Delaware is a popular state in the United States for registering businesses, especially for non-residents, due to its business-friendly environment, flexible corporate laws, and strong legal system.
Delaware company registration for non-residents can be done easily by following certain procedures and requirements, such as appointing a registered agent and complying with the state’s regulations and taxes. Registering a Delaware company as a non-resident can provide various benefits, such as limited liability protection, tax optimization, and access to the US market.
Is A US Business Address Necessary To Form A Company In Delaware?
A physical address is one of the crucial conditions for establishing a Delaware Company as a non-US resident. The applicant can start a business in the US from anywhere in the world, but they must give the Secretary of State’s office and the Division of Corporations – State of Delaware their business’ US address in order for them to process the registration. The state departments or agencies mostly utilize this address to transmit certificates, crucial business letters, reminders or notices, etc.
In order to simplify Delaware company registration with a bank account or open a new bank account, the physical address will also be necessary. Hence, the address must be provided because it is a requirement of the state for the formation of a firm.
REQUIREMENTS OF DELAWARE COMPANY REGISTRATION
- Registered Agent – Delaware law requires all companies to have a registered agent who is a resident of the state or a registered agent service provider. The registered agent must have a physical address in Delaware and be available during regular business hours to receive legal documents and other important communications on behalf of the company.
- Certificate of Formation – Non-residents can register a Delaware company by filing a Certificate of Formation with the Delaware Division of Corporations. The Certificate of Formation includes information about the company, such as its name, address, registered agent, and type of entity.
- Tax Registration – Non-residents are required to register for both federal and state taxes. Delaware does not have a state-level sales tax, however, businesses may have to pay federal and state corporate income taxes.
- Business License – Non-residents may be required to obtain a business license from the county where the business is located, depending on the type of business.
TYPES OF COMPANIES AVAILABLE IN DELAWARE FOR NON-RESIDENTS
Delaware offers several types of companies that are available for non-residents to register, each with its own legal and tax implications. Here are the main types of companies available in Delaware for non-residents:
- Corporation – A corporation provides its shareholders with limited liability protection. To form a Delaware corporation, non-residents must submit a Certificate of Incorporation to the state
- Limited Liability Company (LLC) – An LLC is a popular choice for non-residents. It provides limited liability protection and flexibility in terms of management and taxation.
- Limited Partnership (LP) – In an LP, one or more partners have limited liability protection.
- General Partnership (GP) – A GP is a kind of partnership where all partners have unlimited personal liability for the company’s debts and legal issues.
DOCUMENTS REQUIRED TO REGISTER A COMPANY IN DELAWARE AS A NON-RESIDENT
- Certificate of Formation/Incorporation
- Federal Tax ID Number (EIN)
- Photo ID (such as a valid passport)
- Proof of address
- Banking resolution document
- Corporate bylaws
PROCESS OF REGISTERING A BUSINESS IN DELAWARE
Step 1: Choose the corporate structure
The applicants can select numerous company structures for their business before beginning the incorporation procedure, just like in any other US state. For both local and foreign business owners, LLCs and C Corporations are the two most popular company types in the US.
C Corps offer additional benefits when it comes to financing and obtaining outside cash because they are the only type of company that may issue both common and preferred stocks.
However, since LLCs do not pay corporate taxes, they might seem more appealing to small business owners. In any case, Delaware offers several advantages to each structure, and one can run your business without ever leaving the nation.
Step 2: Submit the formation document
The documentation for establishing a business must then be filed and submitted to the state. a Certificate of Formation for an LLC (minimum fee of USD 90) or a Certificate of Incorporation for C Corporations (minimum charge of USD 89).
Step 3: Get EIN
One of the most important steps in the registration of a Delaware corporation for non-residents is to obtain the Employer Identification Number from the IRS. Although it could seem difficult, even for foreigners, the procedure is straightforward. To file taxes, recruit staff, or open an American company bank account, they need the EIN permission.
ITIN or a social security number is not required in order to apply for an EIN. For this, they don’t even have to be located in the US or give a US address. The sole requirements for non-residents are a passport and the USD 95 application fee.
Step 4: Hire a registered agent and fill out documentation
According to state law, if the applicant is a non-resident or a citizen of the US, they must hire a registered agent in order to incorporate a C Corp or a Delaware LLC. They may register a Delaware corporation for non-residents through Relin Consultants, and get a registered agent. This is the person who will update their legal documents as directed by the state.
Step 5: Virtual Address for Delaware company registration
Non-residents may register a Delaware corporation without having to be a resident of the state. However, the applicants must register a legitimate physical address in the US in order to receive IRS communication or official state mail.
Step 6: Get a US business bank account
It is possible to register a Delaware company with a bank account, and the applicant is not required to be an American citizen or a resident alien of the United States in order to open a business bank account in Delaware. They can apply for a Delaware business bank account even though every bank in the United States has its own set of regulations if they have a Certificate of Incorporation or Certificate of Organization and Employee Identification Number (EIN).
Additional information may also be requested, such as their company’s location or address and the address of your registered agent. As non-US residents, they can apply for a business bank account either before or after creating a Delaware corporation.
ADVANTAGES OF REGISTERING A DELAWARE COMPANY AS A NON-RESIDENT
- Corporations registered in Delaware but not conducting business there are not subject to income tax. Additionally, stockholders who don’t live in Delaware are exempt from paying taxes on shares held there. Delaware is referred to as a tax haven because of these factors.
- It takes a short period to complete filings in Delaware. Delaware is dedicated to being a corporation-friendly state, so the filings may also be completed on the same day.
- Businesses are not required to give the state the names of their directors and officers when they incorporate in Delaware. This offers privacy to business that wants to protect their anonymity
- Shareholders, directors, and officers are not required to be Delaware residents.
- One person may serve as an officer, director, and shareholder under Delaware law, which can be beneficial for small enterprises.
DISADVANTAGES OF REGISTERING A DELAWARE COMPANY AS A NON-RESIDENT
- The native state will tax the firm even if Delaware doesn’t tax companies incorporated there and doesn’t conduct business there. Hence, it is hard for companies to escape taxation.
- The filing costs in Delaware are much greater than those in other states.
- Although a company won’t be subject to income tax in Delaware, it will be required to pay the state’s franchise tax depending on the value of its shares. For small enterprises, this is typically small, but it will rise as the business’s share value rises. A business may have to pay franchise tax in your native state also.
- The company must still comply with the native state’s filing and licensing requirements in order to conduct business there, even if the company is incorporated in Delaware. Annual reports must be submitted in both countries as well. Doing this requires twice as much work and money.
Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance with your Delaware company formation.
Can non-residents form a Delaware LLC or corporation?
Yes, non-residents can form a Delaware LLC or corporation. Delaware is a popular state for non-residents to register their companies due to its favorable tax laws and flexible business regulations.
Do I have to go to Delaware to start a business?
No, foreign investors are not required to be present to register their businesses in Delaware. But, the company must have a registered agent who is a resident of the state or a registered agent service provider with a physical address in Delaware.
How long does it take to register a Delaware company?
The registration process can vary depending on the type of entity and the services requested. In general, it can take between one to three weeks to register a Delaware company.
How can I find out if the company name is available?
Investors who wish to review the list of available business names can do so by visiting the local offices or the website of the Delaware Secretary of State. The company name must finish with LLC, L.L.C., or Limited Liability Company.
What is the required minimum share capital for Delaware corporations?
There is no specific requirement that a minimum share capital should be deposited for the business in Delaware.