By Andrew Millman Tuesday, September 15, 2015
What are the benefits of a Delaware LLC, and what makes a Delaware LLC so easy to manage and operate? There are a number of reasons a Delaware LLC is uncomplicated to form and maintain. The Delaware LLC is well-known for its unmatched flexibility and low maintenance requirements. First, creating an LLC is simple and straightforward; all you have to provide is your company name, your contact information and the names of the members of the LLC. The state of Delaware does not require the names of the members to be listed on the Certificate of Formation where it would be available on public record.
Once your LLC is up and running, eventual changes in ownership or membership are easy to facilitate. You can add or remove members of the LLC via your LLC Operating Agreement. The LLC Operating Agreement is a written agreement between the LLC’s members that addresses the ownership, management and responsibilities of all the members and managers of the LLC. The LLC Operating Agreement is an internal matter and is not required to be filed publicly.
The annual reporting requirements for a Delaware LLC are simple and direct. All you have to do is submit a $300 Franchise Tax (the Franchise Tax amount is the same for all Delaware LLCs), which is due on or before June 1st of each year, regardless of the amount of income your LLC generates. There is no annual report required when filing the Franchise Tax for a Delaware LLC. This is much different than the annual requirements for a corporation—all Delaware corporations must file an annual report consisting of an updated list of the names and addresses of all officers and Directors, updated shareholder information, updated gross assets and updated issued shares. As you can see, when compared to a corporation, the Delaware LLC is significantly easier to maintain, with much less paperwork and, therefore, much less stress.
In addition, Delaware LLCs include asset protection against liability and creditors. They also carry a distinct tax advantage in that owners can decide, upon formation, how they want the LLC to be taxed by the IRS—as a partnership, an S corporation, a C corporation or a sole proprietorship.
Delaware LLCs are, in a word, extraordinary; when you compare them to other business entities, none of which include the level of privacy, flexibility or cost-efficiency, it is easy to see why two-thirds of all companies formed in the state of Delaware are LLCs.
Protect Your Boat in an LLC
By Devin Scott Monday, September 14, 2015
It is becoming more and more common for boat owners to form a Delaware LLC in order to protect themselves as well as their boat. Oftentimes, people who own a yacht or boat charter it out for a fee. Their boat may be in one city while they are in another, and their boat is often being operated by a person they have never met. The liability concerns here are easy to see. A Delaware LLC can protect the boat owner from personal liability that may stem from any damage that can possibly occur, whether the fault of their boat or the operators of their boat at the time.
Sheltering a boat under a Delaware LLC also allows the owner to maintain his/her privacy. In Delaware, information about the members of an LLC is not required to be filed with the state, and is not on the public record. The members of the LLC are shielded from any debts and obligations of the LLC as well. There can also be tax benefits associated with a Delaware LLC that holds an asset such as a boat. If this interests you, we encourage you to speak with a tax professional for the specifics on LLC tax benefits.
After the LLC is formed, The Delaware Department of Natural Resources and Environmental Control can be a good source of information on how to register your boat in Delaware. The DDNREC requires a bill of sale, a certificate of origination from the manufacturer, the boat type and length and the year the boat was constructed. You can contact the DDNREC office directly for the specifics.
To maintain a Delaware registration, there is a minimum amount of days the boat must be kept in the state of Delaware. DDNREC officers have ways of verifying this information, so it is important to stay in compliance. Those who are not in compliance may receive fines or have their Delaware registration rescinded.
If you would like to protect your boat in an LLC, Harvard Business Services, Inc. can help, and we will not need any of your boat’s information. In fact, some of our clients even form a Delaware LLC before purchasing a boat. The only questions we will need to ask are:
- the name of the company
- your basic contact information (which remains private)
- the names of the initial LLC members (which also remains private)