When forming a limited liability company for the purpose of starting a small business or pooling investment assets, the three most popular choices are to incorporate the LLC in your home state, form a Nevada LLC, or form a Delaware LLC. This brief overview will explain the reasons the third option, a Delaware LLC, might be a great choice to hold a family operating company, real estate portfolio, or securities such as stocks and bonds. (Click here to see Northern Michigan's finest collection of vacation rentals)
The Benefits of a Delaware LLC
There are several benefits to forming a Delaware LLC for a family business, investment pool, or other assets. You don’t have to do business in Delaware to form a Delaware LLC because the state permits so-called foreign investors—meaning someone from out-of-state. A single person or investor can form a Delaware LLC without anyone else. The one person can serve as President, Vice President, Secretary, and Treasurer.
Delaware is the leading incorporation state in part because it has a separate Court of Chancery, which handles corporate law cases quickly and with more expertise than the general courts in most states. It means that disputes are easier to handle because there is more than a century of established case law that is relatively friendly to businesses.
Also, Delaware has no income tax, sales tax, or intangible personal property tax. (Click here to see all Northern Michigan Waterfront Lifestyle Homes for Sale)
Remain Anonymous in Your LLC
A Delaware LLC allows the members and managers to remain anonymous, making it easier to hide assets from people attempting to uncover the extent of your wealth. By naming a local Delaware attorney as the registered agent, you can remove all references to you and the other investors. The only people who have to know about the income and assets of your Delaware LLC is the IRS. That makes it incredibly difficult for a potential creditor to identify where you have money invested or parked.
There are very low costs involved in forming most standard Delaware LLCs. The actual filings fees with the Secretary of State are roughly $250 plus ongoing annual fees are less than $150 per year for a small company.
There are no minimum capital requirements for forming a Delaware LLC. You could establish one with only a few hundred dollars if you wanted. It makes it an attractive choice for many start-ups that don’t have a lot of money to invest.
You may already know that the LLC operating agreement is the contract that governs the company’s operations. The great thing is that the Delaware Limited Liability Company Act governs a Delaware LLC, providing a firm legal foundation.
For example, if your LLC operating agreement calls for members to contribute cash or property at certain dates or in the case of certain events, that becomes a legally enforceable requirement thanks to §18-502, Liability for Contribution, which states:
Contact me today to learn more about Deleware LLC Basics. Send me a message or give me a call at 231.459.3179.Posted by Brook Walsh on