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When you choose to start up a company, you may decide to start with a sole trader structure. However, as your business grows and expands, you must register your company. You can set up a limited liability company (LLC) in Delaware.
Setting up a Delaware LLC will require key legal documents to make it compliant with the laws. This article will help you explore all the required documents to form a company in Delaware.
Before we look into the legal requirements of forming an LLC in Delaware, let's take a look at the different types of LLCs. They include:
Single-member LLCs
This structure is more suitable for small businesses. The LLC itself is not taxed, but the owner reports the LLC's profits and losses on their personal tax return.
Multiple-member LLCs
This structure has different tax rules than single-member LLCs which do not pay taxes. This is treated as a partnership meaning that the company is not taxed on its income rather, the owners are taxed on their shares of the company's income.
Series LLCs
This is formed by filing Articles of Organization with the state. Series LLCs are formed after one LLC is incorporated. Every series can have its assets, liabilities, and purposes. Each series is treated separately when it comes to paying and filing tax returns.
Professional LLC
This LLC structure is used by certain licensed professionals such as veterinary, chiropractor, medical, accounting, and legal professionals. Professionals that look for state licenses to offer their services.
Foreign LLC
This is when your business is already operating in another state and you want to expand it to Delaware. When expanding the business, you will have to form a foreign LLC.
Now that we understand the different types of Delaware LLCs, we will highlight the legal requirements needed to start the company.
Company name
When choosing a company name for your Delaware LLC, it should be unique and distinct. There are also requirements that entrepreneurs should keep in mind when choosing a company name, which are;
It is important to understand that you can check if the name is available before using it by searching the Secretary of State's Entity Name Availability database. You also have the opportunity to reserve a company name for 120 days by applying with the Secretary of State.
The General Corporation Law of the State of Delaware requires a Certificate of Incorporation. This document states the name of the company and the purpose of incorporating it. The Delaware Division of Corporation provides a sample form for entrepreneurs to fill out, or they can use a different template, but it has to contain all the necessary information.
The document contains:
A Registered Agent is a legal requirement in Delaware when incorporating an LLC. The agent acts as a point of contact between the company and the government. But who is a Registered Agent? This is a physical designated point for businesses to collect official correspondence and legal documents.
The Registered Agent has to be available during business hours to accept and maintain a physical address in Delaware. They should not use a P.O. Box address since it is not acceptable. Businesses will use their address to incorporate their LLCs.
At their address, Registered Agents will collect mail and sort it for every business using their address. They will ensure the businesses receive their mail promptly for acknowledgment. Ensure your business has a reliable Registered Agent since missing a legal notice or important filing can lead to fines, penalties, or dissolution of the business.
This is a legal document that outlines the operating procedure of the company. The binding contract governs the relationships between the company and its members. The agreement dictates how the company will vote, allocate profits and losses, management structure, financial contribution, membership interest, and dissolution if it ever reaches that point.
It also shows that the entity is separate from its members and managers. This ensures the members are not liable for the company’s debts or legal implications.
The EIN is used to file and pay taxes. It is also used when submitting payroll and payments for your employees. It is issued by the Internal Revenue Service (IRS) and is required to open a business bank account or obtain a line of credit.
You can obtain an EIN from the IRS or Icon Offices as part of the Delaware LLC formation process.
With all the key legal documents mentioned above, you can easily form a company in Delaware and start your operations.
Icon Offices, a Registered Agent in Delaware, offers LLC formation services. We act as a business’s point of contact, handling official correspondence and legal documents. We ensure that all documents get to our clients promptly for acknowledgment. We also help businesses file taxes and report required documents to avoid fines and penalties or even possible dissolution.
For more information on key legal documents needed to form a company in Delaware, contact us at [email protected].
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