How to Form a Company in Delaware

Introduction

There are a lot of reasons to incorporate your business in Delaware. It’s easy, inexpensive, the state offers incentives to new businesses and it has laws that protect shareholders. But before you register your Delaware corporation, make sure you understand the pros and cons of incorporating in this state.

Registering a Company in Delaware

Registering a Company in Delaware

Delaware is known as the corporate haven of America, because it’s one of the easiest states to set up a corporation. You can register your company online and file all necessary paperwork electronically too. The whole process takes less than 24 hours and costs under $300!

The only thing you need to provide when registering a company in Delaware is basic information such as:

• The name of your new corporation, also known as its “DBA” (doing business as), which must end with “LLC” if you want to use an LLC structure instead of a corporation.
• Your address, including city and state (or principal place of business).   *        Registered agent details – this should be someone who resides in Delaware or another state where they have registered their address ; if not then they will need permission from that jurisdiction before acting on behalf of this new venture .

Advantages to Incorporating in Delaware

There are many advantages to incorporating in Delaware. For one thing, it’s a small state with a small population and relatively low tax rate. As a result of these factors, Delaware has one of the lowest overall tax rates in the United States. In addition to being a good place for you to incorporate your business, it’s also seen by many as having a very business-friendly environment. This makes it easier for you to attract investors and other professionals who want to work with what they perceive as an efficient legal system.

The banking community is large in this state too; this gives businesses an expanded number of options when it comes time for them to consider where they will set up their headquarters after incorporation or when looking for financing options outside of their own venture capital fundings

Disadvantages to Incorporating in Delaware

There are some drawbacks to incorporating in Delaware:

• It isn’t a tax haven. Delaware is known for having no corporate income tax, but that’s not the whole story—it does have a franchise tax on corporations (0.08% of gross revenue). While this isn’t much more than most other states, it still means your business has to pay something out of pocket. However, compared with other countries’ corporate taxes (like France’s 33%), it’s still relatively low cost.
• Delaware isn’t the best place to incorporate if you want to become a public company; there are better options available elsewhere in the U.S., like California or New York City.

What Happens If You Have an Existing Business and Want to Move to Delaware

If you have an existing business and want to move it to Delaware, then you will need to change the name of your company and file a Certificate of Assumed Name.

To do this, follow these steps:

• Change your company name with the Secretary of State in your current state. This can be done online or by mail—check their website for specific instructions on how to do this for your state.
• File a Certificate of Assumed Name with the Delaware Secretary of State using Form DB-1A (or submit electronically) within 30 days after changing your name in step 1 above.

Make sure you understand the pros and cons of incorporating in Delaware before making your final decision.

Now that you’ve learned about the benefits and drawbacks of incorporating in Delaware, it’s time to weigh the factors and make a decision. While we’re not going to say which state is best for your business, we do recommend taking into account these pros and cons when deciding where to incorporate. Remember, each company will be different based on its industry, so it’s important to conduct research and think critically about how each factor affects your business.

Pros

• Low taxes: If you’re starting an S Corp or C Corp with no profits yet, Delaware offers relatively low taxes for companies that don’t generate much income (less than $50k).
• High credit rating: The state of Delaware has one of the highest credit ratings in America (AAA). A high credit rating means more flexibility when borrowing money from banks or issuing bonds than other states.

Conclusion

Incorporating in Delaware is an important decision. There are many factors to consider and it is important that you have all the facts before making your final decision. We hope this article has helped you understand these factors so that you can make an informed choice when it comes time for you to form a company in Delaware.