Delaware has gained recognition as the prime destination for business registration in the United States. It is the preferred legal domicile for public corporations, multinational enterprises engaged in mergers and acquisitions, and startup founders from around the world. Despite not having any operational presence in the region, these entities find the comprehensive and flexible laws and regulations provided by Delaware to be valuable and cost-effective.
One of the driving factors behind Delaware’s popularity as a business registration destination is its status as a tax haven. By incorporating in Delaware, companies can ensure that their internal affairs, such as the interpretation of their certificate of incorporation and the relationships between stockholders and directors, are governed by Delaware law. This provides businesses with confidentiality and attracts investors.
There are several reasons why companies choose to locate in Delaware:
1. Corporation-friendly laws: Delaware has a long history of enacting laws that are favorable to businesses operating within its jurisdiction. These laws offer sufficient protection to business entities.
2. Low taxes: Delaware’s tax laws allow corporations to be taxed at a low rate, enabling them to avoid higher taxes that may be imposed in other jurisdictions. It is often referred to as a tax haven because it does not collect corporate taxes from Delaware corporations that do not conduct business in the state.
3. Easy and fast formation process: Forming a company in Delaware is relatively easy and fast, as there are no stringent requirements or registration procedures. This makes it attractive to entrepreneurs who want to establish a business quickly and efficiently.
4. Attractiveness to investors: Venture capitalists and other outside investors often prefer to invest in Delaware corporations due to the state’s well-regulated business environment. Incorporating in Delaware can make a company more appealing to potential investors.
For non-U.S residents, forming a Delaware company may seem intimidating. However, platforms like Sidebrief have made it easy to start a business venture as a Delaware LLC or Corporation. Non-residents do not have to live in or visit Delaware to form a company there. They can operate lawful business activities from anywhere in the world, and they do not need to be American citizens or residents to form or operate a Delaware company.
The process of starting a Delaware LLC or Corporation as a non-resident involves the following steps:
1. Naming the company: Conduct a name search on the Division of Corporation’s website to find an available name for your business. Once you have found a name, it automatically belongs to your business entity once Delaware records your company’s LLC or corporation filing.
2. Hiring a registered agent: Delaware requires businesses to have a registered agent with a physical address in the state. Registered agents receive all official mail and service of process on behalf of the Delaware company. Platforms like Sidebrief can help with the registration process and fulfill the registered agent requirement.
3. Filing formation documents: Depending on the type of entity you are forming, you will need to file either a Certificate of Incorporation for corporations or a Certificate of Organization for Limited Liability Companies (LLCs). These documents can be filed either by paper mail or online at the Delaware Division of Corporations website.
4. Obtaining an EIN: Even non-U.S residents can obtain an Employer Identification Number (EIN) from the IRS, even if they do not have a U.S. Social Security Number. The EIN is important for banking and tax purposes. Sidebrief provides fast EIN processing times for non-U.S. residents.
While forming a Delaware company offers numerous advantages, non-U.S. residents should be aware of the tax obligations associated with owning a U.S. company. This includes the Delaware Franchise Tax and U.S. corporation Tax Return. However, platforms like Sidebrief can provide guidance and assistance with these obligations.
In conclusion, Delaware’s reputation as a business registration destination is well-deserved. Its business-friendly laws, low taxes, easy formation process, and attractiveness to investors make it an ideal choice for companies looking to establish a strong legal presence in the United States. With platforms like Sidebrief providing support and guidance, non-U.S. residents can easily navigate the process of forming a Delaware company and ensure ongoing compliance.