When you start a company, the first thing to do is make a handful of important decisions. One of the most important decisions you’ll make is to pick the state where you register your business.

If you’re thinking about starting a business in Delaware, you may wonder whether or not it’s the best state for your new venture.

Nearly three-quarters of the Fortune 500 companies are incorporated in Delaware, showing that the state is the best place for small businesses that want to grow.

An LLC is a relatively new business model and is quickly becoming the most popular form of business ownership in the United States. 

It is a hybrid of a corporation and a partnership and offers certain benefits of both, like limited liability and tax treatment. In almost every state of the US, you can form a limited liability company.

This guide will introduce the benefits of Delaware LLC and help you understand why it’s the best state for small businesses.

benefits of Delaware LLC

7 Benefits of Delaware LLC for Small Businesses

There are the seven benefits of Delaware LLC that make it the best state for small businesses:

  • Less Expensive, Easy to start
  • Freedom of Contract
  • Tax Flexibility
  • Privacy Protection
  • Flexible Management Structure
  • Liability Protection
  • Series LLC

Less Expensive & Easy to Form

Unlike other states, Delaware has a relatively uncomplicated LLC filing process. To form a Delaware LLC, you must file a Certificate of Formation with the Delaware secretary of state and pay a $90 filing fee.

A Delaware LLC is pretty simple to start. You don’t need to file annual reports with the state, and you only need to provide your company’s basic information: the name of your company, the name, and address of your registered agent, and so forth.

Freedom of Contract

An LLC is a very flexible business structure. The structure and rules of an LLC are set out in a document called the LLC Operating Agreement

This document is drafted by the company members. You can make the terms and rules according to the requirements of your company. It is one of my favorite Benefits of Delaware LLC.

Tax Flexibility

One of the best benefits of Delaware LLC is its tax flexibility. Delaware is a tax haven for LLCs. It does not charge business income or sales taxes if the company is not conducting business physically there.

Delaware LLC owners only have to pay $300 annual registered agent fees and a franchise tax annually to maintain their corporate status.

A Delaware LLC member, who is not a resident of Delaware, does not have to pay income taxes on his or her share of LLC earnings. In addition, Delaware does not tax intangible assets such as software, licenses, patents, trademarks, and copyrights.

Also Read: Tax Benefits of LLC for Small Businesses

Privacy Protection

The state of Delaware does not require LLC owners to disclose any information about themselves or their business. Many states do not ensure this kind of privacy that’s why Delaware is considered an ideal place to form an LLC.

Flexible Management Structure

Delaware residents who form LLCs can choose to operate their businesses on their own, by appointing managers, or in any other way they like. Delaware law provides them with a lot of freedom in deciding who will handle what responsibilities and how.

Liability Protection

Delaware LLCs allow business owners a great deal of protection from liability. In Delaware, LLCs are not liable for the debts of their members. 

The members of an LLC are only responsible for the debts they individually incur while conducting business under the LLC’s name (unless there is misconduct by the LLC’s manager).

Series LLC

Another benefit of forming a Delaware LLC is the flexibility to create a series LLC.

A Series LLC is a Single Limited Liability Company that can be divided into several divisions or series. Each LLC series is treated as a separate legal entity and has its own assets, members, and liability limitations. That means that if one series is issued, the others aren’t affected.

Willing to form a Delaware LLC?

If you are interested in forming an LLC in Delaware, you are at the right place. Micahguru Formation is here to help you with your business needs.

We have a package for Delaware LLCs that costs $490 and includes:

  • Business Mailing Address in Delaware
  • Preparation of Documents
  • Certificate Of Formation
  • Digital Copy of Documents
  • All Delaware Filing Fees
  • EIN (Employer Identification Number)
  • Registered Agent Service
  • Business Bank Account
  • Banking Resolution Template
  • Compliance Coaching

Congratulations🎉 

As a special thank you for reading our blog, we’d like to give you a discount on your purchase. Use the code (Blogreaders) when checking out.

Conclusion

In this guide, I try my best to inform you about all the benefits of Delaware LLC, and through all the benefits, I have proved why Delaware is the best state to form an LLC