Business entities in Delaware in 2023
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, a partnership, a trust, or a branch.
The Limited Liability Company (LLC)
- 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 to register an LLC in Delaware. 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;
- Best uses: This entity is used for starting a small company in the United States.
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);
- Best uses: The benefit of a Delaware corporation is that it may be used when our Clients intend to raise capital by listing on the local stock exchange(s).
- 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 its parent entity (LLC or Corporation). Furthermore, the branch office will also be required to pay annual Delaware franchise taxes;
- Best uses: This entity may be used when our Clients prefer booking all their income under 1 company’s name.
The Limited Liability Partnership (LLP)
- As an alternative to the LLC, our Clients may setup an LLP. Such entities will have at least 1 member and 1 manager, who may not be US residents or nationals;
- An LLP is taxed an LLC i.e. no tax will be imposed on the proportion of income attributed to each member;
- Best uses: An LLP is used extensively to provide professional services. e.g. – Accounting Firms, Law Firms.
Free Zone company
- Our Clients also have the option of registering their businesses in one of Lastly, our Clients will have the option of setting up a free zone company in Delaware’s Wilmington Free Zone;
- For this purpose, our Clients will i) incorporate a new entity and ii) thereafter, apply for an operating permit in the free zone;
- Best uses: A free zone company is recommended when our Clients wish to setup an export oriented manufacturing business.
- Delaware is a lucrative destination for Clients looking to set up a trust to save taxes, protect assets;
- The formation of a Delaware Statutory Trust is straightforward and inexpensive. The trust deed is submitted to the Delaware Division of Corporations to obtain a Certificate of Trust;
- According to Delaware trust law, it is mandatory for at least one trustee to reside in or have a place of business in Delaware;
- Best uses: The benefit of establishing a personal trust in Delaware is that it can be converted into a registered investment company, provided it has a local registered agent and a local office address.
Different types of business entities in Delaware
LLC C-Corporation Branch Office LLP Free Zone Company How long to set the company up? 1 week 2 weeks 1 week 1 week 1 week How long to open company bank account? 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks Issued share capital required US$0 US$1 N/A US$1 US$1 Allowed to sign sales contracts with local Clients? Yes Yes Yes Yes Yes Allowed to invoice local Clients? Yes Yes Yes Yes Yes Delaware corporate tax payable? 0% 0% 0% 0% 0% Federal corporate tax payable? 0% 35% 0% 0% 0% Withholding tax rate payable? 35% 0% 35% 35% 35% Corporate bank account BNY Mellon Wells Fargo Bank of America U.S. Bank Wells Fargo Can rent office premises in Delaware? Yes Yes Yes Yes Yes Allowed to import raw materials? Yes Yes Yes Yes Yes Allows to export goods? Yes Yes Yes Yes Yes Can the entity hire expatriate staff in Delaware? Yes Yes Yes Yes Yes Tenancy agreement required before incorporation? No No No No No Do you visit Delaware for company incorporation? No No No No No Individual shareholders allowed? Yes Yes Yes Yes Yes Corporate shareholders allowed? Yes Yes Parent Company Yes Yes Corporate director(s) allowed? No No No No No Resident director required? No No No No No Resident agent required? Yes Yes Yes Yes Yes Resident shareholder required? No No No No No Minimum number of directors/managers? 1 1 1 1 1 Minimum number of shareholders 1 1 Parent Company 1 1 Public register of shareholders and directors Yes Yes Yes Yes Yes Statutory audit required? No No No No No Annual tax return to be submitted? Yes Yes Yes Yes Yes Access to US double taxation treaties? Yes Yes Yes Yes Yes Estimate of engagement costs US $ US $ US $ US $ US $ Total Delaware business setup costs in Yr. 1 11,500 11,500 8,843 9,015 9,910 Subsequent annual costs (incl. accounting and tax fee) 5,075 3,800 4,500 4,900 4,550 Healy Consultants Invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF