BUSINESS GUIDELINES AND MARKET ENVIRONMENT OF DELAWARE

INTRODUCTION

The state of Delaware has remarkably climbed to become the hub for international business entities due to various reasons such as tax benefits, corporation court services, prolonged privacy, and expediency. Almost 68% of the Fortune 500 companies are registered in Delaware which showcases the significant impact of this small state from the mid-Atlantic region of the United States.

TYPES OF BUSINESSES IN DELAWARE

Delaware provides businesses the option to choose from multiple options of a business structure. They are as follows:

1. Sole Proprietorship- The simplest form of business enterprise is a sole proprietorship in Delaware. Here, business is conducted by an individual in their capacity. The individual here can be held legally responsible for all matters pertaining to the business. There are no formation or operational formalities to be kept in mind to start, operate, or terminate the business. The only way to transfer ownership is through the sale of assets.
2. Limited Liability Partnership- There is a special form of a general partnership known as a limited liability partnership (“LLP”). In an LLP, the partnership is required to register with the Delaware Secretary of State. The partnership also needs to maintain a specified amount of liability insurance. As a result, partners are relieved of personal liability for any act under the partnership agreement. However, partners remain personally liable for their negligence.
3. Corporation- A corporation is an entity that is formed under the state or federal law. It is thus a legal entity. It is separate from the owners and the owners cannot be held personally liable.
4. Delaware Statutory Trust- A Delaware statutory trust is an unincorporated association created by a trust instrument and the filing with the Secretary of State of Delaware of a certificate of trust. It is an extremely flexible form of business structure. It is managed by trustees.
5. Limited Liability Company- A limited liability company is one of the most flexible business structures available in Delaware. It is a separate legal entity with perpetual existence. It may have as few as one member.
6. General Partnership- A general partnership is simply an association of two or more persons to carry on a business. There are no official procedures or formalities to be undertaken to establish a partnership. It may arise out of an oral agreement however; it is prudent to have a written agreement specifying rights and duties of the partners.

STEPS

To embark on this embellishment of a profound business endeavour; the key is to look at the steps required for incorporation in Delaware. Here are the steps;

• Choose the business type– After you have chosen an entity type for your business (you may refer to the section above); there is a requirement to file with the Delaware Division of Corporations. Sole proprietorships need not file with the office, meanwhile, unincorporated nonprofit associations and partnerships need only optional fillings. The accessibility of the service and conduction of the business can be even accessed by the State’s one-stop licensing and Registration stop.
• Obtain a registered agent- There is a necessity to obtain and maintain a registered agent in the State of Delaware who can be an individual resident or a business entity that is authorized to do business in Delaware. They must have a physical address in the state of Delaware.
• Reserve a name- The Delaware Division of Corporations allows for the reservation of an entity name. The guarantee of the name is held for 120 days. This can also be done online and the fee amounts to 75 USD.
• Obtain a Certificate of Incorporation – The forms are available on the website of Delaware and can be submitted using the Document filling and Certificate request service by mail.
• Submit the completed certificate for Filing- The Document Filing and Certificate Request Service or mail in completion to the request to the office. This process is completed upon clearance of all dues and payments in the process.
• Beneficial ownership reporting- The Corporate Transparency Act (2024) requires certain entities in the United States to report information about beneficial owners to the Financial Crimes Enforcement Network which can be accessed through the Delaware.gov website.
• Issuance of certificate of status- Some financial institutions require the approval of a good standing certificate to complete the process of new entity filling which must be confirmed by the parent financial institution. On the necessity, a ‘certificate of good standing’ or a ‘certificate of status’ can be ordered.
• Annual Taxes- Every corporation in Delaware must file an Annual Report or Amended Annual Report to pay the franchise tax. The minimum tax is 175 USD and the maximum can be up to 200000 USD. Although LP/LLC/GP do not file an annual report, they are requisite to pay an annual tax of 300 USD which can no later be received than June 1st of each year.
  
  

CONCLUSION

From this, it is evident that Delaware offers multiple business structures to choose from for establishing a new business. It has today, become a hub of innovation offering several benefits for new businesses to be set up. The procedure includes legal formalities but is quite straightforward. Consequently, entrepreneurs receive government benefits such as tax benefits and access to markets. As Delaware continues to develop its economy and maintain good geopolitical relations, it emerges as a potential place for making huge profits.