Form a Delaware Corporation
One of the most common questions we are asked is: “Should I incorporate in Delaware?” Incorporating online can be a confusing process and it is very important that you have the right information when deciding to incorporate in Delaware. Let LawInc set up your Delaware corporation, the right way. We keep things simple and allow you to easily form your Delaware corporation online or over the phone.
Incorporating in Delaware
Incorporating in Delaware can be vital to certain businesses. At LawInc, we prepare your Delaware corporation Certificate of Incorporation, bylaws, stock certificates, stock ledger and more. We can even obtain your Delaware corporation Tax ID number and file your S corporation election with the IRS.
Delaware Incorporation Information
The following Delaware incorporation information will likely be helpful when deciding to incorporate in Delaware.
Delaware Corporation Name
The first step in forming an Delaware corporation is selecting the business name. Delaware corporation names:
- Must contain or end with one of the following (or an abbreviation of) the following “Incorporated,” “Corporation,” “Limited,” “Company,” “Association,” “Club,” “Foundation,” “Fund,” “Institute,” “Society,” “Union” or “Syndicate.”
- Cannot contain a words or phrase that indicates or implies that the corporation is organized for a purpose other than the purpose contained in its articles of incorporation and other than that permitted by Delaware law.
- Cannot contain the words “limited liability company” or “limited company” or the abbreviations “L.L.C.”, “L.C.”, “LLC” or “LC”, in uppercase or lowercase letters.
- Must be unique from any other registered Delaware corporation, non-profit corporation, foreign corporation, partnership, LLC, fictitious name, reserved or registered name on record.
An available Delaware corporation name may be reserved for a 120-day period.
LawInc.com permits you to choose up to three names and will conduct a name search for your Delaware corporation, prior to filing.
Delaware Corporation Formation
Delaware Filing Procedure: File a Delaware Certificate of Incorporation with the Delaware Department of State.
Delaware Publication: Delaware does not have a publication requirement.
Delaware Corporate Stock: Authorized shares and par value must be listed in the Certificate of Incorporation. Initial filing fees are based on the number of shares and/or par value.
Delaware Purpose Clause: The purpose clause of a Delaware Certificate of Incorporation may include a statement that the purpose of the Delaware corporation is to engage in any lawful business activity.
Delaware Authorized Shares and Minimum Paid in Capital: There is no minimum or maximum number of authorized shares since state incorporation fees are not based on the share structure. There is no minimum amount of paid in capital required to commence business in Delaware.
Delaware Corporate Directors: The Delaware corporation board of directors shall consist of one or more individuals, with the number specified in or fixed in accordance with the Articles of Incorporation or bylaws. A director must be a natural person
Delaware Incorporator: Minimum number of Delaware incorporators is 1 and there is no requirement that the organizer be an Delaware resident. The incorporator must be a natural person who is at least eighteen years old.
Delaware Registered Agent: An Delaware corporation must maintain a registered agent and office to receive service of process in Delaware. The Delaware registered agent should be available, at an Delaware physical address, during normal business hours to accept important legal and tax documents on behalf of the Delaware corporation.
Delaware Professional Corporation: Professionals like accountants, attorneys and physicians are permitted to form Delaware professional corporations.
Delaware Corporation Post-Filing Requirements
Delaware Annual Report: All Delaware domestic corporations must file an Annual Report and pay any taxes and fees due. The Delaware Annual Report fee is $50 plus taxes, both due at the time the Annual Report is filed. Notifications of Franchise Taxes and Annual Reports are sent to Delaware Resident Agents in December of each year. Annual reports must be filed online. Domestic LLCs and partnerships are not required to file Annual Reports but rather must pay an annual $250 tax. Corporations to be declared void for failure to fully complete their Annual Report. In addition, the Department of State will not issue a Certificate of Good Standing if an Annual Report is not filed. Foreign corporations are required to file Annual Reports by June 30th and pay a $125 filing fee.
Delaware Annual Franchise Tax: Delaware corporations are required to pay an annual franchise tax. The minimum tax is $75.00 for corporations using the Authorized Shares method and a minimum tax of $350.00 for corporations using the Assumed Par Value Capital Method. The Authorized Shares Method, is based on the number of shares authorized in the Certificate of Incorporation. The Assumed Par Value method is based on the corporation’s total assets divided by the number of shares. Taxes and Annual Reports are due no later than March 1st, each year. For additional information regarding calculating the annual franchise tax, please visit: http:/www.state.de.us/corp/frtaxcalc.shtml. Franchise Tax and Annual Report notifications are sent to Delaware registered agents in December of each year.
Delaware Corporation Taxes
Delaware C Corporation: All Delaware corporations formed by default are “C” corporations. A Delaware C corporation is a Delaware corporation that has not made an election to be an “S” corporation. The term C corporation is specifically used because the entity is taxed under subsection C of the IRS code. Delaware C corporations are taxed at two levels (“double taxation”). This means that the corporation itself pays its own tax when it makes money (the first tax). The owners or shareholders are then taxed again when they are paid a salary or dividend by the corporation (the second tax). Despite double taxation, Delaware C corporations offer many planning and benefit opportunities.
Delaware S Corporation: A Delaware S corporation is a corporation that has made an election with the IRS to be treated for tax purposes as a “pass-through entity.” This means that corporate profits and losses are passed through to the shareholders (owners) who report them on their own personal tax returns and pay the tax at the individual level. The corporation pays no federal income tax at the corporate level. Delaware S corporations are not subject to the double taxation C corporations encounter.
Delaware Tax: The Delaware business income tax rate is 8.7%.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. All Delaware corporations should obtain an EIN.
Delaware Corporation Dissolution
State of Delaware: In order to dissolve an Delaware corporation, you submit a completed Certificate of Dissolution form to the Department of State by mail, fax or in person. A separate form is required if the corporation has not yet started to conduct business. A “short” form Certificate of Dissolution is available if your corporation pays the minimum tax amounts required by the Department of State. If you pay more than the minimum corporation annual taxes then you will want to file the regular Certificate of Dissolution form. The Delaware Department of State Franchise Tax Section should also be contacted regarding any outstanding taxes owed at the time of dissolution. A check for any tax payment due must accompany the Certificate and filing fee. Filing fee is $204 and expedite is an additional $35. The Delaware Department of State offers expedited service for an additional $1,000.00 for 1 hour service, $500.00 for 2 hour service, $200.00 for same day service, or within 24 working hours for an additional $100.00 fee.
IRS: Corporations are required to file IRS Form 966, Corporate Dissolution or Liquidation. A final tax return should be filed with the IRS. Form 966 should be filed along with the final tax return.