Delaware Company
Delaware offers privacy and tax advantages, but it’s not a tax haven . Its appeal lies in its flexibility, although operating in another state may require additional registration. Know its benefits and limitations before deciding.
A misconception has spread regarding the State of Delaware that it could be considered a quasi-tax haven due to the confidentiality and privacy of certain corporate data and the “exceptional tax advantages” available to companies incorporated in Delaware.
The regulations governing companies in the State of Delaware—corporations or LLCs—are very similar to those discussed above for other companies in the states of the Union. Therefore, the characteristics and operation of Delaware companies are similar to those of companies incorporated in other states.
The difference, undoubtedly important, is that the name of the Director of a Corporation or the Manager of an LLC is not listed in the Articles of Incorporation or Certificate of Incorporation and, therefore, is not subject to public record. Now, the name of the Director or Manager must appear in all business activities carried out by any Delaware Corporation, and of course, both the name of the Director or Manager or even the Partner or Member of a Delaware Corporation must be disclosed to any banking or financial institution with which the company establishes and maintains banking or financial activities, and of course must be disclosed annually to the IRS.
Regarding the “exceptional tax advantages,” there are neither numerous nor applicable to all types of Delaware corporations. The tax regime applicable to these corporations is detailed, as with all other corporations or LLCs, in the Tax Planning section of our professional services.
The major error that occurs with the use of Delaware corporations is that they are frequently incorporated in the State of Delaware, while their business activities are actually carried out in another state . Therefore, it becomes necessary to either incorporate a new corporation in the state where the company’s actual business activities are actually carried out, or to register the Delaware corporation in that other state, which will eventually become a corporation regulated by the corporation or LLC regulations of the state where it actually carries out its actual business activities.
