Delaware is one of the most popular States to incorporate in, for both foreign and domestic companies. There is no corporate income tax in Delaware, although there is a franchise tax (minimum $35). The authority for incorporating in Delaware is the Division of Corporations under the Department of State. Besides the tax rates, Delaware is very “legal friendly” when it comes to corporations. They have a separate Court of Chancery for business matters and much of US business law is based on rulings from this 215 year-old institution. The rulings are published and clear on a vast variety of subjects, making it relatively easy for businesses to negotiate the legal terrain in Delaware.
Five basic steps to incorporate in Delaware
Search to make sure your company name is available. You can use the free CorpNet company name search. Your corporate name in Delaware will have to include one of these suffixes:
Incorporated or Corporation
Limited or Company
Association or Club
Foundation, Fund, Institute, or Society
Union or Syndicate
Register your corporation (or LLC) with the Secretary of State. CorpNet offers filings of the Articles of Incorporation (for corporate structures) and for LLCs, Articles of Organization. Delaware requires either the purpose of the corporation to be listed, or a statement that the corporation is being formed “for any lawful act.” This means, in effect, that the purpose does not have to be recorded.
Hold the first official meeting for the corporation or LLC and adopt the Bylaws (corporations) or Operating Agreement (LLCs). This is a legal meeting and must be recorded as such. Unlike other States, Delaware allows shareholders to act in writing instead of holding meetings.
Apply for a Federal Employer Identification Number (EIN) under the corporate name. You will also have to arrange for a bank account under this number for accounting purposes. Your financial institution will want a copy of the EIN as well as a Certificate of Good Standing which is issued by the Division of Corporations.
Obtain any specific licenses and permits required, either statewide or for the county in which you will do business. Some examples would be: Electrician’s license, trucking licenses and permits, Liquor license, etc.
Foreign and Domestic Corporations
A foreign corporation is a corporation registered in another State that does business in Delaware. A Foreign Corporation Certificate is filed and must include a Certificate of Good Standing (or equivalent) from the home State.
Domestic corporations are those formed in Delaware itself. Because Delaware charges no income tax on corporations who do not do business in the State, a popular option is to incorporate in Delaware and then do business in the home State as a foreign corporation. There is also no corporate state taxes. This allows a business to take advantage of the legal structure in Delaware while keeping their business in their local state. While there is no residency requirement for directors or officers of Delaware corporations, a registered agent (who can also be a corporate officer) must have a physical address in Delaware along with regular business hours. They have to be available to take phone calls and respond to legal matters. Hiring a Registered Agent will protect your privacy and meet the requirements of incorporation in Delaware.
Officers and documents
Corporations in Delaware must have one or more directors who do not have to be listed on the incorporation documents. In Delaware, directors do not have to be stock holders. The classes, number and par value of shares that the corporation is authorized to issue must be listed in the certificate of incorporation.
Information about officers, stockholders, minutes of required meetings and annual reports have to be maintained at the corporate offices. Other records required at the principle place of business include a copy of the articles of incorporation along with any amendments.
Certificate of Corporation – Two versions, stock and non-stock. A stamped, filed copy will be returned to the registered agent of the corporation. This is the main document that creates the corporate entity. Different versions are required depending on which type of entity is being registered – for instance, “close”, “exempt”, “limited liability” and others. For foreign corporations, a certificate of qualification is filed.
Name Reservation Application – Valid for 120 days, this form is used to reserve a business entity name prior to filing articles of incorporation. To ensure a name is available, a name search should be performed at the state level before a request is sent in. The same form is also used for Foreign Corporation name reservation.
Certified Certificate of Status/Good Standing – Although online status verification is available, this is the official document that proves a corporation’s existence in Delaware. Currently, this cannot be ordered online. A request must be submitted by mail.
Certificate of Change of Agent – Because the registered agent is the point of contact between the corporate entity and the State of Delaware, any change must be documented with the State. There are different versions depending on the business structure registered.
Certificate of Dissolution – This is used to close out a corporation. There are different versions for stock and non-stock corporations as well as before stock is issued or after. Foreign corporations file a Certificate of Withdrawal.
Forming a corporation online
Incorporation in Delaware can be handled remotely through our services. This is a major advantage for out of state business who want to get domestic corporation status in Delaware. We offer complete packages that allow you to start your corporation or LLC without missing key steps or documents.
Incorporating online is as easy as providing some initial information and deciding which type of corporation best fits your needs. CorpNet is available to help you start a corporation in Delaware and one-year Registered Agent Services is standard in our packages. We also include unlimited customer support.