Our Presence
Delaware
The extremely welcoming climate that Delaware created to attract investors, and promote company incorporation, led it to grow into a jurisdiction highly-prized by many successful businesses, including several Fortune 500 companies. The state is also increasingly popular with startups owing to its business-development supportive environment. This makes it an ideal jurisdiction for entrepreneurs looking for financial support through venture capital, or from angel investors – the latter favouring companies incorporated in that jurisdiction.
What sets Delaware apart?
- Fiscally responsible, with an AAA bond rating.
- No. 1 business-friendly state in America according to CNBC’s Top States for Business survey
- The United States of America ranked 27th out of 180 countries according to the Corruption Perceptions Index report 2021
- Corporation-friendly & business-friendly climate
- Supportive environment for start-ups
- Low cost of doing business
- Well-established and highly respected court system
- Specialist Delaware Court of Chancery – for corporate matters
- Solid privacy protection
- Favourable tax structure
- Flexible structuring options for corporations
- No income tax on resident companies doing business outside of Delaware
- No physical presence in the state required
- No public disclosure of shareholders’ or directors’ names
- Rapid processing of filings
Legal Structures
Limited Partnership
“C” Corporation
Limited Liability Company
Incorporating in Delaware
A Recognized and Business-Friendly Jurisdiction
Delaware remains one of the most established jurisdictions in the United States for company formation. Its legal framework, tax environment, and corporate infrastructure continue to attract entrepreneurs, holding companies, investment vehicles, and growth-oriented businesses.
Below is a concise overview of the principal advantages and entity options available when incorporating in Delaware.
Key Tax Advantages
Delaware does not impose corporate income tax on revenue earned outside the state, provided the company does not conduct business within Delaware. This is particularly relevant for holding companies and businesses operating in other jurisdictions.
Delaware does not levy state sales tax on goods or services, which simplifies compliance and accounting requirements.
Non-resident shareholders are not subject to Delaware personal income tax on their share of company profits, provided the company does not operate within Delaware.
Delaware does not impose inheritance or estate tax. Shares of a Delaware corporation owned by non-residents are not subject to Delaware taxation upon death.
Corporations that do not operate within Delaware are generally not required to obtain a Delaware business license, contributing to its popularity for holding structures and out-of-state businesses.
A Strong Corporate Legal Framework
Delaware’s corporate reputation is closely linked to its established legal system. The Delaware Court of Chancery specialises in corporate and business matters, contributing to legal certainty and predictability.
The Delaware General Corporation Law (DGCL) is widely regarded as advanced and business-oriented, providing clarity in governance and shareholder rights.
Additional Reasons to Incorporate in Delaware
- No requirement to reside in Delaware
- No requirement for a physical office in the state
- A registered agent can receive legal and governmental correspondence on behalf of the company
The initial filing fees for forming a Delaware corporation or LLC are comparatively low.
- A single individual may serve as director, officer, and shareholder of a corporation
- A single member may form and operate an LLC
Delaware is widely recognized as a corporate-friendly jurisdiction, often preferred by investors and international counterparties.
Before Incorporation: Key Steps
1. Determine the Appropriate Entity Type
Common entity types include:
- Limited Liability Company (LLC)
- General Corporation (C-Corp) Limited Partnership (LP)
The appropriate structure depends on long-term objectives, tax considerations, governance preferences, and capital strategy.
2. Choose a Business Name
The name must comply with Delaware requirements and be available for registration.
3. File Formation Documents
Formation is completed by filing the relevant certificate with the Delaware Secretary of State.
Entity Overview: LLC, Corporation, and Limited Partnership
Limited Liability Company (LLC)
An LLC provides limited liability to its members, meaning members are not personally liable for company debts and legal financial awareness obligations beyond their investment.
Governance and Flexibility
The LLC is governed by an Operating Agreement, which defines management, profit distributions, and member rights. The structure is flexible and can be tailored to the members’ arrangements.
Taxation
By default, an LLC is taxed on a pass-through basis. The entity itself is not taxed; instead, members report their share of profits and losses. An LLC may elect alternative tax treatment if required.
Annual Requirement
An LLC pays a flat annual franchise tax of USD 300, regardless of income generated, business activity conducted, or the number of members involved in the company.
General Corporation (C-Corporation)
The Delaware corporation is frequently selected by companies seeking institutional investment or anticipating significant growth.
- Shareholders elect the Board of Directors
- The Board appoints officers to manage daily operations
Corporate governance follows a structured statutory framework.
A C-Corporation is taxed at the entity level. Shareholders are taxed separately on dividends or capital gains.
A Limited Partnership consists of at least one General Partner and one or more Limited Partners.
- The General Partner manages the partnership and bears unlimited liability.
- Limited Partners’ liability is limited to their investment, provided they do not participate in management.
An LP is generally treated as a pass-through entity for tax purposes.
Entity Overview: LLC, Corporation, and Limited Partnership
| Feature | LLC | General Corporation | Limited Partnership |
|---|---|---|---|
| Liability | Members not personally liable | Shareholders not personally liable | General Partner fully liable; Limited Partners limited |
| Taxation | Pass-through (default) | Entity-level taxation | Pass-through |
| Management | Defined by Operating Agreement | Board and officers | Managed by General Partner |
| Capital Raising | Membership interests | Shares of stock | Partnership interests |
Conclusion
Delaware offers a structured and established framework for business formation. Its tax environment, corporate governance regime, and legal certainty make it a commonly selected jurisdiction for both domestic and international businesses. Careful consideration of the appropriate entity type ensures alignment with operational and long-term strategic objectives.
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