Description
of Corporations Organized in Delaware
Before deciding which
type of corporation best suits your business needs, always consult
with your legal or financial advisors. Global Corporate Services,
Inc. is a registered agent in the State of Delaware and does not
offer legal or tax advice. We are here to help you start your new
business as quickly and cost effectively as possible.
For more detailed information, you may address your questions to
our Tax and Accounting Services at tax@delawarecorp.us.
Should
I incorporate my business as a Corporation or form an LLC?
Both corporate
entities are excellent choices for business owners looking to
minimize their personal liability and build greater credibility.
Each entity offers distinct tax and business advantages. Choosing
the right one depends on the specific needs of the business.
General
Corporation
The general corporation is the most common corporate structure.
This type of corporation is a separate legal entity that is owned
by stockholders. A general corporation may have an unlimited
number of stockholders that, due to the separate legal nature of
the corporation, are protected from the creditors of the business.
A stockholder's personal liability is usually limited to the
amount of investment in the corporation and no more.
Advantages
-
Owners' personal
assets are protected from business debt and liability
-
Corporations
have unlimited life extending beyond the illness or death of
the owners
-
Tax free
benefits such as insurance, travel, and retirement plan
deductions
-
Transfer of
ownership facilitated by sale of shares of stock owned by
individuals outside the State are not subject to any
Delaware taxes.
-
Shares of stock
owned by individuals outside the State are not subject to
any Delaware taxes.
-
Change of
ownership need not affect shares of stock owned by
individuals outside the State are not subject to any
Delaware taxes. management
-
Shares of stock
owned by individuals outside the State are not subject to
any Delaware taxes.
-
Easier to raise
capital through sale of stocks and bonds.
Disadvantages
-
More expensive
to form than proprietorship or partnerships
-
More legal
formality
-
More state and
federal rules and regulations
See: "C"
Corporation Tax Breakdown
What
is a Close Corporation?
There are a few minor, but significant, differences between
general corporations and close corporations. In most states where
they are recognized, close corporations are limited to 30 to 50
stockholders. In addition, many close corporation statutes require
that the directors of a close corporation must first offer the
shares to existing stockholders before selling to new
shareholders.
This type of corporation is particularly well suited for a group
of individuals who will own the corporation with some members
actively involved in the management and other members only
involved on a limited or indirect level.
To be incorporated the name of the corporation must include one of
the following:
* Incorporated or
Inc.
* Corporation or Corp.
* Association
* Institute
* Union
* Limited or Ltd.
* Club
* Foundation
* Fund
* Society
* Syndicate
