Delaware, a small state in the Mid-Atlantic USA, is located on a peninsula with beaches and dunes that line the Atlantic Ocean, the Delaware River and the Delaware Bay.
Its capital is Dover.
This state offers attractive tax regulations, innovative corporate laws and the existence of a chancery court system.
Delaware is the second smallest state in the United States situated northeast on the Atlantic Coast and has approximately 950,000 inhabitants.
General Characteristics of Delaware Limited Liability Companies (LLC)
Delaware LLC companies are governed by the Limited Liability Companies Act.
The registration for Delaware LLCs is performed at the Offices of the Secretary of State in Delaware.
The Delaware LLC companies have the following advantages:
- No citizenship requirements.
- No limitation on type of members.
- No limitations on a single class of actions.
- No limitation on ownership of other corporations.
- No tax penalties on liquidation.
- Allows limited liability to all members including those who participate in management.
The duration of an LLC is generally perpetual.
LLCs may carry on any activity except insurance or banking.
Movement of Funds
United States law requires that anyone transacting more than USD$10,000 into or out of the United States must report this transaction to the United States Customs Authorities.
In addition, the United States Internal Revenue Service must be notified of certain cash transactions in excess of USD$10,000.
Name: The name of the LLC must include the words Limited Liability Company, L.L.C. or LLC.
The name must be distinguishable from the name of any other company, partnership, business, trust or LLC organized under Delaware law or qualified to do business in Delaware unless the written consent of such other entity is obtained.
Members: The minimum number of members required for LLCs is one (1).
Members need not be American citizens, nor US residents and may be individuals, trustees, corporations, or other entities, foreign or American.
Managers: The managers of a Delaware LLC may be individuals or companies of any nationality or domicile.
The names of the managers may be included in the Certificate of Formation and normally indicated in the LLC Operating Agreement.
The Managers may also be members of the LLC.
Capital: There is no minimum or maximum requirement regarding the contribution of capital for a Delaware LLC.
It is recommended that the company issues certificates of shares so that the identity of their owners is duly documented.
Registered Office: Delaware LLCs must have a registered agent.
LLC Operating Agreement: Every LLC is required to have an Operating Agreement.
The agreement is a private instrument among the members or executed by the Sole Member.
A standard Operating Agreement would include the domicile, object, duration, names, and details of managers and members, duties and responsibilities of the managers and members, voting rights, and contributions of capital, among other important matters in the business affairs of the LLC.
Books and Records: The books may be kept anywhere in the world.
It is advisable for LLCs to register in minutes of meetings all resolutions made by the Managers and Members.
Annual Requirements, Taxation, and Fees
The Annual Delaware Franchise Tax for LLCs is USD$300 which is payable prior to June 1st of each year.
If payment is made after June 1st, the LLC will incur a penalty of USD$200 plus 1.5% monthly interest.
The LLC is subject to the US Tax Code based on the nature of its income, distributions, residencies of the members and any Tax Treaty provisions.
The United States Department of Treasury and the Internal Revenue Service (IRS) have implemented new regulations requiring LLC entities incorporated in the United States that have the exclusive property, directly or indirectly of a foreign person or entity, to comply with the annual presentation of form 5472.
Information contained in this publication does not constitute any kind of advice on any particular matters and should not be considered as such.
OMC Group accepts no responsibility for clients’ decisions. LR_MR_0420
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