If you are thinking of forming a Delaware LLC, this article can help in walking you through the process. A Delaware LLC has many benefits from other states. Although if you are not located in Delaware and decide to form your LLC in Delaware, you may still need to file the Delaware LLC back in your home state. So don’t look to form a Delaware LLC to avoid taxes in your home state because that won’t work.
Delaware LLC Requirements
Name of your LLC: The name you choose must fulfill the following criteria:
- The name must end with a “Limited Liability Company” or with an abbreviation like “L.L.C.” or “LLC.”
- It can also include the name of a member. Must be as unique as possible.
- The name can include terms like “Company,” “Association,” “Foundation,” “Club,” etc.
Articles of Organizations: The articles of organization must be filed with the
Department of State. The information that you need to supply are:
- The name of the company
- The registered office’s address
- How long you plan to run the LLC
- The name and street address of the registered agent of your LLC
Delaware LLC Filing
The filing process for a Delaware LLC: After you submit the original signed certificate of formation to the
Delaware Department of State, your LLC is considered to be organized.
The certificate should be signed by one or more authorized person. It can be anyone including an attorney. This will stand if nothing separately has been mentioned in the operating agreement. One certified copy of the articles of organization is returned to the member(s).
The other conditions that Delaware sets are:
- The LLc can be formed by any person or a body.
- The minimum number of members is one.
- A member can be an individual, a partnership, trust, estate, corporation, or an association.
Although the operating document is not mandatory, it is best to have it incorporated in the LLC business
Membership procedure: After the LLC is formed, a member is added either straight from the LLC or after he/she fulfills the LLC company agreement. Membership can also be granted by the consent of all members, and when the person’s addition is shown in the records of the LLC.
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Resignation: Resignations are generally accepted based on the conditions stated in the company agreement.
Service rendered by the members: Members can contribute to the company in the form of cash, property, or other services.
Registered Agent: It is mandatory that every Delaware LLC have a registered agent in Delaware. This is to assure that a point of contact is available to correspond or serve notice in case of a lawsuit.
Eligibility criteria for forming a LLC in Delaware
- The agent must be a resident of Delaware
- Limited partnership ,a domestic corporation, Statutory trust or LLC
- A limited partnership, a foreign corporation, or LLC authorized to set up a business in Delaware.
The registered agent must have a business office with the normal working hours that performs the task of the LLC.
The registered office: The registered office can be the place from where the business is run.
Requirement of the Delaware State Department:
- Records should be open to scrutiny
- Complete and correct financial and business information
- Member name list, their residence or mailing addresses, and their last known business.
- Access to local and state income tax returns of each individual member.
- Copy of all documents related to operating agreement, certificate of formation, and other amendments along with the certificate of amendment execution.
- Correct information regarding the amount of cash, property value or service value contributed by each member, and the date of membership.
- Other relevant LLC information as required by the Delaware state.
Dissolving a Delaware LLC
The Delaware LLC Dissolution is done when the LLC is not longer needed.
Unless otherwise mentioned, a LLC is dissolved under the following conditions:
- As per the condition specified in the LLC operating agreement.
- It can dissolve at a time specified in the operating agreement, else it will continue in existence.
- By vote or written consent of members.
- When there are no members.
- Entry of a judicial order
- Death, retirement, resignation, bankruptcy or dissolution of any member cannot force the LLC to wind up unless specified explicitly in the agreement.
Delaware LLC’s Tax Status
Taxes: The IRS considers the limited liability company of one member as a sole proprietorships for tax calculation. In the case of multiple partners, the IRS considers the LLCs as a partnership company for tax purposes, unless otherwise changed on the SS4 form with IRS at the time of forming the LLC.
Federal Tax Identification Number or Employer Identification Number: The final step in forming a Delaware LLC is the creation of the EIN. The LLC should file for the tax identification number with the IRS using the form SS4, but refer to your tax advisor for tax advice on the best way to elect tax status.