Business entities in Delaware

Business entities in Delaware

The commonly preferred business entity in Delaware is the limited liability company (LLC). However, our Clients may also choose to incorporate alternative business entities including a C-corporation, an S-corporation and a branch office.

The Limited Liability Company (LLC)

Setup LLC in Delaware

  • In Delaware, an LLC can be formed with 1 director and 1 shareholder. There is no requirement for directors or shareholders to be US nationals. Furthermore, there is no minimum share capital requirement;
  • A Delaware LLC can choose to be taxed either as a corporation (if 1 or more shareholder) or as a partnership (if 2 or more shareholders) or as a disregarded entity (if only 1 shareholder). If the LLC is taxed as a partnership or as a disregarded entity, its income will not suffer any corporate tax. Instead, the income will flow through to the shareholders who will pay personal tax. On the other hand, an LLC taxed as a corporation will have to pay corporate tax as well;
  • In Delaware, the identities of directors and shareholders will not made available to the public.

The C-Corporation (C-Corp)

  • Like an LLC, the C-Corp can be incorporated with i) 1 director and 1 shareholder of any nationality and ii) US$1 as the share capital. Furthermore, a Delaware corporation enjoys the same privacy benefits as the LLC;
  • A Delaware corporation does not require a resident director or physical address for incorporation;
  • A C-Corp is recommended when a company wishes to raise capital from the public. Nevertheless, it is not mandatory for the C-Corp to be listed on the US stock exchange(s).

The S-Corporation (S-Corp)

  • An S-Corp combines features of an LLC and a C-Corp. An S-Corp will be registered as a C-Corp but the Client will be required to file Form 2553 with the IRS to elect for Subchapter S status, after which the entity will be taxed like an LLC;
  • However, the shareholders of an S-Corp can only be American resident individuals or American citizens. Corporate entities and non-resident foreign individuals cannot be shareholders of an S-Corp.

Branch Office

  • Foreign LLCs and corporations are allowed to setup branch offices in Delaware. The branch office will have a registered agent and an address in Delaware. To setup a branch office, companies must submit i) the completed foreign qualification form and ii) a Certificate of Existence (cannot be older than 6 months);
  • A branch office will be allowed to practice all activities as their parent entity (LLC or Corporation). Furthermore, the branch office will also be required to pay annual franchise taxes.

Different types of business entities in Delaware

 LLCC-CorporationS-CorporationBranch Office
How long to set the company up?1 week2 weeks2 weeks1 week
How long to open company bank account?4 weeks4 weeks4 weeks4 weeks
Issued share capital requiredUS$0US$1US$1N/A
Allowed to sign sales contracts with local Clients?YesYesYesYes
Allowed to invoice local Clients?YesYesYesYes
Delaware tax payable?0%0%0%0%
Federal corporate tax payable?0%35%0%30%
Federal tax rate payable on income distributions abroad?35%35%35%Depends on the parent company
Corporate bank accountBNY MellonWells FargoBank of AmericaU.S. Bank
Can rent office premises in Delaware?YesYesYesYes
Allowed to import raw materials?YesYesYesYes
Allows to export goods?YesYesYesYes
Can the entity hire expatriate staff in Delaware?YesYesYesYes
Tenancy agreement required before incorporation?NoNoNoNo
Do you visit Delaware for company incorporation?NoNoNoNo
Individual shareholders allowed?YesYesYesYes
Corporate shareholders allowed?YesYesNoN/A
Corporate director(s) allowed?NoNoNoNo
Resident director required?NoNoYesN/A
Resident agent required?YesYesYesYes
Resident shareholder required?NoNoYesNA
Minimum number of directors111NA
Minimum number of shareholders111NA
Public register of shareholders and directorsNoNoNoNo
Statutory audit required?NoNoNoNo
Annual tax return to be submitted?YesYesYesYes
Access to US double taxation treaties?YesYesYesYes
Estimate of engagement costsUS $US $US $US $
Total Delaware business setup costs in Yr. 16,700US$6,860US$6,860Contact us
Subsequent annual costs (incl. accounting and tax fee)3,7003,7003,700Contact us
Healy Consultants InvoiceFrench LLC setup costDelaware C-Corporation setup costDelaware S-Corporation setup costContact us

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Contact us

For additional information on our company setup services in Delaware, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Paavan Chhabra, directly:
client relationship officer - Paavan