page for EINs is here: http://www.irs.gov
- You can also hire us to get the EIN federal tax ID number for you on our incorporation sign up form (at the bottom): USA (Delaware) Tax ID.
If you have a social security number, the process is super easy and can be done instantly online if the IRS website is working. (It crashes ALL the time.)
If you do not have a social security number and are from out of the U.S., it is just harder, but still quite possible. You can also add this service on our incorporation sign up form.
A federal tax id number is the same thing as an EIN, and an employer identification number. When paying your taxes to the IRS, you will be required to have one. If you have employees, you will be required to have a federal tax id number, because this is how you associate the payroll taxes you withheld from your employees and how you pay it to the IRS. (Isn’t it something that we are forced to collect the IRS taxes and we don’t get paid for it? It’s just our duty for having the privilege of having a business?)
Often a bank will want you to have an EIN as well, but this is just a specific requirement per your bank.
Many people form Delaware companies for the purpose of holding assets in them. Many Delaware companies don’t actually have profits and thus don’t file tax returns with the IRS. The IRS will tell you that even if you don’t make money, you should file a zero return so they can monitor you and see what you’re up to. Many people don’t do this though, and the IRS never finds out about their companies. This is not our advice, but we are just telling you that a lot of people don’t go through with getting an EIN because their bank doesn’t require it and they don’t really make any money with that company. They just own assets in it that don’t appreciate, so there’s never any income they have to report and pay taxes on, so they are making the calculated risk that the IRS won’t ever even find out about the company.
Companies House is a company solely responsible for the registrar of business in the UK. It is mandatory that companies register with Companies House and as such any change henceforth will be on their records.
A limited company is a lawful body produced by its incorporation with Companies House. The responsibility of the participants or clients to the firm is restricted by just what has actually been spent or insured to the business. Limited company could be limited by shares or warranty. A company restricted by shares is without doubt one of the most standard sorts of business in the UK.
LLP represents the Limited Liability Partnership that resembles regular company collaboration with the one distinction being that the individual liability of the companions is restricted.
A minimum of 2 participants is called in to develop an LLP. There is no optimum variety of participants for an LLP.
An LLP framework is made use of by specialists that usually establish as collaboration, such as medical professionals, lawyers, as well as financial advisors, yet which need the defense that restricted obligatory supplies.
An LLP is dealt with as a normal collaboration for tax obligation objectives. The participants pay revenue tax obligation on their share of earnings. The collaboration itself is immune for tax return. Many companions will establish themselves up as independent and also register for self-assessment earnings tax obligation.
Yes, a company physical body could be a partnership of an LLP; however any type of revenues, it makes will certainly be accountable for company tax return instead of earnings tax return.
This is a written contract in between companions specifying their civil liberties, duties and also share of revenues. It is not a legal services need for an LLP to have such a contract, yet when it comes to the department of earnings and also civil liberties, it is recommended to actually have one prepared.
All registered up limited firms call for the suffix limited of LTD after the business name. Both imply specifically the exact same and also the selection which one to utilise refers individual inclination.
All enlisted restricted organisation obliges the addition Limited of LTD after the company name. Both mean precisely the same and the decision of which one to utilize is a matter of individual inclination.
No, you do not need to be a UK individual to be a director of a limited company.
A corporate body or organisation can be a director of another organisation, however, it can’t be the main executive – there must be no less than one other director who is a “characteristic” individual. Please contact our support team if you need to appoint director a corporate body or organisation.
Directors are accountable for running a business legally and also attempting to make it effective. They need to comply with business regulations, choose for the firm’s advantage, keep documents, and documents precise accounts and also return on schedule.
Shareholders can add another executive to a company whenever after arrangement. This should be possible using the web through our administrator portal (for nothing out of pocket) and the data is sent to Companies House for regard.
A director could be expelled from a business by a bulk ballot from the investors, or invalidated by a court or controlling physical body. If the regards to the director’s written agreement or an investors’ Business Secretary
A business secretary is by and large named to take care of a percentage of the executives’ obligations, for example, keeping up and documenting statutory registers and organisation records.
Any individual or organisation can be a business secretary, and no formal capabilities are needed for secretaries of privately owned businesses. Nonetheless, the secretary can’t be the organisation examiner or an ‘undischarged bankrupt’.
No you don’t, a UK company must have a UK registered office address which we can provide.