Why form a corporation in Delaware?
Delaware’s advantages as a place of incorporation range from advantages built into the Delaware General Corporation Law (the “DGCL”), to the flexibility of the Delaware corporate formation process.
While we cannot advise you regarding what form or location may be best for your specific needs, the following list of the advantages of DGCL might help you decide if Incorporating in Delaware is right for you:
Ten good reasons to incorporate in Delaware:
- Asset protection – separate your personal assets from your business debts.
- Any number of different kinds of business can be transacted under one corporate roof.
- Shareholders can act in writing instead of holding meetings.
- You can add people to the board who are not shareholders.
- Corporate records need not be kept in Delaware.
- One person can act as the only officer, director, and shareholder.
- Shares of stock in Delaware corporations are not subject to Delaware taxes if the owner lives outside the state.
- No Delaware corporate income tax for corporations that are formed in Delaware so long as they do not transact business in Delaware.
- Delaware has no sales or personal property tax.
- Reasonable costs; State fees starting at $109.00 to file & as low as $225.00 annually to maintain.
There may be significant federal tax advantages to incorporating as well.
Who can form a corporation in Delaware?
Anyone anywhere in the world is permitted to file the required documentation with the Delaware Division of Corporations in order to form a Delaware Corporation. Similarly, the requirements for Incorporators in Delaware are broad; Any person or entity, singly or jointly with others, regardless of where they live, are domiciled or incorporated, may organize or incorporate a Delaware corporation by filing a properly executed Delaware certificate of incorporation.
What is needed to form a corporation in Delaware?
In order to register a corporation in Delaware, you need to file the appropriate paperwork with the Division of Corporations, called a Certificate of Incorporation, as well as pay the required filing fees. Upon proper receipt, the State will process the Certificate of Incorporation based on workflow and the priority selected at the time of the filing. In anywhere from 1 hr to about 10 business days, a date and time stamped copy of the Delaware certificate of incorporation, along with any other certificates requested, will be returned to the submitter.
After the company is incorporated, additional actions need to take place in order to maintain the corporation. Among other things, corporations need to:
- Appoint and/or hold an initial meeting of directors
- Adopt bylaws
- Issue shares of stock to owners
- Hold an initial meeting of shareholders
There may be additional industry or regulatory specific requirements to consider as well. A corporate kit is a great tool to help the incorporator or initial director(s) address the above matters, and maintain corporate compliance.
How to Form a Corporation in Delaware
C Corporation
Close Corporation
Public Benefit Corporation
Non-Stock Corporation
Determine if you will draft and file your own certificate of incorporation or if you will have someone else do it or help with it. Though that statement seems relatively straightforward, there are many ways to get from A to Z, and options exist that fit every personality and every budget.
Here are a few ideas to consider for drafting your Delaware certificate of incorporation:
DIY
Do it yourself through education, organization, and a bit of document drafting. Based on the feedback our experience staff receives, beginners sometimes find the DIY option overwhelming and have reported that in the end they generally didn’t save much money and spend a great deal of time that could have been allocated elsewhere. This option definitely isn’t for everyone. That said, depending on the individual, you may find it a rewarding experience.
Use a Service Company
There are several good service companies out there who can help you incorporate. Most of them will charge a fair price to do the preparation and filing of your certificate of incorporation. Hiring one to handle the bureaucratic and statutory requirements of starting your corporation can end up saving you time and expense, allowing you to focus on what you are passionate about – running your business. That said, you should do your research carefully to make sure you select a company that will meet your needs now and in the future. In general, a service company should be accessible, reasonable, and back up their work with a guarantee. Most of all they should be able to add value. Give them a call or send them an email. It’s a great way to gauge how they will respond when you really need them!
Hire an Attorney or CPA
Never underestimate the value that a good attorney or CPA can add. Not only can they give you legal and tax advice, in the beginning, they can continue to add value over the lifetime of your corporation. If a retainer fee or budgetary issues are of concern when forming a startup corporation, explore how you can still build a relationship with these professionals to receive advice in the areas of planning that are critical for you.
Many times it is not one solution, but a combination of all above. It is reasonable to say that some DIY research is necessary. Then leverage the experience and resources of a good service company that can help start, grow and maintain your corporation, as well as the advice of your attorney or CPA in any areas that are necessary.
Calculate the costs of starting a corporation in Delaware. The initial charge for incorporating in Delaware can be as low as $109.00. The annual franchise tax can be as low as $150.00 in many cases. With Agents of Delaware no fee incorporation, the cost of doing business as a Delaware Corporation is affordable.
Authorized Shares
The authorized stock listed in the Certificate will affect the filing fee and it could exceed the minimum fee.
Total Document Pages
If the document is more than 1 page, you must submit $9 for each additional page.
Additional Certificates
You will receive a stamped “Filed” copy of the submitted document. At the time of filing, certified copy or a certificate of good standing may be requested for an additional $50. Apostilles are also available for $80.
Processing Speed Requested
Expedited services are available, ranging from 24 to 1-hour processing. Ultimately, State fees can vary, depending on your specific needs. Please contact our office concerning your specific needs so we can assist you in determining your total costs. Additionally, consult our fee chart.
A Certificate of Incorporation for a Delaware Stock Corporation must meet the requirements set forth in accordance with Section 102 of the General Corporation Law of the State of Delaware. The following are the minimum requirements in a Delaware Certificate of Incorporation:
Corporation Name
The name of the corporation exactly as you want it to appear in the official records at the Delaware Division of Corporations. In addition, the name must include one of the following words: association, company, corporation, club, foundation, fund, incorporated, institute, society, union, syndicate, limited or one of the abbreviations thereof. Agents of Delaware will check name availability in Delaware for free. Just send us an email or give us a call and we will be happy to send you the results – all at no cost to you.
Registered Agent Information
The name and street address of the registered agent located in Delaware you are appointing to accept service of process for the corporation.
Purpose of the Corporation
There is a general-purpose clause stated in Delaware statute that appears on the template available from the State by default; however, it is possible to customize this information if desired.
Stock Details
A Corporation formed in Delaware must list the total number of authorized shares and the par value assigned to such stock on the certificate of incorporation.
Incorporator Information
List the name and mailing address of the Incorporator for the corporation. Please note that the corporation itself cannot be the Incorporator. Agents of Delaware will act as your incorporator for no additional fee when you elect to use us as your registered agent. This is just another way to keep the cost of doing business as a Delaware Corporation affordable.
Execution Section
The document must be signed by the Incorporator listed in the document pursuant to Section 103 of Title 8. The name of the person must be typed or written legibly underneath the signature.
Submit your filing with the Delaware Division of Corporations. Completely fill out a required filing memo to accompany your certificate of incorporation. You can send it to the State by mail or courier delivery, or drop it off at the front desk if you happen to be in Dover. Agents of Delaware is one of a handful of commercial registered agents who have a direct electronic connection to the Delaware Division of Corporations. If we are assisting you with your certificate of incorporation, electronic filing is included at no additional cost!
Once you’ve received the date and time stamped copy of the certificate of incorporation back from the State, your corporation officially exists. While this is true, there may be some other steps you need to consider for your specific circumstances. Such as:
- Qualification, Foreign registration, or other jurisdictional filings needed where you are transacting business.
- Business licenses
- Professional licensing, or other regulatory requirements
- Obtaining an EIN
- Opening a bank account
- Insurance
- Bookkeeping, accounting, legal, technical or other professional services
