Formation of Companies in Delaware

FORMATION OF COMPANIES IN OTHER JURISDICTIONS
DELAWARE CORPORATIONS

Advantages

1. Delaware is considered the most attractive state in the nation for organizing.
2. Delaware courts have a reputation of reaching reasonable and fair conclusions when construing the corporation laws.
3. Only one incorporator is required. A corporation may be the incorporator.
4. There is no minimum capital requirement.
5. The franchise tax compares favorably with that of other states (usually $30/year).
6. For companies doing business outside of Delaware, there is no corporation income tax.
7. Delaware has no sales tax, personal property tax or intangible property tax on corporations.
8. No taxation upon shares of stock held by non-residents and no inheritance tax upon non-resident holders.
9. A Corporation may keep all of its books and records outside of Delaware.
10. .You may have a principal place of business/address outside of the State of Delaware as well.

Regarding the Federal taxes: if you are US citizen or US resident (US taxpayer) and you file taxes in the US, a LLC is treated as a partnership and is not subject to corporate income tax.

Any profits or losses are passed through to the members of the LLC to report on their personal income tax.
Therefore, The LLC DOES NOT PAY ANY INCOME TAXES!

Company Formation

Procedure to form
Corporation: Filing of Articles of Incorporation or Certificate of Incorporation with the
Secretary of State.
LLC: Filing of Articles of Organization or Certificate of Formation with the Secretary of State.

Language of legalization and corporate documents
English. If any other language is used it must be accompanied by a translation in English.

Registered office required
Yes. Must be maintained in state of incorporation/formation at the office of a professional registered agent.

Shelf companies available: Yes.

Time to incorporate/form
Generally 2 days, but must allow an additional 5 - 7 business days for delivery of documentation.

Name restrictions
Corporation: Anything identical or similar to an existing company within the state of incorporation. Additionally, the use of bank or trust within the name of the corporation is prohibited in all 50 states without first obtaining consent from the banking authorities in the state of incorporation.

LLC: Anything identical or similar to an existing company within the state of formation. Additionally, the use of bank, trust, insurance or reinsurance within the name of the LLC is generally prohibited in all 50 states. This is because limited liability companies in most states are simply not allowed to engage in a banking or insurance business.

Language of name
The name can be in any language. Some recommended states require an English translation.

Suffixes to denote corporation:
Corporation: Incorporated, Corporation, Limited, Company or their abbreviations Inc, Corp, or Ltd. Some of the recommended states allow other suffixes such as Fund, Association, Foundation, Syndicate, Club, Society and Institute.
LLC: Limited Liability Company and Limited Company or their abbreviations LLC or LC.

SHARE CAPITAL, TAXATION, LICENCE FEES AND COMPLIANCE MATTERS

US federal taxation
Corporation: US Corporations are required to file a US Federal Income Tax Return
(IRS Form 1120 or 1120A) and pay tax at a progressive rate depending upon the amount of net income. This requirement holds true regardless if the owners (shareholders) are US citizens, non-resident aliens or a combination thereof. Even if the corporation conducts no business in the US and there is no US-source income, it must still comply with the federal tax reporting requirements and payment of tax on worldwide income.

LLC: US limited liability companies structured for partnership tax treatment with non-resident members and which conduct no business in the US and which have no US-source income are not subject to US federal income tax and are not required to file a US income tax return.

State taxation
US limited liability companies that conduct no business in the recommended states of formation are generally not subject to state income tax and are not required to file a state income tax return.

ANNUAL REPORT/LICENSE FEES
Corporations

LLC

Financial statements
Corporation: There is generally no requirement to file financial statements with the state of formation unless the corporation owns assets within that state or has conducted business within that state.
LLC: There is generally no requirement to file financial statements with the state of formation unless the corporation owns assets within that state or has conducted business within that state

STRUCTURE OF MANAGEMENT

Directors/managers
Corporation: The minimum number of directors is one, who must be a natural person. Directors may be of any nationality and need not be a citizen of the United States.
LLC: One manager either a natural person or a body corporate of any nationality

Shareholders/members
Corporation: The minimum number of shareholders is one. A shareholder of a US Corporation may be another corporation (even an international or "offshore” corporation).
LLC: The minimum number of members is two. This number (or greater) ensures automatic tax classification as a partnership, the advantages to which are described above under "Taxation".