Each of the 50 states of the United States is constitutionally an independent legal jurisdiction with the right to enact laws in many areas of activity. Each state has enacted its own LLC statute with most states doing so after 1988 when the U.S. Internal Revenue Service commenced issuing rulings that an LLC would qualify for partnership tax treatment. Among the states, the state of Delaware has emerged as the premiere LLC jurisdiction with approximately 25,000 LLCs being formed annually. The status of Delaware as the leading LLC domicile is linked in part to the important role played in the U.S. by the Delaware corporate legislation and its Chancery Court in the development of American corporate jurisprudence. The influence of the Delaware corporate regime is evidenced by the fact that more than half of the companies on the Fortune 500 list and of the companies listed on the New York Stock Exchange are domiciled in Delaware.
Advantages of Delaware Company
1A well developed political, legal and economic society
Back-up provided by comprehensive and mature professionals, financial institutions and providers of legal services
Privacy – no disclosure of beneficial owners
No income tax is assessed on corporations’ offshore income
Non-resident shareholders pay no Delaware state tax on shares
Annual franchise tax is low
Wide variety of types of entities fit for different purposes, e.g., “C” Corporation, LLC, “S” Corporation, Close Corporation, etc.
Simple company structure, e.g., for a “C” Corporation, one person can act as the director, shareholder and officer
User-friendly – timely registration, expedited service, online filing and search, etc
Simple administration – corporate books and records are not required to be located in Delaware