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WHY INCORPORATE IN DELAWARE?
Why incorporate in Delaware? Chances are Delaware’s corporate laws are much better than your home state’s laws. Delaware is the most favorable place for entrepreneurs and early-stage companies around the country—and the world—to incorporate, due to Delaware’s strong business-friendly legal system. Many of the largest technology companies, consumer goods retailers and investment firms choose to incorporate in Delaware because of its experienced judges and deference to the contracts between the owners instead of default statutory rules. The majority of the businesses on the Fortune 500 list are incorporated in Delaware. Because of the large number of firms incorporated here, Delaware has a large body of well-settled case law, making outcomes more predictable than in other states. The Delaware Division of Corporations is one of the best-staffed and most responsive in the country, filing the incorporation documents for a new business in potentially a few hours. Other states may take weeks to send you your filed incorporation documents. Delaware continues to lead the way for the rest of the country when it comes to corporate law.
Here are just a few of the many reasons people choose to incorporate a Delaware corporation or form a Delaware LLC:
Why Incorporate In Delaware Reason 1: Delaware's Corporate Law
Incorporating in Delaware means that your company has access to the best legal system in the country. In fact, the United States Chamber of Commerce ranked Delaware #1 in eight consecutive studies. Delaware’s corporate law is known for having the strongest shield of any state to protect owners from creditors of the business.
Incorporating in Delaware and benefiting from Delaware’s legal system doesn’t mean you have to do business in the state. If you form a Delaware LLC, corporation, LP, or series LLC, Delaware state law will oversee your company’s internal affairs, no matter where you do business.
Why Incorporate In Delaware Reason 2: Delaware Is a Popular State for Incorporation
Delaware is home to many large corporations, and it can even be beneficial to you with a small corporation. The majority of Fortune 500 companies—66 percent, to be exact—are incorporated in Delaware, although very few have offices in Delaware.
So many corporations are formed in Delaware that there is nearly a one-to-one ratio of corporations to state residents. About 75 percent of the total number of Delaware companies incorporated in the state are LLCs.
Top lawyers know Delaware is the best home for their clients’ corporations and LLCs. In law school, when students learn corporate law, they learn Delaware corporate law. Delaware LLC law is also based on contract and allows for the members to organize their company as they see fit without unfavorable rigid default rules that cannot be contracted around found in most other states. Delaware is the gold standard for organizing and governing the internal affairs of your company to shield your personal assets from potential business creditors.
Why Incorporate In Delaware Reason 3: It’s Easy to Incorporate in Delaware
The process of incorporating in Delaware is simple, and nearly anyone can register their company in the state. With the help of a Delaware registered agent such as IncNow, you can create your company by filing out a simple form.
The process to incorporate your business in Delaware is easy with IncNow. Simply answer a few questions about your business and we’ll take care of the rest. The process specifically involves completing an order form on IncNow.com (it takes five minutes). Then, IncNow submits your filing to form your company on that same business day. Finally, IncNow will send you signature-ready company documents that list the owners and managers of your new company. That’s it!
The process to incorporate your business in Delaware is easy with IncNow. Simply answer a few questions about your business and we’ll take care of the rest.
Why Incorporate In Delaware Reason 4: There Are Several Company Types to Choose From
In Delaware, you can form a limited liability company (LLC), corporation, limited partnership (LP), series LLC, and more. However, the two most popular options are the LLC and corporation.
An LLC allows for management and ownership to be structured in a way that minimizes bureaucracy. At the same time, it provides liability protection to the owners of the LLC. Unlike corporations, no formal meetings are required with an LLC. Plus, the Delaware LLC offers another type of protection that helps protects members from the creditors of other members of the LLC. That added benefit is called the “charging order” and it’s the exclusive remedy of the creditor of a member to only allow a lien on an LLC distribution without control rights or direct ownership by the member’s creditor. An LLC can also reduce or eliminate fiduciary duties of controlling members and mangers. The only required duty required in Delaware is the implied contractual duty of good faith and fair dealing. Furthermore, an LLC can be managed by other entities and owned by other entities, reducing the liability of people involved in the management, which can help you sleep better at night to reduce potential risks of liability.
A corporation is comprised of people or entities that hold stock in the corporation. Corporations are owned by shareholders who elect natural persons to comprise a board of directors to oversee the company’s activities. The board then elects natural persons to be officers of the corporation. Those directors and officers have fiduciary duties, many of which cannot be waived that could result in liability for breaches of the duty of loyalty. Corporations have a more formal structure than LLCs and require annual meetings and elections. Reducing fiduciary duties and allowing other entities to serve as managers is why the LLC is often a preferred choice.
Not sure which Delaware entity is right for you? Below are the critical documents you will receive to start your business properly when you start a Delaware corporation or LLC with IncNow.
