When most budding entrepreneurs get their chance to start their first company, their first choice is usually an LLC (limited liability company). This type of company is easy to set up and provides protection, or “limited liability”, to its owners. All this means is that if the LLC you set up acquires any debt, is sued, or has to make payments, you won’t be held liable to take out the funds from your personal finances – it all has to come from the company. It’s an easy, straightforward way to create a legal separation between your personal and business assets.
For many of these new companies, their owners usually want to form the LLC in Delaware. Now, you might think that forming an LLC sounds fitting for your business, but why set it up in Delaware?
First of all, Delaware is considered a “business friendly state”. More than half of Fortune 500 companies register their main office in Delaware, and current records show that almost a million businesses have already been registered in the state. The business environment makes it reason enough for most new businesses to set up there. After all, you can easily build your network locally. But we’ve just scratched the surface here. There are deeper and better reasons why it’s a good idea to form an LLC in Delaware.
Delaware’s high number and variety of local businesses means that they have a broad body of business laws. Add this to their legal experiences with businesses, it means that their courts can handle even the trickiest issues. In fact Delaware’s court for corporations, Chancery Court, has a reputation for being one of the best in the United States. Their laws are also good for business. For example, they don’t usually tax you for out-of-state income.
Another reason is that most legal textbooks and law schools teach Delaware business laws, making most American lawyers familiar with these laws. Even if you hire a lawyer from outside the state, odds are that they are very familiar with Delaware business laws. You won’t have trouble looking for legal advice or representation for your business.
Lastly, Delaware is known for fast document processing. The businesses that set up in Delaware provide the State with additional revenue that has allowed them to invest in state-of-the-art equipment. You can often submit your documents electronically, and filing your paperwork takes considerably less when compared to other states.
If you look at all these reasons, you’ll see that it’s almost ideal to form your LLC in Delaware, especially if you live in or near the state. The only thing you need to know now, of course, are the steps you need to take to register your business.