- Incorporation of an LLC in the USA
- What are the Main Advantages of Incorporating an LLC in Delaware?
- What Taxes Should an LLC Pay in Delaware?
- What Steps are Taken to Incorporate an LLC in Delaware?
- Bank Account for an LLC in Delaware
- Which State is Best for LLC Incorporation in the USA?
- The cost of LLC Incorporation and Maintaining in Delaware
- Remote Incorporation of an LLC in Delaware
If you are not familiar with the reality of present-day business, the registration of an offshore LLC in the state of Delaware (USA) may seem a highly questionable or even a delusional idea. How can we seriously speak about offshore companies in a jurisdiction that stands so firmly for deoffshorization, tax transparency, and the abolition of the right to confidentiality when offshore companies are registered? But the reality is that some US states can actually be called offshore territories, and Delaware is one such exception.
The State of Delaware is in great demand among those wishing to register an LLC in the United States. This format of a legal entity allows the business to reach the international level and protect the assets and the confidentiality of the beneficial owners. In this regard, we offer you to use an extremely popular service: remote offshore LLC incorporation in Delaware.
Incorporation of an LLC in the USA
Delaware is considered an offshore “tax haven” within the United States. In recent years, the US has become a popular offshore jurisdiction, even though official Washington is now the main apologist for the fight against the very concepts of tax-free territory, offshore, and confidentiality.
This is primarily due to the state’s refusal to participate in the automatic exchange of information on financial accounts, as well as a favorable tax climate for businesses created in some states (not only Delaware but also Nevada, Wyoming, and Florida). This article will give you answers to the most common questions asked by our readers about LLC incorporation in Delaware, USA.
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What are the Main Advantages of Incorporating an LLC in Delaware?
First of all, it is the legal status of an American company that gives a lot of real advantages. But unlike the “traditional” business, an offshore LLC in Delaware will allow you to take advantage of the actual “bonuses” of tax-free zones without contacting the traditional offshores.
The main pros of LLC registration in Delaware:
- favorable laws that regulate business
- clear and consistent legal system
- tax legislation beneficial for companies operating outside the state (in fact, here we can talk about offshore business!)
In addition, Delaware is considered the best state to set up:
- startups (simple registration procedure, no tax on intangible assets)
- non-resident companies that are expanding into the US market
Delaware’s corporate laws are more flexible and advanced in comparison to other states. The state authorities ensure strict compliance with the law, which gives companies legal protection. At the same time, it does not restrict business freedom, confidentiality, or the ability to enjoy tax benefits.
What Taxes Should an LLC Pay in Delaware?
The situation is a bit confusing here, so we strongly recommend discussing all issues related to taxation with our experts. Formally, LLC members enjoy the same limited liability benefits as the shareholders of a corporation, but the LLC’s income is taxed at the level of company members as in partnerships. Thus, an LLC does not pay taxes in most cases and, as a result, it should not file an annual tax return. An LLC must pay a franchise tax of $300 annually (the situation is different for corporations).
But if we get into the essence of the issue (which is quite difficult), the clear and transparent picture of taxation of the offshore LLC will become quite different. We will not discuss this issue in detail in this article, but it is worth identifying the most important points essential for practical business.
Status of an LLC for tax purposes:
- Not a taxpayer (disregarded entity) – for an offshore LLC with one member
- Partnership – an LLC with several members
- Corporation – by decision of the IRS/application of the LLC
Details on each status:
- Incorporation of an LLC with one member (a foreigner). You are required to submit a 1040NR reporting form there is no need for that if there is no profit and only personal property is used to conduct business). In some cases (but not always!), the income of a private person is not subject to taxation in the United States. It is extremely important to understand that the criteria of a foreign member are quite complex: you should analyze not only laws but also legal practice/judicial precedents.
- Incorporation of an LLC with several members (foreigners). Reporting to the IRS is mandatory (Form 1065). K-1 form should be additionally prepared for each member and attached to the tax return (Form 1040NR). The taxes withheld by an LLC from each member are as follows: a) 37% – effective related income; b) 30% – other FDAP income paid by the LLC itself (one of two). But again, it is desirable to consult our expert on LLC taxation in the USA as there are many nuances to be taken into account.
- Incorporation of an LLC in the corporation format. The federal tax is paid at a rate of 21%.
What Steps are Taken to Incorporate an LLC in Delaware?
A typical list of necessary actions is given below, but we would like to note that the price may change in the current situation.
Standard steps to be taken for company registration:
- Selection of a name for LLC in Delaware. It should not a) repeat the existing name b) contain words such as bank or trust c) indicate that the company is engaged in the insurance business (a special license is required). The name of the LLC shall include the abbreviation LLC, L.L.C. or the words Limited Liability Company. You cannot use obscene/racist language in the name.
- Selection of the number of members in the offshore LLC.
- Preparation of an operating agreement to determine the rights and obligations of each LLC member.
- Appointment of a registration agent (to be a representative of a non-resident LLC in Delaware).
- Obtaining an EIN (Employer Identification Number).
Bank Account for an LLC in Delaware
After the LLC has been registered, you will need to open an account with one of the American banks. Please contact us to select a suitable bank and open a corporate account for the offshore LLC in Delaware or take advantage of free advice on choosing a foreign bank account.
Free advice on opening bank accounts:
- a foreign/offshore personal account
- a foreign payment system
- a foreign corporate/personal account
Which State is Best for LLC Incorporation in the USA?
Nevada and Delaware are the most popular states for business registration in the United States. Both have similar conditions and advantages over other states. However, there are several differences between them.
Delaware’s advantages for incorporating an LLC:
- General Corporations Law. It allows to limit the responsibility of corporate directors and officers and ensure smooth and trouble-free business for companies.
- The Delaware Chancellery Court (without a jury) deals exclusively with business cases, so decisions are made as quickly as possible.
- The Division of Corporations, which is under the control of the Secretary of State of Delaware, is a profitable government entity because of its focus on the “customer” – that is, the business.
- Just like in Nevada, there is no income tax (if the business is conducted outside the state).
- There are no requirements for a business license until (!) the application for LLC registration has been submitted.
- Preparation and submission of the annual report is not required.
The Cost of LLC Incorporation and Maintaining in Delaware, USA
The specific figures we quote are final and up-to-date on the day of writing. But we cannot guarantee that the situation remains unchanged, and a review of the pricing policy may be required. Another important point concerns the list of services that are necessary in your case. Most likely, you will not need all the possible options listed below, and then the total cost of an offshore LLC incorporation in Delaware will be lower. But the reverse situation is also possible, when the circumstances of the company registration require additional costs, or they will be needed to start a real business.
The basic cost of LLC incorporation in Delaware (USA):
- The cost of an offshore LLC registration in Delaware (USA) is EUR 2,000.
- Company renewal in Delaware (including the services of a registration agent, provision of a registered address, filing of zero accounts) is EUR 2,000.
Virtual office services:
- Phone number for receiving messages per 1 year – EUR 960 (+ deposit in euros for international calls).
- Phone number to forward phone calls to the client’s number – EUR 1,560.
- Services of a secretary on the phone – USD 800 for connection + USD 200 per month of service.
- Selection of a separate office, the cost depends on the location and area – from EUR 2,000.
- The cost of a virtual office in the business center (per year) is EUR 800.
- The cost of our services related to providing an individual address in the business center (with confirmation) is calculated on a case-by-case basis.
Remote Incorporation of an LLC in Delaware
You need to take three main steps to register an offshore LLC in Delaware (USA):
- Contact our specialists for advice and professional assistance in the registration of an offshore LLC in Delaware (USA).
- Pay for professional assistance in the registration of an offshore LLC in Delaware. Payment can be made by bank transaction or payment card, as well as using PayPal, WebMoney, or Western Union transfer.
- Prepare the necessary documents for LLC incorporation in the state of Delaware, USA.
Documents required for LLC incorporation in Delaware:
- notarized copies of international passports (pages with photo and signature) and a second ID with a photo (e.g. driver’s license) from the (beneficial) owner and all members/managers of the LLC
Attention! If the notary refuses to certify a copy of the passport, order an English translation from a sworn translator and stitch it with a copy of the original (a page with a photo and signature is mandatory), and then certify it with the notary!
- proof of residential addresses of the (beneficial) owner and all LLC members/managers (e.g. utility bills not older than 3 months)
- letters of recommendation from public partners and banks for the (beneficial) owner and all members/managers of the LLC
- a summary in English for the (beneficial) owner and all members/managers of an LLC
Attention! All documents must be translated into English and notarized!
Please contact us at email@example.com to find out more about the remote incorporation of an LLC in Delaware, USA.