Delaware LLC: An Overview
A Delaware limited liability company is filed through a registered agent, upholding the highest amount of confidentiality. In fact, only the company name and registered agent's name/address appear on the formation documents. You as the business owner have the choice in whether or not your name appears on the certification documents.
After you've formed your business, your registered agent will provide you with a Certificate of Incumbency, which is a document that is not filed with the Secretary of State. This document will identify who is authorized to do business on behalf of the business, including who can open business bank accounts, issue stock certificates, and enter into contracts.
Additional Requirements for a Delaware LLC
There is no requirement to file an annual report in the State of Delaware; furthermore, the names of LLC members will not be a matter of public record. No other information regarding the LLC members will be publicly disclosed. The only thing that is required, however, is that the registered agent has a record of the point person for the LLC, including his or her address. Below are some requirements for this individual:
Must be at least 18 years old
Doesn't have to be an actual LLC member or manager
Doesn't have to reside in the US or be an actual US citizen
After initially forming your LLC, you will have to pay a franchise fee of $300. If it isn't paid on time, you will have to pay an additional $200 fee as a penalty.
Delaware LLC Advantages
There are many advantages to operating a Delaware LLC. Such advantages include the following:
Flexibility for managing the business
Anonymity
Less paperwork
Inexpensive
Limited liability
Pass-through tax entity
There is great flexibility when owning and operating a Delaware LLC. Most states offer great flexibility in terms of how the LLC can be managed. The LLC members can choose to operate as a member-managed or manager-managed LLC. If its members manage the LLC, they will have full oversight of the daily operations of the business. If the members choose to hire a manager, however, that individual will have management oversight into the business's operations.
As previously noted, there is great anonymity in owning a Delaware entity. This allows those who don't want their private information public to remain anonymous.
There is generally less paperwork required when forming an LLC. Unlike the corporation, the LLC doesn't have to file documentation relating to the shares in the company, nor is it required to have periodic meetings or keep minutes of such meetings.
It is also usually cheaper to form an LLC as opposed to a corporation. A corporation generally has additional ongoing maintenance fees, especially for annual and biannial reports. The LLC, however, has much less ongoing requirements. The State of Delaware doesn't require that LLCs file an annual report.
The LLC offers limited liability for its owners. Therefore, plaintiffs or debt cannot look to the personal members' assets to satisfy the outstanding business debts or obligations. Note, however, that there is an exception to this rule, which is generally referred to as piercing the corporate veil. This occurs if any one members act counterfeitly or unbelievably, personally undertakes a loan, or otherwise holds out as an extension of the LLC.
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