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For better recognition on L.L.C and Corporation, let's take Google and YouTube for example
Google is a Corporation and YouTube is an L.L.C. Why did they choose different entity types?
The L.L.C vs Corporation distinction is clearly defined by this one example that the new generation of entrepreneurs should take full take advantage of.
YouTube actually started as a corporation, filing its Certificate of Incorporation with the Delaware Division of Corporations on October 3, 2005. On November 8, 2006, just 13 months and five days later, it merged its Corporation into an L.L.C, which is one of the key advantages of Delaware companies: they can change from one form of entity to another, whenever they want.
Read more: Advantages of Delaware LLC
YouTube L.L.C, on the other hand, is owned by a few members. Nobody but the insiders know how few, and nobody but the insiders know who the owners are. In addition, nobody but the owners know what the company finances are, because no public disclosure is required. That’s the benefit of a Delaware L.L.C—your members, their ownership percentages and your financial valuation are private matters, of which only the company insiders are aware. There is no public registration, no public disclosure and no federal requirement of any type that necessitates the owners of a Delaware L.L.C to reveal who they are on the public record.
Google chose to be a Delaware Corporation so it could go public and raise money, which they did on August 16, 2004. Once it did so, it quickly became one of the richest companies in history. Google's rise to power created tens of thousands of millionaires and a lot of billionaires. Even though 60% of Google is owned by institutions, there are millions of individual shareholders in the company. The company has current cash reserves of $50 billion.
Forming a Delaware corporation is easy with us. You can select which type of corporation you'd like to form, choose whether you'd like to obtain a Federal Tax ID Number and more. We also have a knowledgeable staff available to help over the phone, via email or by live chat.
Comparison 2 types of company Corporation vs LLC in Delaware, USA:
|L.L.C Company||Corporation Company|
|Governance structure|| || |
There are 3 tiers of power:
|Federal taxation|| || |
IRS taxes in 3 different ways:
|Privacy|| || |
Annual report must state:
|L.L.C Company||Corporation Company|
| || |
Hard-copy of documents will be delivered to client’s registered / mailing address without courier fee charged.
A Delaware LLC (Delaware limited liability company) is a type of business entity that is created by filing the proper certificate of formation with the Delaware Secretary of State.
So why form a Delaware LLC?
When you form your Delaware LLC through OffShore Company Corp, our corporate kit, which is included in both the standard and premium packages, will provide you with an operating agreement to customise to your specific business needs.
An LLC is a relatively new type of entity in the United States. If properly structured, it combines the limited liability of a corporation with the pass-through taxation of a partnership. However, it is important to clarify that while LLCs can be treated as partnerships, they are not corporations.
An LLC is a business vehicle with a legal existence separate and distinct from its owners. Owners and managers are not personally liable for the company's debts and obligations. These features, when combined with non-U.S. source income, mean non-resident aliens of the United States can avoid U.S. taxation when using an LLC.
Read more: Delaware LLC formation requirements
The operations and management of an LLC are governed by a written agreement, composed by its owners, called an LLC Operating Agreement. The Delaware Limited Liability Company Act allows the parties to define their operations, management and business relationship in the LLC Operating Agreement. This is known as freedom of contract.
An LLC guarantees secure confidentiality as well as the ability to create a customized management structure that establishes the economic relationship among owners. The LLC Operating Agreement can be written in any language and is typically not required to be translated into English.
While the Delaware LLC law permits a Delaware LLC to be managed by its members, it does not require members to be managers. More importantly, the law also states that no member or manager is personally responsible for any debts, obligations or liabilities of the Delaware LLC solely by being a member or acting as a manager.
With minimal start-up requirements, simple maintenance and the ability for members to establish their own company structures and rules, the Delaware LLC is the most flexible type of business entity offered by any state or country in the world
Below are seven of the significant benefits of a standard Delaware LLC:
This means the terms and rules of each LLC can be tailored to accommodate the specific needs and preferences of an LLC. This is the biggest benefit of an LLC over any other form of business entity. This power is called freedom of contract.
Delaware LLCs possess increased asset protection against creditors. This means that if a member of an LLC has a judgment filed against him/her, a creditor cannot attack the LLC nor acquire any portion of the LLC's assets. This benefit protects everyone in the company
A statutory limitation on the personal liability of the members of an LLC means that members are not held liable for repayment if an LLC fails and leaves behind debt. They just lose the amount of dollar they invested in the LLC.
When an LLC is formed, the owners can choose whether they want the LLC to be taxed as a partnership, an S corporation, a C corporation or a sole proprietorship. Single-member LLCs are not recognized by the IRS and therefore pay no taxes at all.
Very little information is required to form an LLC in Delaware, and start-up involves only a small filing fee. Additionally, there are no meetings or voting requirements.
The cost to maintain a Delaware LLC is simple and inexpensive. Once a year, a simple form and an annual Franchise Tax Fee of $300 must be filed with the Delaware Secretary of State, and a Registered Agent Fee must be paid annually, as all Delaware LLCs are required by law to have a Registered Agent to accept service of process.
You are not required to disclose any information about the owner of an LLC to the state of Delaware in order to form or maintain an LLC. In Delaware, you are required only to have a designated contact person and a Delaware Registered Agent.
|Delaware Corporation Company|
|There are 3 different annual rates for 3 circumstances |
|**Late payment will be imposed 125 USD + 1.5% of monthly interest|
|Delaware LLC Company|
|Flat annual rate: 300 USD Due date: June 1st of every year*|
|*Late payment will be imposed 200 USD + 1.5% of monthly interest|
2 mins video Delaware Company is highly recognized country so easy to do as well as expanding your business. there is no state corporate income tax for companies, no personal income tax for non-residents.
With Delaware LLC which conduct no business/source income in the US are not subject to US federal income tax, not required to file a US income tax return. Delaware LLCs are popular vehicles for conducting international business. In other hand, Delaware Corporation can go public and/or raise capital as needed by selling stock. In general, it is Offshore Company Status.
Delaware Offshore Company Formation, initially Our Relationship Managers team will ask you have to provide the detailed information of the Shareholder/member names and information. You can select level of services you need, normal with 2 working days or a working day in urgent case. Furthermore, give the proposal company names so that we can check the eligibility of company name in Delaware’s Corporation Division system.
Read more: Delaware company registry
You settle the payment for Our Service fee and official Delaware Government Fee (Franchise tax) required. We accept payment by Credit/Debit Card , Paypal or Wire Transfer to our HSBC bank account (Payment Guidelines).
After collecting full information from you, Offshore Company Corp will send you a digital version of Certificate of Formation, Certificate of Member, Delaware First State, Statement of Authorized Person and Apostille via email. Full Delaware Offshore Company kit will courier to your resident address by express (TNT, DHL or UPS etc.)
You can open bank account for your company in European or other jurisdictions supported offshore bank accounts! You are freedom international money transfer under your offshore company.
Your Delaware Company formation completed, ready to do international business!
A general corporation – often referred to as a stock corporation, open corporation or C corporation – is highly recommended when a company goes public or plans a private offering of stock. General corporations are also typically used when a company wants to attract venture-capital funding.
A general corporation has three tiers of power – shareholders, directors and officers. Each has different rights and responsibilities within the corporation.
Shareholdersprovide the financial resources in the company. They own the company but do not manage its routine. Holders of common stock receive one vote for each share they own, and they have the right to help elect the members of the board of directors, as well as to vote on certain other matters of major significance to the company.
The shareholder who holds a majority of the shares of issued stock also holds the right to control the company. They are sometimes referred to as majority shareholders. They possess a larger amount of responsibility than minority shareholders.
Other shareholders who hold no controlling role are referred to as minor shareholders. Generally, they bear no responsibility to the company. They are able to assign or grant their votes to anyone they choose, and sell their stocks at will.
Shareholders are rewarded in two ways – by dividends paid on their stocks and by the increased value of their stocks as the company grows.
Directors take responsibility for the company’s overall management. They manage all the major Delaware business actions, such as the issuance of stock, the election of officers, the hiring of key management, the establishment of corporate policies and the setting of their own and key officers' salaries and compensation packages.
Directors may make decisions and take action in pre-announced meetings with a quorum present, or without a meeting by unanimous written consent of all directors. Directors cannot give or sell their votes to other directors, nor can they vote by proxy.
Ordinarily, directors may be removed and replaced – with or without cause – by the majority vote of the shareholders. This is the controlling role of majority shareholders.
The officers work for the board of directors and handle the day-to-day business activity. Officers carry out the board's decisions and implement the board's policy. Officers are usually the President, Vice President, Secretary and Treasurer. The board of directors will appoint other officers such as CEO, Sale Manager, Operation Manager etc, to fit the company provision.
Officers do have the right to purchase company-issued stocks at the discretion of the board of directors.
Forming a Delaware corporation is easy with us. You can select which type of corporation you'd like to form, choose whether you'd like to obtain a Federal Tax ID Number, and much more. We also have a knowledgeable staff available to help over the phone, via email or by live chat.
Complete Delaware Company Kit package includes:
|L.L.C Company||Corporation Company|
| || |
Hard-copy of documents will be delivered to client’s registered / mailing address without courier fee charged
|Limited Liability Company (LLC) in Delaware, USA||General Corporation|
|Formation||State filing required||State filing required|
|Liability||Typically, members are not personally liable for the debts of the LLC||Typically, shareholders are not personally liable for the debts of the corporation|
|Raising capital||Potential to sell interests, contingent upon operating agreement restrictions||Shares of stock are usually sold to raise capital|
|Taxation||Not taxed at entity level if properly structured. Profit/loss passed through directly to the members||Taxed at the entity level and shareholders receiving dividends are taxed at the individual level|
|Formalities||Less formal meetings and minutes are required; state reporting required||Board of directors, formal meetings, minutes and annual state reports required|
|Management||Members have an operating agreement that outlines management responsibilities||Shareholders elect board of directors to appoint officers for day-to-day management|
|Existence||Perpetual unless otherwise specified||Perpetual unless otherwise specified|
|Transferability||Contingent upon operating agreement restrictions||Shares of stock are easily transferred|
There are two kinds of business entities for setting up a Delaware corporation: S-Corp and C-Corp. Moreover, an important step for opening a company is to find a reliable agent to help the business owners understand clearly the formation process as well as all advantages that the owners can benefit from.
To form a Delaware corporation, the businesses send all required documents to the Secretary of Delaware’s office and then additionally pay service fees for the corporate formation process. After the business owner receives the Certificate of Incorporation, the Delaware corporation is ready to operate.
The requirements to set up a Delaware corporation are the same for the US residents and foreigners who want to set up a Delaware company. The following documents below are mandatory for opening a Delaware corporation:
Lots of companies choose to incorporate in Delaware because many advantages are given by the government. One IBC can support and advise the clients about the process as well as other services to open a company in Delaware. Everything becomes easy for the customers in doing business with One IBC.
Delaware is a popular state among foreign businesses that are planning to do business in the USA. Delaware LLC formation requirements for starting a company in Delaware is similar between foreigners and USA citizens, including:
Delaware is one of the best states to open an offshore company to conduct business in the United States. The procedure to open a business in Delaware can be summarised as follows:
Form an LLC in Delaware is not complicated.
If you want to hire employees, open a business bank account, or file and manage Federal and State Taxes. It is highly recommended that you need to get an Employer Identification Number (EIN) - The number offered by the Internal Revenue Service (IRS) to identify the business for tax purposes.
Contact our advisory team if you want to get further more information to make a decision by clicking the link: https://www.offshorecompanycorp.com/contact-us.
The USA has the best economic development in the world. Most foreign businesses want to open a company here to gain more advantages for their companies’ reputations and others. Delaware is one of the states that attract a large number of foreigners to set up businesses in the USA.
All US companies must pay tax to the state and federal level. However, the tax rate for Delaware companies is typically lower than the tax rate of other states. The method for determining which taxes the companies must pay bases on the type of business entity incorporated in the US.
As mentioned above, Delaware is a very popular state to form a Liability Limited Company (LLC), many advantages of Delaware LLC formation for businesses as listed below:
The annual tax is paid for Delaware by Liability Limited Company is lower than the other states. In addition, there is no requirement to file an Annual Report. The deadline for annual tax should be payable to the government before June 1st at the latest.
In Delaware, there are several different business entities such as LLC and Corporation (S-corp and C-corp). All information such as business entity, certificate of incorporation, and a statement outlining the reason for existence are mandatory requirements for all LLCs and Corporations form in Delaware.
Delaware corporations have to pay both franchise tax and corporate income tax. The corporate tax rate is 8.7% (2019).
For the S-corp, the tax is paid through the individual shareholders. It means the tax payment is dependent on each shareholder of that income. Furthermore, each shareholder of the S-corporation will pay tax to the state based on his/her share from the company’s income.
Overall, the tax rate of each shareholder will depend on all his/her taxable income for the current year.
Delaware is a small state of the United States, in the Mid-Atlantic region. However, more than half of all U.S. publicly traded companies, and 63% corporations of the Fortune 500 (including giants like Apple, Coca-Cola, Google and Walmart...) are incorporated in Delaware.
Delaware has a long history being a tax haven as it offers many methods of reducing taxable income that results in a reduction of tax payments for businesses. By offering appealing tax incentives, Delaware helps businesses to minimize corporate tax and maximize their profits. Therefore, Delaware has been attracting a large number of companies filing in its direction.
Delaware has a long history of being a welcoming home and offers many benefits for businesses. Here are some advantages of incorporating in Delaware:
Delaware is known as a “tax haven” to incorporate companies because of its light taxation. There is no sales tax in Delaware, it doesn't matter if a company's physical location is in the state or not; no in-state purchases are subject to tax in Delaware. Additionally, there is no state corporate income tax on goods and services provided by Delaware corporations operating outside of Delaware.
The state does not have a corporate tax on interest or other investment income that a Delaware holding company earns. If a holding corporation owns fixed-income investments or equity investments, it isn't taxed on its gains on the state level.
Delaware also does not collect personal property tax. There is a county-level real estate property tax, but it is very low compared to other states in the USA. Corporations can own their own office spaces and reduce the amount of property tax compared to other states.
The state has no value-added taxes (VATs). There is no inheritance tax in Delaware, and there are no capital shares or stock transfer taxes either.
Every Delaware corporation must have an agent in the state for the process of service and receiving legal documents. The registered agent may be (1) an individual Delaware resident, or (2) a business entity authorized to do business in Delaware.
The registered agent must have a physical street address in Delaware. However, if your corporation has a representative office physically located in Delaware, it may act as its own registered agent.
A Certificate of Incorporation for corporations or Certificate of Formation for LLCs needs to be filed with the Department of State. Here’s what the Certificate of Incorporation normally includes:
Delaware requires corporations to file an Annual Franchise Tax Report. The due date for corporations is March 1. For LLCs, Delaware requires to file an Annual Franchise Tax Statement by June 1.
Most small businesses, including sole proprietorships, need a combination of licenses and permits from both federal and state agencies to operate legally and meet government standards.
Other tax and regulatory obligations you should consider for your corporation or LLC include obtaining a Federal tax identification number (EIN).
Open a business account when you're ready to start accepting or spending money for your LLC or corporation. You will most likely need an EIN and your incorporation paperwork.
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