About Delaware

About Delaware

Delaware is located on the East Coast of the United States, midway between New York City to the north and Washington D.C. to the south. The northern boundary on Delaware is Pennsylvania and on the south and west by Maryland. This location puts Delaware in the midst of one-third of the entire population of the United States and therefore good market access.

The population of Delaware is just over 700,000 and is one of the least populated states. It also covers a relatively small land area of 1,982 square miles and rank 49th of the 50 states in land area. Dover is the capital of Delaware. The largest city is Wilmington with a population of 72,000.

HISTORY

In 1681, the province of Pennsylvania was granted to William Penn by King Charles II. Penn recognized that his province would be landlocked if the colonies on either side of the Delaware River or Delaware Bay were hostile. In 1682, the colonies were annexed to Pennsylvania by deed and leases. After 1682, long disputes ensued between William Penn and Lord Baltimore of the province of Maryland as to the exact dominion controlled by Penn on the lower Delaware. This dispute continued to the end of the colonial period.

In 1776, the time of the Declaration of Independence, Delaware declared itself free from the British Empire and also established a state government, separate from Pennsylvania. Delaware's boundaries were surveyed from 1763 to 1768.

In 1785, the invention by Oliver Evans of Newport, Delaware of an automatic flour milling machine, revolutionized the flour industry and provided a positive impact on the Delaware economy.

In 1786, John Dickinson of Delaware chaired the Annapolis convention, which called for the Federal Constitutional Convention which met in Philadelphia in 1787. A new constitution was drafted and Delaware was the first state of the thirteen involved, to ratify the convention and thus became known as the "The First State" of the new Federal Union.

GOVERNMENT

Today Delaware State Government consists of three branches, the Executive, the Legislative and the Judicial branches.

The executive power of government lies with the Governor, who is elected every four years, and can serve for a maximum of two terms. The legislative power lies with bicameral General Assembly, consisting of a House of Representatives and the Senate. Representatives are elected every two years and senators every four years.

The judicial branch of government is comprised of a Supreme Court with five justices appointed for 12 year terms by the Governor, on the advice and consent of The Senate. There are also three trial courts composed of Appointed Term-Limited Judges.

INFRASTRUCTURE

The infrastructure of Delaware is highly developed to serve its economy and provide easy access to domestic and export markets by sea, air or land.

Delaware central location in the heavily populated eastern seaboard affords rapid access to the major cities of the east and mid-Atlantic. US highways and major railways provide the passenger and cargo transportation requirements to these markets.

Delaware is also well served by air transportation. The major public and private airports easily accommodate commercial and corporate aircraft. Two major out of state airports are within one hour of Wilmington by land; these are Dulles Airport in Maryland and Philadelphia International Airport.

Transportation by sea is served by the port of Wilmington on the Delaware River and just 65 miles from the open Atlantic Ocean. This containerized port provides deepwater berths, modern and competitive off-loading and storage facilities and handles about 4.5 million tons of sea cargo annually.

Other infrastructural requirements such as water, electricity and telecommunications are all highly developed and efficient as one would imagine to meet the national standards.

ECONOMY

The major industries in the state of Delaware are the chemical and automotive industries and manufacturing followed by financial services, are the largest sources of income. The industrial and service sectors are predominantly in the northern third of the state, while the other two thirds in the south are reliant on agriculture. The major activities in agriculture are; poultry, corn, soybeans and diary products.

Delaware investment climate is enhanced by the concept of public-private partnership. The government and the private sector work closely to maximize business opportunity and the quality of life provided to its residents. There are many initiatives and programs which receive overwhelming bipartisan support from legislators that strengthen the economy.

To enact a new tax or a tax increase, government has mandated that a three-fifths or 60% vote in both houses is required. State spending cannot exceed 98% of estimated revenue and a 'rainy day fund" of 5% of anticipated revenue is put aside in the event of unexpected revenue decreases or to pay for tax reductions.

Delaware has developed many programs to encourage business to invest in its economy, some of these initiatives are; an employment and training service which can respond to specialized employer needs or additional skills.

Recruitment assistance in support of new or expanding businesses is provided by the Delaware economic development office. They assist employers in locating a qualified work force. The Delaware Development Corporation Loans Program provides loans to qualifying small business for long term, fixed asset financing at fixed rates. Delaware Venture Partners can seed companies who wish to develop new technologies, particularly in the areas of computer related, high technology, biotechnology, medical, communications, environmental and manufacturing.

FINANCIAL SERVICES

Delaware's fastest growth sector in recent years has been in the financial sector. Many major financial institutions have made Delaware their home. The enactment of the law to establish a Limited Liability Company (LLC) in October of 1992, which combines the best aspects of the Corporation and the Limited Partnership, has made Delaware even more attractive in its quest to expand its economy.

Today over 50% of all companies listed on New York Stock Exchange are Delaware Corporations.

Delaware LLC

Limited Liability Company (LLC)

In October, 1991, Delaware enacted the legislation which enables the formation of a Delaware Limited Liability Company (LLC).

An LLC which was first legislated in the United States in 1977 has now been adopted in varying forms in all 50 states of the USA. Delaware is well known for its General Corporation Law and as an attractive location for company formation. Companies in Delaware known as LLC's, when organized combine the best aspects of a Corporation (a company limited by shares) and the Limited Partnership. This form of organization protects the personal assets of its owners, while affording them "pass-through" taxation, without most of the restriction inherent in the US "S" Corporation. Most importantly for a person or group of persons who wish to own a US company which provides the benefits similar to a traditional Offshore Company (IBC) registered in an offshore Tax Haven, Delaware LLCs some times referred to as "Delaware offshore companies" or "Delaware companies for non-residents", is tax free on business transactions and benefits derived outside the United States and whose members are US non-resident aliens.

To enjoy the US tax free benefit, it is advised that the LLC have two or more members.

Features of a Delaware Limited Liability Company
A Delaware LLC may be formed by one or more organizer or member. For tax purposes, non-resident legal entities (such as companies or Corporations) who are members of the LLC may cause the IRS to classify the LLC as a branch of a foreign company in the US, and the LLC will be taxed on its worldwide income. It is therefore recommended that the non-resident members of Delaware offshore companies be physical persons.
An LLC does not issue shares and therefore does not have shareholders. The owners of an LLC are referred to as members.
A Delaware LLC is a legal entity, registered with the state, and is treated separate from its members.
The Delaware LLC is recognized anywhere in the world as a legally registered US company.
Because of the Limited Liability status, the law protects the members (owners) from the debts and other obligations of the LLC.
After Delaware offshore incorporation, the risk to an owner of a Delaware offshore LLC is to the extent of his investment in the LLC, and all his personal assets are protected.
A Delaware Limited Liability Company may be fully owned by non-resident aliens.
An LLC may also be owned by Corporations (companies limited by shares), Partnerships, Trusts, Charitable Organizations and Pension Plans.
After Delaware company formation, the Limited Liability Company must have these words after the company name or the abbreviation thereof i.e. "Limited Liability Company", "L.L.C.", or "LLC".
The IRS tax treatment of a Delaware LLC is on the flow-through tax basis. That is the LLC is not taxed on its profits. The income of the LLC is distributed to its members who are taxed on a personal income basis.
Non-resident aliens are not taxable by the US on income derived out of the US. If an LLC derives its income outside of the US, the non-resident aliens do not file tax returns.
There is no limit on the number of members allowed in a Delaware LLC.
The Management of an LLC is usually undertaken by its members. If it is found necessary, an outside manager may be employed and would report directly to the members.
The structure of the LLC does not provide for a Board of Directors. The flexibility in the law allows the members by agreement, written or oral, to decide on the most appropriate management system and on the distribution of profits.
The voting authority usually is in direct proportion to member's interest in profits.
The manager of a Delaware LLC may be a member.
There are no statutory requirements concerning meetings of members or record keeping. It is recommended that with two or more members, Members' Agreement be entered into.
If meetings are held by members, this may be done anywhere in the world and in any way convenient to the members.
An Annual Report is required, which sets out the distribution of profits to US residents.
A Delaware Limited Liability Company (LLC) is a good vehicle for non-resident aliens to earn tax free income (not derived in the USA), utilizing a US business entity.
Members of a Delaware LLC are not liable for tax to the United States providing that:
The members are non-resident aliens.
The LLC does not employ US residents as permanent staff, or rely on a dedicated place of business within the United States.
The LLC does not undertake any business activity that is effectively connected with business or trade within the United States.
The Delaware LLC has a perpetual life and membership is easily transferable. It is advisable to enter into a Members' Agreement if alternative conditions are required.

Delaware is recognized for its General Corporations Law which provides a stable legal platform. There is a Chancery Court which adjudicates on corporate matters. The courts do not use juries, so decisions are issued as written opinions and litigation is not settled by the emotions of a jury, but on stable law. A registered Agent and office is required along with Nominee Services.

Delaware: Limited Liability Company (LLC)

Delaware was the first of the thirteen states, which drafted the Federal Constitution, to ratify it and is thus known as "The First State".

Located midway between New York City and Washington D.C., Delaware which is one from the last in population, sits among one third of the entire population of the US and has excellent access to major domestic and export markets by highway, train, air and sea. The infrastructure is highly developed and has deepwater berths at Port Wilmington on the Delaware River, just 60 miles from the Atlantic Ocean shipping lanes.

In October of 1992, Delaware law recognized Limited Liability Companies (LLC's). The LLC combines the best aspects of the Corporation and the Limited Partnership without many restrictions.

Delaware is well known for the Delaware General Corporation Law which is said to be the friendliest in America. Also the dedicated court called The Chancery Court, which adjudicates on matters of Delaware Company Law, is fast and efficient. The trials are by appointed judges (not a jury), who issue written and well thought-out decisions. All this means is that you know the rules from a stable legal system when you incorporate in Delaware.

Delaware is the home to 50% of corporations listed on the New York Stock Exchange.

Why Set Up a Delaware Company

Delaware does not have an income tax for corporations that are not actually conducting a business in Delaware. LLCs pay a flat annual fee to the State, and assuming they are not doing business in Delaware are not subject to income tax.

For use overseas, LLCs are a much better vehicle. Business corporations formed anywhere in the 50 States or District of Columbia are subject to Federal income tax, but LLCs composed of a single non-resident member are disregarded for tax purposes, and LLCs with more than one member, all of whom are non-residents, are considered foreign partnerships for federal tax purposes.

Whether a corporation or an LLC, Delaware companies have no residency requirements to be a shareholder/member, and the officers & directors/managers also do not have be residents.

However, because it is the owners of the LLC, not the management, that determines the tax status of the company, management and control of the LLC can be handled by US residents, and business conducted by US resident employees, without subjecting the company to US tax, as long as the company does not have US-source income, and does not file a US tax return to take deductions for expenses.

Delaware companies are excellent for:
holding companies (companies that own other companies)
investment companies
companies that own trademarks, patents and other intellectual property
companies that will be operating in several States

How to form your own US Corporation from anywhere in the world

How to form your own US Corporation from anywhere in the world

Step #1: Should you form a US corporation or an LLC?

Answering that question will vary depending on your business and personal circumstances. Below is information that may offer you some guidance.

Remember to consult a professional if unsure. www.myuscompany.com recommend to get a free phone consultation with US CPA (Certified Practicing Accountant) Jerry Ballard's by visting his site here.
http://www.accountant-city.com/ballardpa

Jerry will be able to provide you with expert advice based on your personal circumstance. You can also work with Jerry as your registered agent in the State of Delaware. The fees for this services are around $89,00. You can download the documents requiered from www.myuscompany.com or later on this guide.

Other service that we can recommend is The Incoporating Company. They charge a bit more but have a great variaty of services.

I also can recommend Active Fillings. They can charge you online and have a great customer service. Also, they speak spanish.

Next you will be allowed yo see some characterisitc of an LLC and a Corporation...

Advantages of an LLC?

The LLC is a unique type of company. It is a hybrid between a partnership and a corporation.

The advantage for non-US residents, who have no US sourced income is that a Delaware LLC is totally disregarded for income tax purposes by US tax authorities.

A Delaware LLC pays only one "tax": the $200 per year Delaware franchise tax.

An LLC's profits "pass through" to the individual owner.

For Americans who file a personal US tax return, these profits are added to their ordinary income and taxed at the individual rate.

The advantage for non-Americans who do not file a U.S. tax return is that the LLC's profits pass through to the LLC's owner but the income is not taxed by the U.S.

It is still your responsibility to report income tax within your own country.

Advantages of a Corporation?

If you DO have US sourced income then perhaps a US corporation is the better choice.

You will be required to pay tax on income earned in the Untied States. Therefore having a corporation can simplify things.

The disadvantage of having a corporation is that it is taxed on world wide income, not just US income.

However you can talk to a US accountant about minimizing this tax.

Now, let's review what name could you use to your new company...

Step #2: Check your new company name?

Once you have decided on your company structure (LLC or Corporation) we move to the fun part of choosing a name.

To see if your name is available use the link below:

Search name availability here
https://sos-res.state.de.us/tin/EntitySearch.jsp

Step #3: What company would you like to form?

LLC formation

www.myuscompany.com provides a short easy procedure. They recommend to use the service of Ballard and Tompson. We can not guarantee this services as its a 3th party company. However you can see if it fits your needs.

Download the next forms, print them and fill them with your own personal details. Once filled in simply fax the forms to: (302) 739-3812

The fee to form an LLC is US$90

Sample Form

Real LLC form (print and fax to: 302-739-3812)

Your company registered agent is:

Gerald P Ballard
Ballard Thompson & Associates

16 West Main St
Christiana, DE 19702
USA

(800) 542-1900 Office
(302) 737-6139 Fax

Appling for your EIN

After your corporation has been formed you can then apply for your EIN (Employment Identification Number).

You can receive your EIN instantly over the phone by calling the number below. It will take about 10 minutes.

Simply give your name and your address (does not have to be a US address) and when your tax year ends (it must be within one year of forming your corporation). The operator will then give you your EIN over the phone. There is no cost for this service.

Phone IRS: +1-800-829-4933

How to form your Corporation

www.myuscompany.com provides a short easy procedure. They recommend to use the service of Ballard and Tompson. We can not guarantee this services as its a 3th party company. However you can see if it fits your needs.

Download the next forms, print them and fill them with your own personal details. Once filled in simply fax the forms to: (302) 739-3812

The fee to form an Corporation is US$89

Sample form

Real form (print and fax to: 302-739-3812)

Your company registered agent will be:

Gerald P Ballard
Ballard Thompson & Associates

16 West Main St
Christiana, DE 19702
USA

(800) 542-1900 Office
(302) 737-6139 Fax

Appling for your EIN

After your corporation has been formed you can then apply for your EIN (Employment Identification Number). You can receive your EIN instantly over the phone by calling the number below. It will take about 10 minutes.

Simply give your name and your address (does not have to be a US address) and when your tax year ends (it must be within one year of forming your corporation).

The operator will then give you your EIN over the phone. There is no cost for this service.

Phone IRS: +1-800-829-4933

**** Remember to review for more than one service provider to be shure you get what you need. ****