Delaware LLC advantages and disadvantages
-Delaware is considered pro-business, which isn't something you find in all states. Indeed, Delaware takes business seriously. Consider Delaware's favorable tax climate. Its corporate tax rate is only 8.7% on net income. In addition, there's no sales tax or equipment tax. Delaware's Chancery Court is the international forum for hearing corporate disputes.
Delaware Llc advantages and disadvantages
Forming a Delaware LLC
reflects a business planning process by entrepreneurs which results in your creating a legal presence within the state of Delaware, accordingly attracting both the privileges as well as the responsibilities of llc formation. Delaware is recognized both nationally and internationally as the center for corporate incorporation services, accordingly has developed an extraordinary legal and professional services community to assist you in your Delaware LLC formation needs.
A Delaware LLC
meets a necessary statutory condition that requires that business developers establish a legal presence in the state by way of your LLC. By meeting this standard, your Delaware LLC qualifies for the legal protections offered by the state of Delaware, which separate out the personal assets of your members from the potential future liabilities of your LLC in respect of its creditors taking litigation steps to prosecute a claim against your Delaware LLC. Your Delaware LLC corporate veil cannot be pierced by outside claims against your members' assets, unless an instance of fraud has been proven. Another major benefit of your Delaware LLC is that you can now treat qualifying costs and expenses as corporate deductibles, along with depreciating or writing off qualifying assets of your Delaware LLC as permitted by state and federal law. Another benefit is that your Delaware LLC is unrestricted in terms of its authority to raise private capital through qualified private placement financing, similar to a C corporation, where an unlimited number of investor members can be brought into your LLC. Similarly, your Delaware LLC can establish credit and banking facilities just like other corporate forms such as C corporation or Subchapter S corporations.
Advantages and Disadvantages
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
Delaware's 2012 Business Tax Climate Ranks 12th
Delaware ranks 12th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Tax Freedom Day Arrives on April 10 in Delaware
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Delaware taxpayers work until April 10 (ranked 21st highest nationally) to pay their total tax bill, 9 days after national Tax Freedom Day (April 12).
Delaware's State and Local Tax Burden Slightly Below National Average
Delaware's 2009 state and local tax burden of 9.6% of income is slightly below the national average of 9.8%. Delaware's tax burden has decreased overall from 9.8% (26th nationally) in 1977 to 9.6% (23rd nationally) in 2009. Delaware taxpayers pay $4,091 per capita in state and local taxes.Reference - Tax Foundation
Delaware LLC Advantages and Disadvantages
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