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| An LLC generally can be viewed as a hybrid entity combining the characteristics and, more importantly, the benefits of a corporation and a partnership.
With limited liability for its members, an LLC resembles a corporation.
The owners of an LLC, like shareholders of a corporation, are generally not responsible for the debts and obligations of the LLC beyond their contributions to the LLC.
Members of an LLC can directly participate in the company's management or can elect managers to manage the business.
Property with "debt and excess of basis" may be contributed and the contribution structured to avoid gain recognition.
A person who contributes appreciated assets to the LLC in exchange for a membership interest is not required to recognize gain on the exchange.
Receipt of an interest in an LLC for a profit interest is generally not taxable (although services for stock would be).
Liquidating and non-liquidating distributions of appreciated property from an LLC are generally received without gain.
In short, the LLC offers significant tax benefits to its members, which are not available to a stockholder in a C corporation.
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- DEAR VISITORS, If you want to become familiar with the description and the contents of company formation packages, offered by our company and to find above, what kind of service is included in this or that formation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the company incorporation within foreign countries, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen.
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 What is a Limited Liability Company?
The Limited Liability Company or LLC is not a partnership or a corporation. An LLC is a distinct type of business that offers an alternative to partnerships and corporations, by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.
- Is a Limited Liability Company Better Than a Corporation?
The answer to this question varies on a case-by-case basis. Which business entity is best for you depends upon your situation and your goals. Both LLCs and corporations provide the "protection" discussed in the previous question. However, each is taxed differently. For instance, an LLC is generally taxed as a partnership or sole proprietorship. Therefore, while an LLC does not have to worry about the "double taxation" that may be applicable to corporations, members of an LLC must pay self-employment tax. Further each of these entities, as well as other forms of business entities, have characteristics that may be advantageous or disadvantageous to you.
- How is the Formation of an LLC Different than a Corporation?
With a LLC, Articles of Organization are filed with the state rather than Articles of Incorporation. Also, instead of bylaws, LLCs generally utilize an operating or management agreement to set forth the details on how the organization is to be managed.
- Why Incorporate in Delaware?
One of the best reasons for incorporating, or forming a limited liability company, is to separate your personal assets from your company's assets. If you conduct business without using a corporation, or limited liability company, you place your assets at risk. Separating your personal property from your business property, and using a legal form such as a corporation, can help protect your personal property. Incorporation or formation of a limited liability company also allows you to take advantage of the statutory and judicial laws of Delaware, to help you plan how your business runs. An example: Delaware Law allows for a version of the Limited Liability Company often called a Serial LLC. An LLC is normally very simple to create.
The major difference between an LLC and a sole proprietorship or a partnership is the limitation of liability an LLC brings to you. But say that you wanted to conduct more than one type of business, and you didn't want to create a separate corporation or limited liability company for each. The "Serial" LLC allows different lines of business to be treated separately from each other from a liability standpoint. So, for example, an LLC that owns several apartment buildings may insulate the LLC from liability for each individual building, if the operating agreement allows for it, and the operating agreement is followed. For more information take a look at the Limited Liability Company Act of the Delaware Code (especially, Title 6, Section 18-215; Series of members, managers or limited liability company interests).
It is simple to form a company in the United States. If you wish to have your own business in the State of Delaware we can assist you in forming your local limited liability company, corporation or limited liability partnership. Our total service covers all the necessary applications and registrations. We can also help you in opening a branch office of your foreign company in the State of Delaware. Company law in the USA does not discriminate against foreign nationals. We form a Delaware company within 24 hours (NB: formation may take longer for certain types of companies or company names). We can form a Corporation, Limited Liability Company, Limited Partnerships, and Limited Liability Partnerships in the State of Delaware for principals who reside outside of the United States. These services are well suited for those who do not have a mailing address in the USA. We can also provide mail forwarding and resident registered office and registered agent services if required.
- What are the Advantages of a U.S. Corporation for Europeans or Other Foreigners?
Liability Protection. As an owner or director of a U.S. corporation, you cannot be held personally liable for its business obligations and activities (we surely need not point out how such protection from liability can be a lifesaver under certain economic circumstances). Although the liability protection of a European corporation is very similar, setting up a European corporation is quite expensive and requires a substantial amount of paid-in capital (for example, Germany requires a minimum cash capital of US$55,000, and during the two-month set-up process the incorporator is personally liable with all of his assets). Since the shareholders and directors of a U.S. corporation enjoy much higher liability protection than in a European corporation, a U.S. corporation is to be recommended even for businessmen who have no intention of being active in international business.
Anonymity. This should not be regarded as a call for tax evasion or other criminal activities. But there are many other good reasons for which one may wish to remain anonymous. In the states recommended by us, the owner (i.e. the shareholder) of a corporation does not need to be registered. Only the founder (i.e. we) and the directors and officers are registered with the state. You yourself can remain completely anonymous by appointing others to be directors and officers. Our UK, EU and foreign customers often ask about anonymity, confidentiality and privacy with regard to the owners, officers and directors of a corporation or members and managers of a LLC formed in Delaware.
The owners of an LLC are called members - not shareholders. And they own membership interests - not shares of stock. A membership interest in usually stated as a percentage. So in an LLC with five owners who have invested equally in the business, each would normally have a 20% membership interest. The attributes of the members vary according to the management structure utilized by the LLC, and thus members in one LLC may be similar to partners, while in another, be more like shareholders. For example, if the management is vested equally in the members, then they take on the characteristics of partners. If management is vested in select members, most of the members have attributes of limited partners. If the management is vested in outside managers, however, members possess shareholder-like qualities.
Like shareholders in a corporation, the members of a LLC are protected from personal liability in excess of their capital investment. Like the partners in a partnership, members of a LLC can flexibly allocate management responsibilities and gains and losses. The LLC also allows members to contribute passively as in the limited partnership. Unlike the limited partnership, however, where the general partner remains personally liable in the event of a business loss, the LLC allows all members to contribute without risking personal liability.
In addition, the names of members are not disclosed in the certificate of formation, thereby preserving confidentiality. The owners, officers and directors of a corporation and the members and managers of an LLC can remain anonymous in Delaware corporations and LLC's during and after their formation in Delaware. In Delaware the only name and address, which is required to be on record, is the name and address of the Incorporator and registered agent. Delaware will accept the filing of the Annual Corporation Franchise Tax Report and payment without the listing of Officers and Directors and signature. This explanation and comparison will help you make your choice of State if you are looking for anonymity, privacy and confidentially when you incorporate or form Delaware LLC.
Unlimited business activities. In the states recommended by us, our attorneys are in a position to formulate the Articles of Incorporation in such a way that the business activities are not restricted to any particular purpose, but that the corporation may engage in any business or activity not forbidden by law. Thus, the corporation does not need to be re-organized in case it wishes to engage in a different business enterprise.
Capitalization. Capitalization through selling shares. A U.S. corporation can pledge its shares, which represent a mathematically precise proportion of the company, as security for loans or sell them as investment objects. (In comparison with this, a limited liability Company such as a GmbH cannot issue shares and is difficult to capitalize.) A U.S. corporation can sell its shares to investors throughout the world, although for sales within the USA there are certain restrictions imposed by the Securities & Exchange Commission (SEC) and state agencies.
Capitalization through bank loans. Not counting branch offices, there are a total of 24,437 U.S. banks with capital in excess of 50 trillion dollars. (There are less than half as many banks in all the rest of the world.) With such competition between money lenders, it is understandable that the credit climate in the USA is significantly more favorable than anywhere else in the world.
Capitalization through venture capital. Venture capitalists control billions of dollars of investment capital. Since a venture capitalist participates in the profits of the capitalized venture, he is naturally much more risk-friendly than U.S. banks, which are forbidden to participate in the financial success of an enterprise. Thus, if a corporation cannot offer sufficient security for a bank loan or afford the expense of going public, a connection with a venture-capital company is the most promising path to capitalization.
No-need for paid-in capital. In many U.S. states - just as in European countries - a certain amount of capital is required for the formation of a corporation. Accordingly, we only incorporate in states without compulsory capital requirement, or where the start-up costs equal the required amount of capital. Thus, your U.S. corporation can be registered in European commercial registers without providing proof of paid-in capital.
- What Paperwork is Required to Form an LLC?
Articles of Organization must be prepared and filed with the state and filing fees, initial franchise taxes, and other initial fees must be paid. If your LLC is formed through Coddan CPM, all you need to do is complete our simple order form. We will prepare and file your articles of organization and pay the initial filing fees.
- Do LLCs Have Directors, Officers and Shareholders?
LLCs are structured differently from corporations and have no directors, officers or shareholders. Instead, LLCs have members and managers. A member is similar to a shareholder in a corporation in that the member owns an interest in the LLC. Managers are the people or entities that manage the operation of the organization. Managers are not always required in an LLC. If the LLC does not use managers, the members act as partners in managing the organization and making decisions.
- Do I Need an Attorney to Form an LLC in Delaware?
No, an attorney is not a legal requirement. You can prepare and file the Articles of Organization yourself; however, you should understand the requirements of your intended state of formation. You can use our service to form your LLC and save money on attorney's fees. However, if you are unsure of what entity type would be most beneficial to your business, consult an attorney or accountant.
- What Should I Name My LLC?
Choose the name of your LLC carefully. It is very important that your name portray the image you want for your new company. Legally, the name you select must not be "deceptively similar" to any existing company or must be "distinguishable on the record" of your state.
- How Many People are Needed to Form an LLC?
The IRS does allow one member LLCs to qualify for pass-through tax treatment; however, taxation of one person LLCs at the state level may be different.
- How is an LLC Taxed?
A state-registered LLC can be taxed for federal income tax purposes as a partnership. Under the check-the-box rules, an LLC can elect partnership status to avoid taxation at the entity level as an "association taxed as a corporation." If an LLC is not taxed as a partnership, it will be taxed at the entity level similar to a standard or C corporation. The state income tax treatment of LLC profits and losses may or may not mirror the IRS tax treatment depending on the state. For specific information on your state rules visit your state's web site. Please note that California LLCs are subject to an annual minimum franchise tax of $800 per year. The first payment must be made within 3 months of forming your LLC. The state of California does send a bill to help you to remember to make this payment.
- What is the Organizational Structure of an LLC?
An LLC is owned by its members. They are analogous to partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes a manager or managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in the decision making of the company. A member's ownership of an LLC is represented by their "interests," just as partners have "interest" in a partnership and shareholders have stock in a corporation.
- How is an LLC Managed?
An LLC may be managed by its members (owners) or by selected managers. If the LLC is to be managed by its members, it operates much like a partnership. Each member has an equal say in the decision making process of the company. If the members choose, they may elect a manager or managers to act in a capacity similar to a corporation's board of directors. These managers are in charge of the affairs of the corporation. Member management is the normal default rule of state law. This means that if managers are not selected in the articles of organization, the members will direct the affairs of the LLC.
- What are the Advantages of an LLC?
LLCs offer numerous advantages. Pass-Through Taxation. LLCs allow for pass-through taxation. This means that earnings of an LLC are taxed only once. The earnings of an LLC are treated like the earnings from a partnership, sole proprietorships and most S corporations. Limited Liability. The LLC owner's liability is generally limited to the amount of money which the person has invested in the LLC. Thus, LLC members are offered the same limited liability protection as a corporation's shareholders. Flexible Management Structure and Flexible Ownership is Permitted. Like general partnerships, LLCs are generally free to establish any organizational structure agreed on by the members. Thus, profit interests may be separated from voting interests.
- What are the Disadvantages of an LLC?
The disadvantages of an LLC include: More Paperwork Than an Ordinary Partnership. Documents must be filed at the state level to create an LLC, which is not the case with a general partnership. Dissolution Date. Some states require that a dissolution date be listed in the articles of organization. This date may be amended. Further, certain events, such as death of a member, a member leaving, bankruptcy, etc. can be a dissolution event. A corporation has unlimited life and these events are not dissolution events for a corporation. Newer Entity Type. The LLC is a newer entity, and people are not as familiar with the LLC as a corporation.
- What is a Publication Requirement?
A few states require notice to be published in a newspaper that a corporation or LLC has been formed. States with this requirement include: Pennsylvania (corps only), Georgia (corps only), Arizona (corps and LLCs), Nebraska (corps and LLCs), and New York (LLCs only). The service performed by Coddan CPM includes the publication requirement for each of the above states except for New York LLCs.
In New York, all LLCs formed or foreign qualified there are required to publish a notice of formation for six consecutive weeks in assigned newspapers. The publication is made at the county level in two newspapers as assigned by the local county recorder. The cost of this requirement varies greatly based upon the county where the business is located. In New York County, the publication costs will be higher than in the rest of the state. To comply with this requirement, please contact your local county recorder's office and they will assign the newspapers. The county recorder's phone number is located in the blue pages of your local phone book.
- How Do I Get Started Setting Up an LLC?
After you have dealt with the questions above, articles of organization must be filed with the state government and initial fees must be paid. We'll take care of that for you, professionally and promptly. After your Articles are filed, your Limited Liability Company should hold an organizational meeting and must have an Operating Agreement in order to complete the formation process. Membership interest documents should be distributed to the members and records kept of such distributions.
Non-lawyer formation services typically sell you a book with a sample operating agreement, sample organization minutes and sample membership interest documents. With them, it's your job to do the actual Operating Agreement, the actual organizational minutes and the actual membership interest documents. Moreover, you are left on your own as to subsequent record keeping. In most states, neither an expensive book nor a seal is required. For $185 instead of the $60-$100 you pay for these normally unnecessary items, we will do the actual Operating Agreement, do the actual organization minutes, do the actual membership interest documents, provide you with checklists to assist you in subsequent record keeping, and provide you with the forms and instructions you need to get your federal tax identification number.
- What is a Registered Agent?
A registered agent is used to provide a place for the service of process, notice or other official communications. It is usually required that LLC's have a registered agent and that the registered agent reside in the state.
- What is an Employer Identification Number (EIN)?
The EIN, often referred to as the Federal Tax Identification Number, is a number that is assigned to a business by the IRS. It is often required of businesses for certain functions, such as opening bank accounts, hiring employees, etc.
- Important Note
Materials on this site have been prepared by Coddan for general informational purposes only. These materials do not, and are not intended to, constitute legal advice. The information provided at this web site is not privileged and does not create an attorney-client relationship with Coddan or any of the firm's lawyers. The act of sending an e-mail to Coddan, or submitting a form response or other materials through the site, will not create an attorney-client relationship. This web site is not an offer to represent you. You should not act, or refrain from acting, based upon any information at this web site.
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£ 100.00
To incorporate in Delaware this package price includes (most popular for USA residents):
Search name availability for your LLC in Delaware
Delaware Resident Agent for 12 months
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