As an international business hub, Delaware has been recognized as a corporate paradise and is “home” to such famous firms as Amazon, Google, Tesla, Walmart, American Express and Disney, to name just a few. To incorporate/ form a Company in the State of Delaware, US Non-Residents/ Indians need not live in or visit Delaware. Anyone can incorporate/ form a Delaware company as a non-resident and run lawful business activities from anywhere in the world except residents of restricted countries (Cuba, Iran, North Korea, Syria and Russia). More than half of all U.S. publicly traded companies, and 63% of the Fortune 500, are formed in Delaware. State’s business-friendly corporation law makes it attractive as a corporate haven. Delaware has at least million registered companies which is more than people living in Delaware.
The significant benefits to incorporate a business in Delaware are tax benefits, confidentiality, expediency, easy structure and the corporation court:
There are mainly two business entity types that are popular here for Non-US Residents:
LLC or limited liability company
LLC (or a limited liability company) is most popular type of entity to form if you want to start a business in the US as a non-citizen. A limited liability company protects your assets from business debts and lawsuits. Liability of all members is limited to investment amount. LLCs generally offer cheaper and simple taxation structures. A limited liability company is a pass-through tax entity (members are taxed, not the LLC) — thus, the earnings you make from your business only go through your income taxes. Because of this, LLC owners are exempt to file separate tax forms, which is a great cost-saver. LLC is kind of Flexible entity and all terms can be determined by founder(s). It can be managed by members or 3rd party manager. Delaware does not require LLCs to file annual reports. LLC is equivalent to Sole Proprietorship/ Partnership Firm in India.
C-Corporation is subject to Double taxation in USA. It is similar to private limited companies in India. So, when a corporation makes a profit, the corporation is taxed. Apart from that, when a shareholder receives a dividend from their shares, they are also taxed on the amount they receive. A C-Corporation is the best choice if you are a non-US resident and want to have shares in a company that you can then easily transfer to other investors or employees. C-corporations must file an annual report with the Delaware DOC (which is associated with the payment of the state’s franchise tax). This company structure is generally recommended to those who want to share responsibility with other shareholders (Unlimited number) who will also invest in the business. C-Corporation business can be managed through a Board of Directors; Corporations have more formal regulations than LLCs and tend to be more attractive to investors. Liability of all shareholders is limited to investment amount unless acting as guarantor of corporate debt. Corporation pay tax on business income at corporate tax rate. Profits distributed as dividend to shareholders are taxed at personal income tax rate. Board and officers have fiduciary duties to corporation and shareholders. Terms can be customized subject to limits of Delaware corporate law.
You will also need to think of the following:
If You are incorporating an LLC
Remote opening of traditional bank account is not possible in USA. The best way to transact business in LLC is through American financial services companies that provide online money transfer, digital payment services and provides customers with working capital.
If You are incorporating a C -Corporation
Cost of forming an LLC in Delaware is around $ 400 (7-8 days approval)
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How is Delaware taxation different from other state taxation in USA-Click Here