More than 65 percent of companies in the Fortune 500 ranking ladder and more than half of US publicly traded companies were established in Delaware. Numbers and statistics simply say it all.
How to do business in Delaware and why you should be interested in setting-up a company here:
In this case, Delaware isn’t a classic US state but a preferred offshore destination, which means:
- 0% income tax for those companies in Delaware who carry out their business outside the country
- No inheritance tax on shares held by owners who aren’t Delaware residents
- No state tax on the sale of personal or intangible property
- Shares owned by non-residents aren’t subject to Delaware state taxes
- Delaware companies that don’t carry out their business in Delaware, don’t need a business licence in Delaware.
- Due to the reputation of the state as an offshore destination, most major banks have their headquarters in Delaware.
- The highest level of anonymity - no one will know who owns the company.
This information is kept secret.
- One person may be a shareholder, the company's director.
- A local address isn’t necessary, only an agent is required who will take care of annual reports. However, you definitely won’t have a headache from any of that, as the paperwork is minimal and we'll sort it out for you.
An LLC is a well-defined business unit that offers an alternative to stock companies and limited liability companies. The main advantage of LLC is that they associate limited liability to corporate tax. LLC companies established by USA non-residents who don’t carry out their business in the USA, don’t have income from USA sources, don’t employ USA residents, they are not subject to federal taxes, and don’t have to file a tax return.
Delaware LLC / Limited Liability Company provides a fully legal opportunity to avoid paying taxes.
Why choose an LLC in Delaware USA?
If you put the emphasis on the prestige and image of your company, an LLC is much more elegant in the United States of America. Only a few know that even in the US there is an island of tax freedom, an unnamed paradise, and you can create the image of a prestigious American company. In addition, you can get flexible business management. The fact is that Delaware is home to half of the listed companies on the New York Stock Exchange. 80% of companies that changed their headquarters after 1965 moved to Delaware. Today, there are over 200,000 companies, including the largest US industries. Delaware's popularity has been ensured by flexible, transparent, unambiguous and modern laws that mirror the basic idea that companies can best prosper and grow in the atmosphere of the minimal constraints imposed on them by government agencies. The founders, partners and directors of the company are given a flexible space of freedom in the company’s creation and management. The main advantage is the principle of joint-stock company, limited liability with an important property of American "partnerships" (see law of IRC Section 7701) - profit isn’t taxed at company level. An LLC offers a widely used alternative to other companies of all types.
How do you achieve zero taxation with an LLC in Delaware USA?
- An LLC must be owned by non-residential foreigners
- The company doesn’t operate in the USA i.e. all income comes from abroad
- The company doesn’t employ USA residents
For tax relief, a company may not have more than two of the following features:
- Limited liability
- Centralised management, so the company’s management is in the power of directors, independent of company shareholders
- Continuous duration of the company
- The free transferability of the rights of the shareholder (business shares)
What do you achieve when doing business through an LLC in Delaware?
- You can avoid taxing your profits
- If you meet the conditions that your earnings don’t come from the USA, you don’t employ USA residents and any of your affiliates and agents don’t come from the USA, and you don’t even have a firm business location in the USA - then you don’t have to prove: federal tax returns
- Associates will obtain bulletproof protection of their partners’ assets, and won’t be liable to third parties for their debts, liabilities and other duties. Unlike other business entities in the USA, with an LLC in Delaware, no unlimited liability partner is required. You only guarantee with the company’s property.
How challenging is company management?
An LLC's management and business affairs is very flexible. Lots of LLC’s are operated by the "Operating Agreement" "LLC Agreement", the company's management and ownership are governed by this agreement. The agreement isn’t necessarily a public document, which allows maintaining the maximum confidentiality of ownership relations. The agreement may contain arbitrary provisions in the matter, determination of jurisdiction and limitations of a joint stock company, their shareholders, directors, and such provisions won’t be in conflict with the laws of the State of Delaware.
LLC owners (partners) may be individuals, trusts, trading companies, joint stock companies as well as non-residential foreigners, who may participate in corporate governance and business affairs. The company should have at least two partners.
The company must have a registered representative and registered office, address – operation place for consignment acceptance.
General Meetings can be held anywhere. The company name must be publicly accessible as well as the date of foundation, status, the registered address and the name of the company’s registered representative. Company accounting isn’t required - only annual statements on changes in published information and profit and loss statement are reported.
How will the company be established?
Create a company within 2 days
At least 2 shareholders are needed for the company, the company doesn’t issue shares when it’s set-up, but only registers the basic capital, there isn’t a fixed minimum amount.
You won’t appoint a Board of Directors – partners are appointed for these positions, and these may delegate their powers.
The company may divide its income, profits or losses arbitrarily among its shareholders.
The company name must be verified and approved before the company’s establishment:
It must contain one of the words: "Company", "Association", "Club", "Foundation", "Fund", "Institute", "Society", "Union", "Syndicate", "Limited" or "Trust". Abbreviations are allowed. The name must also include the words "Limited Liability Company" or its abbreviation "LLC".
- C - corporation / Limited Liability Company: LLC
- Submission of financial statements: NO
- Submission of annual reports: YES
- Mandatory company audit: NO
- Required tax return: NO
- Business Income Tax Rate / paid by Shareholders: NO
- Min. flat rate to local government: none
- Possibility of using a double tax avoidance agreement: Not usually
Protect your property.
With the DELAWARE LLC Package you’ll get:
- Verification of the availability of a name for your business in the USA, in Delaware
- Including a one-time Delaware state fee and a one-off service fee for setting-up
- Preparation and submission of the Certificate of Establishment of an LLC
- Start-up within 24 hours of crediting
- Sending copies of the Certificate within 5-7 working days of submission
- Local agent fee in Delaware for 12 months
- Prestigious registered office in Delaware for 12 months
The following documents will be sent to you by post (Express Mail):
- Original Certificate of Establishment of an LLC
The following documents will be sent to you by e-mail, which you’ll print and sign:
- 20-page company statutes – ready for signature
- Minutes of the meeting and reconciliation of organisational documents
- Federal Tax Identification Number and Letter S – voting form
Founding of an LLC in Delaware, USA:
- Participants in an LLC may have residence outside of the U.S.A.
- An LLC can be managed by one person
- The organiser may not be an individual and may not be a member.
- At least one member must be designated
- Members may be legal entities or private individuals
- An LLC member may be any nationality
- LLC owners are called members.
- LLC can have an unlimited number of members (owners).
- Although the law in Delaware allow LLC’s in Delaware to be governed by its members, it isn’t necessary for members to be the company managers.
- A Limited Liability Company may be controlled or managed by members or managers
- LLC members manage the LLC until they appoint a company management manager
- Most states require an LLC to have a registered agent, who manages the registered office of the LLC in the state of establishment.
- All LLC’s based in Delaware are required to file an annual report on franchise tax and pay franchise tax.
- An LLC's revenue belongs to its members who report this income on their personal tax return.
- LLC’s are allowed to set-up subsidiaries unlimitedly.
Income tax is 0 (zero rate)
Annual franchise tax 300 USD. Local income is subject to legal entity income tax of 8.7%.
The state VAT rate is 0 (zero rate).
Agreements to avoid double taxation with different countries have been applied, determining the rates of dividend, interest and licence fees.
Bookkeeping. Bookkeeping and account preparation is required.
Tax records need to be kept.
Audit isn’t obligatory.
Anonymity and privacy. Information on the directors (administrators) and shareholders isn’t disclosed in Company Registry.