What do 68% of Fortune 500 companies and 93% of all US based initial public offerings (IPO) have in common? They are all registered in Delaware.
For many newly created companies the place of incorporation is the one of the most important things to decide on the first place. The decision is taken on the basis of several factors, such as ease of incorporation, the market proposed, tax advantages and even more. Delaware is striking among many states in the US thanks to its favorable sets of laws for businesses. The tax advantage is also one of its worth-noting benefits.
It is not surprising the most advanced companies in the world, such as Google, Facebook, Amazon are incorporated in Delaware. A success story of Delaware has begun in the end of 19th century, when the state established a generous corporate tax law, that allowed corporations to do business as business pleases. Even after the state of Delaware has become a hub for corporations all around the world, wishing to establish in the state and open a tremendous market like USA for their business. Currently, there are several reasons, why Delaware has kept its reputation and is still considered as an advantageous place for the companies, especially start-ups, for the establishment.
First reason is the ease of establishment in the State of Delaware. In the comparison with other states, where a physical presence of the founders can be requested, Delaware does not require any of the founder or directors or officers to be present in the state while establishment or while doing business. A client-friendly atmosphere has been established in the state, which allows the founders to incorporate the company never visiting USA.
Second reason is that the state of Delaware has a business-friendly tax system. Although, it is not considered as a tax heaven, however the state offers a business-friendly tax policy for foreign business. As an example, Delaware does not apply corporate tax for income derived from outside of USA. Also, there is no corporate tax imposed on interest, royalties or other similar investment income. Hence, the tax privileges are the next advantage while incorporating in Delaware.
Last but not the least, Delaware companies are guaranteed a high level of privacy. Unlike some states where the information on founders or directors of the company can be public and any person may have access to such information, both LLC and Corporations in Delaware are assured with confidentiality on members and the directors. In addition, the personal details of the members are not required to be mentioned in the fillings, which allows the official members of the companies to keep their privacy.
Our expertise includes assisting several Armenia based companies, including different start-ups and created business to relocate to USA. Our success story includes establishing companies, issuing shares for shareholders of corporations, planning and executing employee stock option plans (ESOP), opening bank accounts and providing day to day legal assistance to the companies throughout their business activity.
This material is produced by Legelata LLC. The material contained in this newsletter is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this material.