More Fortune 500 companies have chosen Delaware as their legal home than any other state. Learn more about incorporating in Delaware by reading on.
Why do companies incorporate in Delaware?
The cost to form an LLC (limited liability company) or incorporate a business in Delaware is consistently among the lowest in America. And because Delaware imposes no income tax on either LLCs or corporations, and imposes no tax on capital stock for small companies, business owners are continuously drawn to Delaware for its pro-business and pro-privacy laws.
- General corporation law. This is the standard by which all others are measured. It’s clear and concise, and possesses enough provisions to handle any situation corporations are likely to encounter.
- Business-oriented legislature. Delaware utilizes experts in corporate law in reviewing business statutes and recommending changes annually to meet the needs of modern businesses.
- Court system. Delaware has a special Chancery Court to hear equity cases involving corporate entity matters that does not award punitive damages, has no jury trials, and has expert judges to render thorough decisions with great speed.
- Case law. Delaware case law is the largest, most comprehensive, and most complete body of corporate case law in the country, which provides corporate officials and
their legal counsel extensive precedents. - Division of Corporations. Delaware’s Division of Corporations handles corporate filings with the efficiency of a well-oiled machine and can expedite filings
within 24 hours or — in cases of extreme urgency — in one or two hours.
Steps to take when incorporating your business in Delaware
1. Choose a name for your business
Selecting a name that aligns with your business message, product and service isn't always easy. You also want a name that appeals to your customers and is easy to remember.
Additionally, it is very important to conduct a state name check, which lets you know if your desired name is already taken in the preferred state of incorporation. Also, Delaware has rules specific to corporations and LLCs regarding what names you can use, including what words must be included.
For example, an LLC name must
- Contain the words "Limited Liability Company," or the abbreviation "LLC" or "L.L.C."
- Be distinguishable upon the Secretary of State's records from the names of other domestic or foreign business entities
The state may reject any name they deem misleading or harmful. Names containing certain words such as “Bank” may not be allowed without regulatory review. Consult our Delaware State LLC Guide or Corporation Guide to find out more about naming requirements for LLCs and corporations.
2. Recruit and/or appoint members/managers (LLCs) or directors (corporations)
LLC can be managed by its owners (known as members) or by chosen managers. With a corporation, directors act as a group known as a board of directors, the governing body of the corporation.
Corporation requirements:
- Delaware requires a corporation to have one or more directors.
- Delaware does not specify age requirements.
- Delaware does not specify where directors must reside.
- Delaware does not require director names and addresses to be listed in the Certificate of Incorporation.
LLC requirements:
- Delaware requires LLCs to have one or more members/managers.
- Delaware does not specify age requirements of members/managers.
- Delaware does not specify where members/managers must reside.
- Delaware does not require member/manager names and addresses to be listed in the Certificate of Formation.
3. Obtain a registered agent
A registered agent is a person or a business appointed by your business to receive service of process and other important legal and tax information. Delaware requires all corporations and LLCs to have and maintain a registered agent with a physical office address (no PO boxes) in the state of Delaware.
