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What Are the Benefits of a Delaware LLC?

By IncNow | Published July 29, 2020

Delaware flagWhen it comes to incorporation and LLC formation, there is Delaware and then there is the rest of the world. By dedicating itself to the needs of businesses, the state of Delaware has distinguished itself as the leader in desirable corporate and LLC legislation. Combining reasonable filing and maintenance fees, responsive administrators and an exemplary litigation system, Delaware has created an optimal environment for the creation of world-class LLCs. Here are the major benefits of the Delaware LLC.

Benefit #1: Low Start-Up Costs

The initial point of attraction for LLC formation in the state of Delaware is the low upfront costs of filing. The subsequent costs of maintaining the LLC are also low. The current minimum filing fee in the state of Delaware stands at $90. Owners forming a Delaware LLC experience remarkable savings. This is compared to other popular options, like the Nevada LLC, which carries a minimum filing fee of $425.

Benefit #2: Freedom and Flexibility

Looking beyond the costs, the inherent freedom and flexibility of the Delaware LLC structure is ideal for businesses of all sizes. The foundational Operating Agreements of Delaware LLCs can be written to meet the unique business needs of the members. LLCs that are formed in Delaware but do not carry out operations or maintain offices within the state of Delaware find themselves not required to file income taxes with the state of Delaware. The opportunities and benefits available in Delaware make it an incorporation hub not only for companies located in the US, but companies all over the world, as the state of formation governs the internal affairs of the LLC no matter where it is located.

Benefit #3: Favorable Legal System

Beyond the reasonable costs and amenable agreements, what really makes the Delaware LLC unique is the underlying litigation system dedicated to protecting LLC members from business debts. When incorporating or forming an LLC, the internal affairs of a company, such as its liability shield, are governed under the jurisdiction of the state in which the company has been organized. Asset protections for LLCs vary greatly amongst litigation systems across the country; however, Delaware has succeeded in delivering incomparable legal protections and services to LLCs of all sizes. The key to Delaware’s success within the field of corporate law is the expertise of its corporate lawyers and judges.

Benefit #4: Cutting Edge Corporate Law

The Delaware General Assembly defers to the Delaware State Bar Association to both amend and write new legislation within corporate law. Rather than having farmers, teachers and union bosses write corporate law, as is the case in other states, the Delaware bar drafts and updates laws and delivers these bills annually to the General Assembly. It is through this process that the state of Delaware is able to both produce cutting edge corporate laws while still maintaining stability. Many states litigate business disputes through juries and elected judges who are far from experts in business law. This issue is remedied by the state of Delaware’s exemplary Court of Chancery. Operated by judges with experience and expertise in business law, the Court of Chancery is dedicated to both the protection of LLCs and maintaining the fine balance of corporate shareholder and manager protections.

Benefit #5: The Business Judgment Rule

The Business Judgment Rule serves as the centerpiece of Delaware corporate law. Under this rule, managers and directors find themselves able to ward off attacks from shareholders due to realized losses. The court does not review questioned transactions, unless self-dealing by the manager is alleged. Thus, corporate boards are shielded from frivolous lawsuits and empowered to engage in increased risk to further business profits. Along with handing out fair judgments, the court makes well-reasoned and timely decisions. These aspects of the court are reasons why the United States Chamber of Commerce acknowledges the litigation systems of Delaware as the best in the country.

When incorporating in Delaware, the opportunities are endless. The coupling of flexible and affordable incorporation policy with superior asset protection makes the state of Delaware uniquely situated to help your business’s future.

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When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go