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Delaware Tax Haven: Why It’s an Attractive Place To Start an LLC

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Registering an LLC in the Delaware tax haven is a no-brainer if you want to reduce your taxes, protect your privacy, and enjoy stability. The state is known for attracting businesses because of its business-friendly stance. 

There are 1.9 million legal entities incorporated in Delaware. After reading the positives of the state for business in this article, you might be the next one. 

Top Reasons Why Delaware is Considered a Tax Haven

To help you decide if registering your business in Delaware is the right move, let’s consider the top reasons why is Delaware a tax haven. This will inform you of the benefits of company formation in the state. 

Tax Benefits

Tax benefits are the biggest and most obvious reasons why Delaware is a tax haven. The average incorporated business can expect to pay fewer taxes operating from Delaware than most other states in the United States. Here’s a summary of the different tax advantages:

  • No state taxes: There are no state taxes in Delaware, so businesses selling goods will not have to pay sales tax. Furthermore, even if the business owner resides outside of Delaware, they don’t need to pay Delaware corporate income tax. Additionally, there are no value-added taxes (VATs) or property taxes. 
  • Flat fee taxes: The majority of states in the US require LLC and franchise taxes based on the amount of money earned. Therefore, once your business scales, the size of these taxes could be massive. However, in Delaware, you’re not punished for growing your company since there is a flat taxation fee for LLCs of $300. Also, LLCs are not obligated to file annual reports. 
  • Pass-through taxation: In Delaware pass-through taxation is the standard for LLCs. This is important to avoid double taxation. Therefore, your overall tax burden is significantly reduced. 
  • No intangible asset taxes: When your business is operating in another state and creates royalty-based income, you can move the ownership of those assets to Delaware. This allows you to avoid paying taxes on those royalties. 

Financial Secrecy and Confidentiality

When registering an LLC in Delaware, you can enjoy higher levels of secrecy and confidentiality than most other states. For example, there’s no need to disclose information about shareholder or board meetings, or file annual reports. 

Also, you can form an anonymous LLC in Delaware, which means the company owners do not need to publicly disclose their identity. This comes with a number of benefits, such as:

  • Avoid harassment: You can potentially avoid harassment from your customer base by not disclosing your personal identity. Also, your physical address is protected when you opt for virtual mailbox services. 
  • Separation: It’s easier to separate your life when there’s a barrier between your personal life and work. Investing in an anonymous LLC in Delaware allows you to achieve this setup. 
  • Privacy protection: If your LLC were to face problems and get a bad reputation in the public eye, the negativity would not be attached to your name. Distancing yourself from your LLC ensures that business problems don’t stick with you for the rest of your life. 

Political and Economic Stability

Business thrives on stability, and that’s what you’re likely to get in the state of Delaware. The state is known for high levels of political and economic stability. For example, the tax benefits of Delaware explained above will likely stay for years and decades into the future. In comparison, taxation rules in other states may change more frequently. 

Ease of Doing Business

Delaware is one of the best states to do business in the United States. The Delaware tax benefits are a reflection of the economic philosophy of the political system in Delaware. They want businesses to thrive and to attract more business by improving the economic conditions for businesses. 

Also, Delaware is open to foreign investors and business wonders. For example, you can register an LLC in Delaware and run it outside the state. This means you don’t need to move to Delaware to have a business registered there. 

Furthermore, registering a business in Delaware is a hassle-free process. It’s even easier when you have a service like Business Anywhere on your side. We specialize in business registration services to help you complete the process at every step of the way. 

delaware tax haven

3 Step Process For Registering an LLC In Delaware

Let’s look at the steps you need to take when registering an LLC in Delaware:

  1. Choose a name: Start by selecting a name for your LLC in Delaware. Do a name search to ensure that your desired name isn’t already taken and doesn’t sound similar to existing ones. 
  2. Articles of Organization: The next step is to file the Articles of Organization with the state of Delaware. There will be a filing fee, and the process is typically completed within a few weeks. 
  3. Registered agent: Now, you need to select a registered agent. This is an individual or corporation that has a license in Delaware to accept and process legal business documents on your behalf. However, it’s vital to choose a trustworthy registered agent, and you can choose Business Anywhere. 

Delaware Tax Haven – Should You Register Your Business There?

To conclude, registering your business in Delaware is a smart move if you want to save money on taxes. Therefore, you can improve the profitability of your business and potentially scale at a faster rate. 

Now that you know why is Delaware tax free, the next logical step is to strongly consider registering your business there. To enjoy a friction-free registration process, consider using Business Anywhere. We provide business registration services that help you at every step of the way. 

About Author

Picture of Rick Mak

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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