Incorporate in Delaware: Smart Choice for Global Businesses

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According to Benjamin Franklin, only death and taxes are inevitable. Yet, those with insider knowledge suggest that companies registered in Delaware might find its tax laws more accommodating.

In 2022, Delaware welcomed over 230,000 new businesses, bringing the total to an impressive 1.9 million. Known globally as an international business hub, Delaware is home to prestigious companies like Amazon, Google, Tesla, Walmart, American Express, and Disney. Below, we will take a closer look at the most enticing incentives for establishing a company in Delaware and explain why it’s a favored destination for business incorporation.

Delaware: a small state with a big corporate impact

Despite its modest size (Delaware is the second smallest state after Rhode Island and ranks only sixth in population), the state’s influence in the corporate sector is immense. An astonishing 68% of Fortune 500 companies and 93% of all U.S. IPOs are incorporated in Delaware, many of which list a simple brick building on North Orange Street as their legal address.

The state’s reputation as a corporate haven dates back to the dawn of the 20th century, when it first offered a flexible tax system, simple yet efficient corporate legislation, and minimum constraints on business operations. 

In 2021, Delaware generated a remarkable USD 1.38 billion in revenue from fees associated with legal entity formation, franchise taxes, and Secretary of State filings. This financial success underscores the state’s advantageous business environment and attractive corporate laws, which consistently attract business owners, operational companies, and investors from across the globe.

Delaware laws and tax incentives for companies

Delaware’s corporate statutes, particularly the Delaware General Corporation Law (DGCL) and the Limited Liability Company Act (LLCA) are pillars of legal protection that significantly contribute to the state’s appeal for company registration.

The local corporate legislation is designed with the global market in focus, meeting the specific needs of international businesses. It makes complicated legal tasks, like mergers and acquisitions, easier to manage. Delaware allows companies to carry out important business changes quickly, usually with no need to wait for government agencies to give the go-ahead.

Tax incentives are another significant attraction for businesses registering in Delaware. Let’s break down the potential advantages:

  • State Income Tax: Businesses operating beyond Delaware’s borders are exempt from state income tax.
  • Inheritance Tax: Inheritors residing outside Delaware who receive shares in a Delaware company are not subject to inheritance tax.
  • Sales Tax: There is no sales tax on intangible assets, such as royalties, in Delaware.
  • Foreign Ownership: Non-resident foreigners who own shares in Delaware companies are not taxed by the state on these holdings.
  • Business License: Companies registered in Delaware but not conducting business in the state are not required to obtain a Delaware business license.

However, there is an important consideration. Delaware requires all incorporated companies to pay a franchise tax.

Privacy benefits

Delaware’s commitment to privacy is a significant benefit for business owners. Here, you don’t have to uncover the identities of corporate founders.

The personal details of Delaware LLC members remain private and are only disclosed for legal reasons.

For corporate filings, just the registered agent’s information is required.

Company formation in Delaware

Company formation is a breeze. Unlike other states, Delaware permits one person to be the shareholder and director, with no residency requirements.

Benefits for Delaware-incorporated companies are rather tempting:

  • Streamlined corporate structure
  • No need for a physical Delaware office.
  • Non-residents can easily establish and manage Delaware companies.

The simplicity of setting up a company in Delaware appeals to entrepreneurs globally, resulting in numerous incorporations each year.

Delaware LLCs

Setting up an LLC in Delaware is also easy and affordable. Here’s a short guide:

  1. Name Your LLC: Pick a name with LLC in it and check online for availability.
  2. Members: Decide on your LLC’s membership.
  3. Operating Agreement: Advisable for clear operations but optional.
  4. Registered Agent: Choose an agent that can be either a person or a company.
  5. Paperwork: Complete forms, gather documents, pay fees, and file with Delaware.

NB: LLCs with staff must get an EIN from the IRS.

Delaware’s LLC policy welcomes global members. This global reach helps businesses attract talent and investment for growth. At the same time, Delaware LLCs can smoothly change into corporations, which is great for new and growing businesses. The state’s laws support business owners with strong protection against liabilities and debts, keeping their personal property secure from any business-related financial issues or lawsuits.

Doing business in Delaware: cost benefits 

Delaware offers a cost-effective business environment, with operational costs about 25% less than the national average. It also leads in low administrative costs.

These are the key expenses for Delaware businesses:

  • Annual Report Fees: For report preparation and filing.
  • Registered Agent Fees: For agent services.
  • Franchise Tax: A USD 300 flat fee.

Setting up a company in Delaware is easier compared to other states, which boosts its appeal for businesses.

Court of Chancery

Delaware’s Court of Chancery, known for its judge-led corporate law, offers efficient legal decisions for businesses, unlike the jury-based systems elsewhere.

As the nation’s oldest business court, the Court of Chancery, backed by the Delaware Supreme Court’s commercial insight, produces swift, informed rulings and promotes amicable dispute settlements.

Delaware’s seasoned legal professionals and a wealth of precedents guarantee quick, effective corporate issue resolution. The state’s consistent, reliable business laws minimize risks, and its usury laws favor financial institutions by permitting flexible interest rates.

Evaluating the trade-offs

Although registering in Delaware sure has tempting perks, be sure to consider these points:

  • Delaware firms pay taxes where they operate and not in Delaware.
  • Registration costs and franchise taxes may be on the high side.
  • Annual reports and a local agent are required.
  • Legal issues must be settled in Delaware courts, which means you’ll have to be there in person during the proceedings.

These apply if you operate outside Delaware, but global firms find Delaware’s benefits outweigh these factors.

International Wealth: your partner for successful Delaware incorporation

Delaware’s efficient legal system, in combination with its welcoming business atmosphere and flexible laws. is a magnet for global investors. To incorporate here and reach your business goals, contact International Wealth for expert guidance without further delay!

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