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Delaware

Registering an LLC

delaware
Name: Choosing a business name is one of the first steps in the process of forming a Delaware LLC. The name that you choose:
  • Must contain, as the last words of the name, the words "Limited Liability Company" or the abbreviation "L.L.C." or the designation "LLC"
  • May contain the name of a member or manager
  • Must be distinguishable (not the same as or deceptively similar to) the name of any corporation, partnership, limited partnership, statutory trust or other Delaware LLC reserved, registered, formed or organized under the laws of the State of Delaware or qualified to do business or registered as a foreign corporation, limited partnership, statutory trust, partnership, or LLC
  • May contain the following words: "Company," "Association," "Club," "Foundation," "Fund," "Institute," "Society," "Union," "Syndicate," "Limited" or "Trust" (or abbreviations of like import).

Formation Requirements
Articles of Organization: In any Delaware LLC formation, articles of organization must be filed with the Department of State. State law requires that certain information be included in your articles of organization for your Delaware LLC formation. This information must include:
  • The company name
  • The address of the registered office
  • The duration of the LLC (which may be perpetual or for a set amount of time) if the duration is for a set period of time
  • The name and street address of the LLC's registered agent
  • Any other matters, not inconsistent with law, that the member elect to be set forth

    Filing: Your LLC is considered organized once the original signed certificate of formation is delivered to the Delaware Department of State, and the articles are deemed to be compliance with state requirements. The document must be executed by 1 or more authorized persons. Any person, including an attorney in fact, may sign the certificate of formation unless otherwise provided in the LLC company agreement (operating agreement).
One certified copy of the articles of organization will be issued, and the other certified copy will be returned to the organizer or members.
Additionally, a Delaware LLC formation generally requires inclusion and/or consideration of the following:
Organizers: Any natural person or entity may form a LLC.
  • Minimum Number of Organizers: One or more natural persons or entities.
    Eligibility: An organizer may be a natural person, partnership (whether general or limited), trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity, in each case, whether domestic or foreign, and a limited liability company or foreign limited liability company.

    Operating Agreement: Although not required, LLC members may adopt an operating agreement for the company, which may also be amended and repealed as allowed by the agreement or applicable law. The articles of organization may contain restrictions or prohibitions on the power of the members to adopt, amend, or repeal an operating agreement. If there is more than one member, any operating agreement shall initially be agreed to, in writing, by all of the members.
Membership: A limited liability company must have one or more members.
Requirements:
Minimum Number of Members: One or more.
Eligibility Requirements: A natural person or an entity
Procedure for Membership: The member may acquire an interest in the LLC at the formation of the LLC or at the time provided in and upon compliance with the LLC company agreement or, if it does not so provide, when the person's admission is reflected in the records of the LLC. After the formation of a LLC, a person is admitted as a member directly from the LLC or without acquiring an interest at the time provided in and upon compliance with the LLC company agreement or, if it does not so provide, upon the consent of all members and when the person's admission is reflected in the records of the LLC.
Resignation of Membership: Certain prohibitions exist surrounding the ability of a member to resign from the company. A member may withdraw from a limited liability company only at the time or upon the happening of events specified in a LLC company agreement and in accordance with the LLC company agreement.
Notwithstanding anything to the contrary under applicable law, unless a LLC company agreement provides otherwise, a member may not resign from a LLC prior to the dissolution and winding up.
Contribution: The contributions of a member to the limited liability company may be in cash, property or services rendered, or a promissory note or other obligation to contribute cash or property or to perform services.
Registered Agent In Delaware
Every Delaware LLC must have a registered agent in Delaware-- the person or office designated to receive official state correspondence and notice if the company is "served" with a lawsuit.
Eligibility Requirements: A registered agent in Delaware may be: (1) an individual resident of the State of Delaware, (2) a domestic corporation, limited partnership, LLC, or statutory trust, or (3) a foreign corporation, limited partnership, or LLC authorized to do business in the State of Delaware.
The registered agent must have a business office identical with such registered office, which is generally open during normal business hours to accept service of process and otherwise perform the functions of a registered agent, or the LLC itself.
Registered Office: The registered office may be a place of its business.
Delaware Department of State
Once a Delaware LLC has been created, the Delaware Department of State will require that certain ongoing duties and responsibilities be met. The most important of these are explained below. For further information, refer to the Delaware Department of State office.
Continuing Obligations
Records: Each limited liability company shall keep following records open to inspection at its office:
  • True and full information regarding the status of the business and financial condition of the LLC
  • Promptly after becoming available, a copy of the LLC's federal, state and local income tax returns for each year
  • A current list of the name and last known business, residence or mailing address of each member and manager
  • A copy of any written LLC company agreement and certificate of formation and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which the limited liability company agreement and any certificate and all amendments thereto have been executed
  • True and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each member and which each member has agreed to contribute in the future, and the date on which each became a member
  • Other information regarding the affairs of the LLC as is just and reasonable.

Dissolution

Acts Triggering Dissolution: Unless otherwise provided in the articles or a written operating agreement, a limited liability company is dissolved upon the happening of any one of the following events:
  • Upon the happening of an event specified in the LLC company agreement (operating agreement)
  • At a time specified in the LLC company agreement (operating agreement), but if no time is set forth, then the LLC will have a perpetual existence
  • The affirmative vote or written consent of the members, or if there is more than 1 class or group of members, then by each class or group of members, in either case, by members who own more than two- thirds of the then-current percentage or other interest in the profits of the LLC either in total or by class or group, unless otherwise provided in the company agreement (operating agreement).
  • At a time there are no members:
o Unless otherwise provided in the LLC company agreement, within 90 days (or other time provided in the company agreement) after the final member terminates membership, the personal representative of the last member agrees in writing to continue the business of the LLC and to admit himself or nominate or designate a person to be member
o Unless a member is admitted in accordance with admission provisions in the company agreement within 90 days, or other period provided in the company agreement, after the final member terminates membership
  • Entry of a judicial order
  • The death, retirement, resignation, expulsion, bankruptcy or dissolution of any member or any other event that terminates the continued membership of any member shall not cause the LLC to dissolve or wind up, unless otherwise provided in the company agreement.

Taxes

An LLC can offer certain tax advantages over a corporation, including the availability of more deductions. Additionally, an LLC is not required to be a separate tax entity like a corporation; instead, it can be a "pass-through entity," so that the LLC owners report business losses or profits on their personal tax returns, like a partnership.

Federal Income Tax: Unless you elect to tax the limited liability company as a corporation, the IRS treats single-member LLCs as sole proprietorships for tax purposes. This means the LLC itself does not pay taxes and does not have to file a tax return. Unless you elect to tax the limited Liability company as a corporation, the IRS treats multi-owned LLCs as partnerships for tax purposes. This means that LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, not the LLC itself. If you desire, by filing IRS Form 8832, you may elect corporate taxation if you regularly need to keep a substantial amount of profits in your LLC.

Federal Tax Identification Number: Your LLC may need to obtain a federal tax identification number (also known as an employment identification number/ EIN), which is similar to an individual's social security number. Generally, you will not need a separate EIN number for your LLC as long as you are the sole owner and the LLC has no employees. However, if you are not the sole owner of the LLC or if the LLC has employees, your LLC will need a separate EIN number to open a bank account and for certain tax filing requirements LegalZoom can prepare your Federal Tax ID Application if you have not already done so.