Companies choose Delaware for many reasons. The State administration is business-friendly and highly accessible. The Delaware General Corporation Law is enormously flexible in company formation and management. Existence of the famous “Delaware Court of Chancery”, a business court consisting of expert judges in the field of commercial law, provides a legal certainty.

In technical perspective, company owners do not have to be present in Delaware when incorporating. No minimum capital is required to start a company. The state held a limited information concerning a company. The structure of the company and other information about the internal workings of the company are not generally available to the public.

Culmination all these factors makes Delaware a great place to incorporate.

No. The only main requirement is to have and maintain a Registered Agent in Delaware whose business office is identical with the company’s registered office.

A Registered Agent is the contact person between a company and the State of Delaware’s Division of Corporations. The State of Delaware requires to have a contact person for the businesses during business hours and to receive official and legal documents, including but not limited to services of process, state notifications, on behalf of the company.

Any business entity that its state of formation is not Delaware has to register for Foreign Qualification in Delaware before transacting business in Delaware.

If you are not sure whether your company’s activities fall within the scope of “transacting business”, we advise you to seek a legal counsel.

Franchise Tax is a type of state tax imposed by the state of Delaware levied on companies. Save for a few exceptions, any company that is incorporated in Delaware, regardless of where the company conducts business, must pay Franchise Tax for incorporating in Delaware.

The amount of Franchise Tax can differ depending on company type. Income or activities of the company are not relevant in calculation of the amount. For instance, for corporations, the amount is based on the corporation type, the number of authorized shares of the corporation and the par value assigned to the shares of the corporation. Limited Partnerships, Limited Liability Companies (LLC) and General Partnerships formed in the State of Delaware are required to pay an annual Franchise Tax in the amount of $300.00.

EIN, also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify business entities. Similar to a Social Security Number in purpose, an EIN serves as an identification for a business entity rather than an individual person.

Generally, businesses need an EIN. For instance, in order to hire employees or establish business credit, an EIN is most definitely required.

Authorized share refers to the maximum number of shares a company can legally issue, as specified in its Certificate of Incorporation in Delaware. The number of authorized shares can be relevant when the company needs to raise additional funds and issue shares or when calculating the Delaware franchise tax amount. If a company needs to raise the number of authorized shares, the Certificate of Incorporation of the company needs to be amended.

Par value, also sometimes called nominal value, is minimum legal value of the shares for which a corporation may sell. The terms can be misleading as it can be wrongly understood as shares actual worth. Many states in the US, including Delaware, requires corporations to set a par value for its shares during the formation phase. To comply with such rule, most companies set a par value for their shares to a minimal amount.