The Advantages of Delaware LLCs

by Lauren Miller
Forming an LLC in Delaware is a simple and inexpensive process.

Forming an LLC in Delaware is a simple and inexpensive process.

Thomas Northcut/Photodisc/Getty Images

Foreign and domestic businesses flock to Delaware to form their companies due to the state’s corporate-friendly laws and lenient residency requirements for business owners. Limited liability companies, or LLCs, are hybrid business entities that have many of the features of corporations without the complex corporate formation requirements. LLCs also have the flexibility of partnerships. The Delaware Secretary of State has user-friendly procedures, an efficient system and a streamlined website for helping LLCs form in the state.

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Start-up Costs and Expedited Services

In general, startup costs for LLCs are very low compared with those for corporations. In Delaware, it costs less than $100 to file a certificate of formation, the document required to register an LLC in the state. As of 2011, the filing fee for Delaware LLCs is $90. The state also offers expedited services including same-day processing of LLC paperwork for an additional fee of $100.

Residency Requirements

It is possible to form an LLC in Delaware without ever stepping foot in the state. As long as you have a registered agent authorized to conduct business in the state to receive service of process documents for your LLC, you can legally register your company in the Delaware. So people who do not live in Delaware can take advantage of the state's favorable business laws.

Privacy

Unlike many other states, Delaware does not require owners, who are known as members, or managers to include their personal information on LLC registration and other forms. Consequently, the members of LLCs in Delaware enjoy a level of anonymity since the certificate of formation, which becomes public record once it is filed, does not include member names or addresses.

Delaware’s General Corporation Law

The Delaware Limited Liability Company Act is one of the most flexible and up-to-date LLC laws in the nation. Since the state’s limited liability law was passed in 1991, the state legislature has amended it several times to streamline it and make it easier for business owners to form LLCs in the state.

Delaware Court System

In Delaware, unlike other states, judges who are experts in business law rule on business cases instead of juries. Cases are presented in the state’s Court of Chancery, a body that dates back to 1792. This allows companies to get the expertise of judges who are familiar with Delaware’s corporate laws instead of citizens who may not know anything about business legal issues.

Operating Agreements and Annual Reports

In some states, LLCs are required to file operating agreements and annual reports. Many states charge a fee to file annual reports. Delaware does not require LLCs to file operating agreements or submit annual reports.