Learning how to start an LLC is an important step for anyone who wants to be successful as an entrepreneur. This business structure combines some of the advantages of a corporation with the simplicity found in sole proprietorships. Delaware is a popular place to register an LLC. The state has a well-deserved reputation for being business friendly. As will be seen below, the process for registering an LLC is straightforward. Those who want to get started just need to know what to do. Below are the nine questions most often heard among business people hoping to register an LLC in Delaware. The answers should be enough to get most interested parties off on the right track.
It is mandatory for any LLC registered in Delaware to clearly carry the word "Limited Liability Company" in the name. The state also accepts the abbreviations "L.L.C." and "LLC” as well. Failure to place the correct label in the name will result in denial of the application.
The state will refuse to accept any name that can cause consumers to be deceived into thinking one company is another. There must be enough of a difference for the average person to be able to discern which LLC is which. Before filing an application, prospective business owners should check the state database to see if the name already exists. Doing so is referred to as due diligence.
The actual birth of the LLC begins with the mailing or faxing of the Certificate of Formation of Limited Liability. To register an LLC, owners must send this form to the Delaware Division of Corporations, along with the current filing fee.
The experts argue over which type of business structure is the most beneficial all the time. In general, all agree that it depends on the personal situation of the owner. However, when you register an LLC, you have a safety net against legal claims. The financial assets of the business are separate from the personal assets of the owner under an LLC structure. The same is not necessarily true with a sole proprietorship.
No, almost anyone can create an LLC registered in Delaware. The only residency requirement is that the LLC must have an active agent registered with the state. This person will serve as the onsite agent in case someone sues the LLC. The law requires an in-state agent because otherwise business could register with Delaware, be party to a lawsuit and never be held accountable because they are physically located outside of the jurisdiction.
All LLCs must pay an annual tax to remain in operation. This Alternative Entity Tax is due by June 1.
Delaware, as mentioned earlier, is known for its pro-business outlook. As such, the state encourages foreign investments. Unlike American nationals, foreigners have to register with the Delaware Secretary of State and pay a different filing fee.
There is no requirement to publish the company name in the newspaper or online. Anyone who wants to locate registered LLC names can do so online themselves in the state database.
Unlike many states, Delaware does not require an official operating agreement prior to starting an LLC. Nevertheless, those serious about their business should feel free to craft one.