Company Formation in Delaware
Delaware is a state in the eastern United States, bordered by Philadelphia to the north and Virginia to the south. The state borders run along the north-south line.
Delaware is one of the most attractive centers for business. For this reason, many entrepreneurs are trying to establish a company in this state. In this context, this state is known as the most important center to establish a company in the world.
Delaware is such a famous and proven state on business platforms that 65% of the Fortune 500 list, a very important publication for the business world, is based in this state. In addition, half of the companies operating within the US borders were founded in this state. The number of companies in this state is increasing day by day.
Is Company Formation in Delaware Difficult?
At first, the idea of starting a company on the other side of the world may seem strange and difficult. Do not be intimidated by this idea. Incorporating a company in Delaware is not as difficult as you might think.
Nowadays, there have been and continue to be very important developments in the field of trade and company activities. You can eliminate certain procedures by setting up a company in the USA for different reasons such as Paypal, Dropshipping, Stripe or shopify. We can easily say that setting up a company here is even easier than setting up a company in Turkey in some cases.
All transactions to establish a company are carried out online. You can apply to the necessary authorities individually or you can get support from agencies and have the procedures carried out on your behalf. You can see that your company is ready within 1 week after you make your application.
What types of companies can be incorporated in Delaware?
There are two alternatives for incorporating a company in Delaware. The first one is the corporation company and the other one is the limited liability company. Let's talk about what these companies are and some of the issues to be considered during their establishment.
Corporation Company
If large companies with prestige are going to establish a company in Delaware, it is advisable to turn to this type of company. With a corporation, it is much easier to carry out issues such as profit distribution to shareholders, capital increase, transfer of assets or inheritance within the company, stock opening. In this type of company, the company has to pay taxes twice a year. The first tax is the individual tax of the company owner and the other is the corporate income tax. You can consider this type of company if you want to operate with a company that will provide a high rate of profit. Of course, the size of the entrepreneurial activity network is very important here.
Limited Company
In the USA, you can also carry out your activities by establishing a limited liability company known as LLC. This is the most common type of company in the State of Delaware. While you can establish the company as an individual, you can also make it a legal entity. Due to the taxation laws of the State of Delaware, the most attractive company you can establish may be a limited liability company.
What are the Advantages of Company Formation in the State of Delaware?
Starting a company in Delaware is a very attractive business compared to other states. In this context, we can even say that the advantages of starting a business in this state cannot be compared with other regions. It is also considered to be the capital of incorporation in the USA.
The most important advantage of incorporating a company in Delaware is the tax exemptions provided by the central authority specifically for this state. In this context, we can list the advantages and tax exemptions as follows.
- Corporations do not pay state income tax on their activities outside the state.
- You are exempt from inheritance tax as a resident of Delaware.
- The company has no sales tax.
- Shares in tax-exempt companies are also exempt from state income tax.
- Out-of-state business entities are not required to obtain a Delaware business license.
Large-scale surveys also show that this state is a center of attraction. In this context, satisfaction surveys show that people are lining up to establish a company in this state. One of the biggest advantages of doing business here is that it has experienced, strong and company-friendly commercial courts that are unprecedented in the world. These courts are known as "Delaware's Court of Chancery".
Why Delaware?
The first question that comes to the minds of people who intend to establish a company is why Delaware? There are answers to this question for very important reasons. We can list the benefits that those who want to establish a company will obtain from the State of Delaware as follows.
- You do not have to move to Delaware for incorporation purposes.
- The administrative work carried out during the establishment and operation of the company is not tiring and overwhelming.
- You can establish and operate multiple companies, with all powers vested in a single person.
- As this is the state with the largest number of companies, horizontal coordination with other companies is very easy.
- The company's board of directors can set the share prices of companies.
When you consider why Delaware and the advantages of setting up a company here, you may think that all the conveniences will be at your feet. With a system in place to protect the interests of the entrepreneur, it is much easier to set up and run a company.
Privacy of Company Formed in Delaware
Companies incorporated in the State of Delaware can ensure their confidentiality through an internal agreement. For this purpose, an operating agreement must be prepared within the company.
As a result of the meeting held by the owners of the company, there is no obligation to include the names of the shareholders in the certificate of incorporation of the company. This provides an additional mechanism of trust and confidentiality to the company owners or shareholders.
A company operating in that state is not obliged to disclose information about its employees. Only information about the company's field of activity must be clear. In this sense, transparency is taken care of in the state, and it has become a principle that personal data is protected and not forced to be disclosed.
What to Consider During Delaware Company Operations?
After establishing a company in the State of Delaware, you can carry out your activities by paying attention to some issues. In this context, we can list the issues to be considered as follows.
- It is essential that every document on file with a Delaware corporation is publicly available.
- The transfer or sale of bearer shares in limited liability companies established in this state is restricted.
- When the company owner is not located in the State of Delaware, a company employee should be designated as the contact person. Contact information, including address, must be reported to the relevant department. This is a legal requirement.
Comparison of Nevada and the State of Delaware
After Delaware, Nevada is the state with the highest number of companies in the USA. We would like to make a comparison between Nevada and Delaware so that you can analyze the advantages of the State of Delaware much better.
- Tax obligations are heavier in Nevada.
- In Nevada, company managers and employees have fewer responsibilities towards the company. This naturally has a negative impact on company performance.
- Delaware is a much more logical choice for commercial shipments with other countries around the world.
In recent years, the Nevada state government has tried to attract investors to this state by creating attractive conditions. Although some measures have been taken to attract entrepreneurs, it has not been able to compete with Delaware in terms of entrepreneurial rate. Considering the reasons explained above, it can be concluded that it is very reasonable to establish a company in Delaware, as it is accepted all over the world.
