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Choosing Your Business Entity
Limited Liability Company
What Is It?
A limited liability company (LLC) is currently one of the most popular business entities in the United States. A Delaware LLC may be formed to carry on any lawful business, whether or not for profit, with the exception of the business of issuing policies of insurance, assuming insurance risks, or banking. It combines some of the best features of corporations and partnerships. Like a corporation, it has separate legal existence, apart from its members, and can conduct business in its own name. The rights, duties and obligations of LLC members are governed by a limited liability company agreement ("LLC agreement" or "operating agreement"). If you need help with drafting a Delaware LLC agreement, Delaware Corporate Services Inc. (DCS) can refer you to an attorney familiar with Delaware law.
Management:
Unless the LLC's operating agreement provides otherwise, the management of a Delaware LLC is vested in its members in proportion to their interests in the profits of the LLC. If the LLC agreement so provides, one or more managers may manage an LLC, whether or not any such manager is also a member.
Formation Requirements:
A Delaware LLC is formed when one or more authorized persons enter into an LLC Agreement and a separate certificate of formation is properly filed in the Office of the Secretary of State of the State of Delaware. The LLC Agreement need not be publicly filed or disclosed and the names of the member(s) and manager(s) of the LLC may also remain confidential. An LLC formed in Delaware must also maintain a registered agent and a registered office in the state. DCS can act as your registered agent in Delaware and can also provide you with a registered office in Delaware.
Liability Issues:
Generally, members or managers of an LLC are not personally liable for any debt, obligation or liability of the LLC by reason of being a member or manager of the LLC.
Tax Considerations:
An LLC may be structured to qualify for "pass through" tax treatment like a partnership for state and federal income tax purposes and, therefore, avoid income tax at the entity level. An LLC may also be used as a valuable tool for estate planning and wealth transfers.
Financial Flexibility:
An LLC may provide for a higher degree of financial flexibility than a corporation.
Annual Taxes:
All Delaware LLCs must pay an annual state franchise tax of $200 per year. Taxes are due to be received no later than June 1 of each year.
The information contained on this web site is for general information purposes only, is not intended as legal advice and may not apply to your particular situation. If you require legal advice regarding a Delaware entity we will be happy to refer you to an attorney familiar with Delaware law.
We recommend that you consult your attorney or accountant if you have specific goals or hope to achieve specific tax results.
To facilitate the formation of a LLC, please fill out and return to us the LLC Order Form. Please call our offices at (302) 482-4262 or email us for assistance.
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