When creating a Delaware corporation, you have a variety of alternatives. Although close and non-profit organizations have many advantages, general Delaware corporations are typically the most popular. On available, tight, and non-profit corporation sites, you may compare annual reports and tax benefits details about each type if you’re unsure which one is best for you.
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Pick a company name
The word “association,” “business,” “corporation,” “club,” “foundation,” “fund,” “union,” “syndicate,” or “limited” must appear somewhere in the name of your corporation (or an abbreviation thereof, with or without punctuation). Alternatively, if it is written in Roman characters or letters, it can include a word or its acronym with a similar meaning in a different language.
The name of your corporation cannot be confusingly similar to another company with the same name already registered with the Delaware corporation Secretary of State. By scanning the Delaware Secretary of State’s business name database, words can be examined for availability. Through the Delaware Division of Corporations website, you can reserve a name.
Decide on a registered agent.
A Delaware corporation must have a Registered Agent who serves as the state’s point of contact with your business. Important legal and tax paperwork must be delivered to registered agents on the corporation’s behalf. They must have a physical address in the state where the business is incorporated, and the Certificate of Incorporation makes their information available to the public.
The best Delaware Registered Agent is Harvard Business Services, Inc., and their Registered Agent Fee is just $50 yearly, guaranteed for the duration of your company as long as it maintains good standing with the state of Delaware.
Get corporate bylaws ready.
The fundamental guidelines for running your organization are outlined in the bylaws, which are internal corporate documents. They are not reported to the government. Corporate bylaws are not legally necessary for your company.
Still, it would help if you adopted them since they (1) define your company’s running procedures and (2) assist in demonstrating your company’s legitimacy to lenders, creditors, the IRS, and other parties. Visit the Nolo website or Anthony Mancuso’s book Incorporate Your Business for corporate bylaw forms (Nolo). Sample bylaws are usually included in corporate kits as well.
Save your bylaws, meeting minutes, and other crucial company documents in a corporate records book. This can be a straightforward three-ring binder or a business records kit you acquire from a seller of corporate equipment. Keep it at the corporate headquarters. Elect Directors and convene a board of directors
The original corporate directors must be chosen by the incorporator:
The person who signed the articles will serve on the board until the first annual meeting of shareholders (when the shareholders elect the board members who will do for the next term). The incorporator must complete an “Incorporator’s Statement” containing the first directors’ names and addresses.
The declaration must bear the incorporator’s signature, and a copy must be kept in the corporate records book. The state is not required to receive the statement.
The board of directors shall pick corporate officials, enact bylaws, choose a corporate bank, approve the issue of shares of stock, choose the Delaware corporation’s fiscal year, and adopt an official stock certificate form and corporate seal during the organization’s first meeting.
Corporate minutes that have been approved by the board of directors and were created by the incorporator or any of the directors must include the acts of the directors.
The directors must also ratify the decision to elect S corporation status if the corporation has that status. Consult the Nolo website, or Anthony Mancuso’s book Incorporate Your Business for sample Incorporator’s Statement and corporate meeting minutes forms (Nolo).
Make Your Stock Information Known
Whether or whether you want to issue stock, the amount of inventory for your firm and the par value of its shares must be authorized when submitting a general and closing corporation.
Because Delaware corporation Franchise Taxes are based on the number of shares, company owners desire to maintain that number as low as feasible. Often, when forming a Delaware corporation, you should only allow what you’ll need or anticipate needing.
Companies with 5,000 authorized shares or fewer annually pay the minimum Delaware corporation Franchise Tax. The Assumed Par Value Capital Method and the Authorizing Shares Method may be used to recalculate the corporation’s franchise unpaid tax balance and pay estimated taxes for shares over 5,000.
Create and submit an incorporation certificate.
By submitting a Certificate of Incorporation – Stock Corporation to the Delaware Secretary of State, your Delaware corporation is formally established. You must include a Filing Cover Memo when filing articles, which can be done online or by mail (this is created automatically when you file online).
For (1) up to 1,500 shares of no par value stock or (2) up to $75,000 of a par value stock, there is an $89 minimum filing cost. After crossing these points, the charge rises by the number of shares without a par value or the stock’s par value. The Delaware incorporation fees are available for federal income taxes.
The name of the corporation, its purpose, the number of shares it is authorized to issue, the registered office street address, and the name of the agent for process service at that location, as well as the name and mailing address of the incorporator, must all be included in the articles.
A line for noting the par value of the company shares is also present on the reprinted articles form available on the Secretary of State’s website. However, Delaware corporation does not require the use of par value. Cross out “a par value of $__ per share” on the form and replace it with “no par value” if you want to issue shares without a par value.
On the Secretary of State website, there are two examples of Certificate of Incorporation forms: One safeguards directors against personal liability for violations of their duty of care by including an optional directors liability provision. Release Stock
In exchange for each shareholder’s capital commitment of money, an asset, a service, or a combination of all three, issue shares to them. Small firms typically issue paper stock certificates. Fill up the corporation’s stock transfer ledger with each shareholder’s name and contact details.
Delaware allows firms to choose between setting a par value for their stock and issuing shares with no par value. The par value, which has nothing to do with the stock’s actual value, is a predetermined threshold beyond which it cannot be sold.
In some states, this outmoded legal theory is still in use. See “What is Par Value Stock” in Nolo. The stock certificates should be printed with “no par value” if the shares are issued without a par value.
State and federal securities rules that govern the offering and sale of corporate stock classify a share of stock in your company as a security. However, “private offerings”—an unannounced sale to a small group of people—are excluded from federal law (generally 35 or fewer).
Obtain a Federal Tax ID Number (EIN)
Unadvertised share sales to any number of authorized investors are excluded from state registration in Delaware corporation, providing the shares are bought for investment.
Corporate officers, board members, and affluent investors (those worth at least $1 million or making $200,000 per year for singles and $300,000 for married investors) are considered accredited investors. Get a Federal Tax Identification Number (EIN)
Before a business entity may open a U.S. bank account, recruit U.S. workers, or pay U.S. taxes, that entity must receive a Federal Tax ID Number or EIN. In essence, it serves as your company’s social security number.
You can complete the essential information on their simple corporation order form to register your business and request an EIN simultaneously. Harvard Business Services, Inc. will negotiate with the IRS on your behalf.
Create a Delaware corporation.
You can start by visiting their Delaware corporation order page. If you have any queries regarding the configuration of filing fee business entities, you can contact the corporation.
In Delaware, does my corporation require a business license?
Your corporation must obtain a Delaware business license from the Delaware Division of Revenue if it actively conducts business there. The permit can be obtained online using the Delaware One Stop Licensing and Registration Service. It can also be obtained by mailing the Combined Registration Application Form (Form CRA). On the website, you may visit the annual report filing fee of Delaware registered agents.
You should check the Delaware Business First Steps page for more information if your corporation needs a local business license from the town, city, or county where it is located.
Non-U.S. citizens are free to own and manage Delaware corporation LLCs without any restrictions from the state of Delaware, nor do they need to have a physical presence there or even in the United States, for that matter. Having a registered agent, like Harvard Business Services, Inc., is all Delaware asks of you.