What is a Delaware Corporation?
So, you want to expand your business, or start-up a new business idea in the United States. Then, Delaware is the best option for doing so even if you want to expand globally.
A Delaware Corporation basically allows you to raise capital investment for your business via stocks, upon which you have utmost control; unlike in most states in the U.S. and countries worldwide.
There are several types of business entities that one can establish in the State of Delaware; however, corporations are unique to the extent that they give a greater chance for investment for your business.
What are its advantages?
A corporation is considered separate from its owners; who are the shareholders of that company. That means a corporation is a separate legal entity which is protected against its shareholders’ personal legal life and vice versa. The shareholders of a corporation are held responsible only to the extent of their respective shares in the company, including the profits and losses.
Commonly, start-ups prefer to be formed as corporations in order to raise capital investment to grow the business as soon as possible. However, many different types of existing business entities change their status to a corporation in time, again in order to expand the volume of capital for the company.
Delaware is accepted as one of the most reliable places in the world to invest your money; since the corporate law structure of the state is business-friendly and very experienced in the field. Hence, despite business-related risks, lawfully everything is way more secure than it could have been in another U.S. state or country. This is why most investors prefer to invest their money in Delaware Corporations while making a choice. Also, more than %60 of Forbes 500 companies, as well as many other big firms and millions of others are incorporated in Delaware; therefore, the state has a reputation for running a business or making investments.
Unlike an LLC, there is a threefold power structure in a corporation; therefore, both the responsibilities and the liabilities of the people involved in the business are distributed, at least in administration.
At top of the structure are the shareholders of the company who actually owns the business. These people do not interfere with the daily routine of the company; however, they are the ones responsible for the critical decisions taken. Each shareholder has a single vote for a single share; which means, the major shareholders who own the majority of the shares gives the critical decisions.
At the second layer are the members of the board of directors. These people burden the whole responsibility in the daily administration of the company. Through the board meetings, they take decisions for important subjects; such as the number and price of the stock that will be issued, hiring people, setting the salaries for the employees and general company policies and so forth. Financially, the most important duty of the board of directors is to decide whether the company will distribute dividends; and if so, how will it be. This also affects the taxation status of the company.
The board of directors can be fired by the shareholders with or without a reason; therefore, the shareholders are always the major decision-makers in a corporation.
At the last layer are employees and the workers of a corporation who work in the company for a salary. They are hired and fired (if necessary) by the members of the board of directors.
Since a corporation is owned by several shareholders, it can be run forever despite the shareholders may die or decide to leave the corporation.
How to Incorporate?
Each business entity in the State of Delaware is incorporated similarly at their initial stage.
Forming a corporation in the State of Delaware is almost as easy as starting an account on social media. Sure, you do have to go through some procedures; but it is quite simple to do.
The first step is to choose a company name which must be unique. Then, this name is to be registered at Delaware Division of Corporations. You can see the related document to handle this procedure here. Also, you can check if the name you have chosen is unique and untaken and reserve it until you form your business here.
A corporation must have a Registered Agent that will be registered to Delaware Division of Corporations. The Registered Agent is responsible for representing the company in general. You can select us as your Registered Agent.
Similar to an LLC, you need to write a Certificate of Incorporation which will set the rules and procedures regarding the administration of the company. At formation process, you will be required to name the officers and directors of the corporation when the annual report is due, even though you are not required to name them on the Certificate of Incorporation.
You can contact us to handle all these procedures and help you with the preparation of a Certificate of Incorporation for the best interest of you and your business. You can also ask for an expedited process as an extra service to finalize your incorporation, even in one day.
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