What is a limited liability company (LLC)? How are Delaware LLC’s Managed? Why should one form a Delaware LLC or corporation? What advantages are there to a Delaware LLC or company? What is a corporation? What is a registered agent? Why should I have a registered agent?

Christiana Incorporators FAQ (frequently asked questions )

Not sure what an LLC is? Not sure if you should get a registered agent? Click on the menu on the left or browse this page for more information.

What is a limited liability company (LLC)?

LLC’s are a combination of a corporation and a partnership. Similar to a corporation, a LLC has a legal existence separate from its owner(s) and the owners or members are not personally liable for the company's debts. Like a partnership or an S corporation, a LLC is automatically treated as a pass through entity for tax purposes. Some important components of a Delaware LLC include:

How are Delaware LLC’s Managed?

The management of a Delaware LLC is based on an agreement between its owners, referred to as members. Delaware LLCs allow a customized management structure. The Delaware LLC statute allows parties to define their business relationship in the written agreement however they wish. This is called "freedom of contract". Delaware law provides rules only for those matters on which the parties have failed to agree. The contractual flexibility offered by Delaware is unmatched by any other LLC statute. For example, unlike a corporation, an LLC can distribute profits in any manner described in the LLC agreement, regardless of ownership share.

Why should I form a Delaware LLC or corporation?

One reason is to safeguard personal assets against creditors and lawsuits. Without an LLC or corporation, owners' personal assets (houses, cars, bank accounts, etc.) are at risk of being seized anytime the company is sued. Another great reason is Ownership in a Delaware LLC or corporation is private and easily transferable. The state of Delaware does not record owners' names and there is no requirement to file or record the transfer of ownership.

What advantages are there to a Delaware LLC or company?

There are several advantages:

What is a corporation?

A regular corporation, often referred to as a C corporation, pays taxes directly to the IRS. One possible restriction of a regular corporation is that distribution of earnings as profits to shareholders are taxed twice. Once at the corporate level, and again at the individual shareholder level if a dividend is declared. An S corporation is simply a corporation that has filed an election with the IRS allowing profits of the corporation to pass through to the individual shareholders. Therefore, these profits are taxed only once.

What is a registered agent?

LLCs and corporations are required to appoint a Delaware-based registered agent that is located at a street address (post office boxes are not acceptable) during normal business hours. The registered agent is responsible for receiving important legal and tax documents on behalf of the company including: Service of Process (notice of litigation), franchise tax forms and annual report forms. The registered agent's name and address are included on the formation documents and as a result, this information is a matter of public record.

Why should I have a registered agent?

There are a number of practical reasons for using a professional registered agent provider. Some of the reasons include the following:

  • You are legally required to have a registered agent with a physical address (no post office boxes) in the state of Delaware. Using a professional registered agent provider enables you to satisfy this requirement.

  • When you qualify your company to transact business in states other than your state of formation, you need a registered agent in each of those states. By using a registered agent service provider, one company is handling this important function in each state allowing you to concentrate on your business.

  • It is important to keep the registered agent address updated with the state. Changing the address requires a formal state filing and also requires that a fee be paid to the state. Using a registered agent service provider ensures you will never have to worry about making the change with the state.You will only need to update your provider with the new address.

  • As previously mentioned, the registered agent address is a matter of public record. That means anyone, including marketers, can access it. It is not uncommon for the registered agent to receive "junk mail" on behalf of the business. Using a registered agent provider can reduce the amount of unsolicited mail your business receives.

  • Service of Process is often delivered by local law enforcement. Most business owners do not want customers, employees or neighbors (as in the case of home-based businesses) to witness law enforcement serving them a lawsuit. Using a professional registered agent ensures you receive Service of Process discreetly.

  • The registered agent for a business must be available during normal business hours to accept important documents as they are delivered. If you set your own hours or your business requires you to move around frequently (for example an electrician who is making service calls all day), you may wish to consider using a professional provider so that you never miss these important communications and to ensure these documents still reach you and your business.

  • Back to top