Frequently Asked Questions

The annual tax for a limited liability company is $300.00 If the limited liability company does not conduct business in Delaware, that is the only tax paid to Delaware.

The limited liability company’s offices may be located anywhere in the world, as long as the limited liability company maintains a registered agent in Delaware. Non-residents who form LLC’s, may not have to pay U.S. taxes.

A general corporation – often referred to as a stock corporation, open corporation or C corporation – is highly recommended when a company goes public or plans a private offering of stock. General corporations are also typically used when a company wants to attract venture-capital funding.A general corporation has three tiers of power – shareholders, directors and officers. Each has different rights and responsibilities within the corporation.

Investors generally want two things: a suitable return on their money and tangible, legal evidence of their investment (their part of ownership) in your enterprise. Stock certificates are the only way to accomplish the latter. Experienced and savvy investors are far less likely to invest in an abstract project or idea without the stock ownership structure in place. If you approach or are approached by an investor, having a stock ownership structure in place and a prepared business plan vastly increase your chances of gaining investors.

Franchise Tax is the fee imposed by the state of Delaware for the right or privilege to own a Delaware company. The tax has no bearing on income or company activity; it is simply required by the state of Delaware to maintain the good standing status of your company.The term "Franchise Tax" does not imply that your company is a franchise business.The Franchise Tax for a corporation is due by March 1 of every year.

Par value stock is a type of common or preferred stock having a nominal amount (known as par value) attached to each of its share. Par value is the per share legal capital of the company that is usually printed on the face of the stock certificate. It is also known as stated value and face value.A company is free to choose any amount as the par value for its share but companies mostly choose a very low amount. For example, the stock of Microsoft has a par value of $0.00000625 per share and Ford’s stock has a par value of $0.01 per share.Par value of stock is different from its market value. The market price of the stock of well established companies is usually much higher than its par value.

Par value has no relationship to the market value of your stock. If your stock were publicly traded, investors would determine its day-to-day market value. The stock of many large and well-known corporations may trade for $50, $75, or $100 on a given day, but the par value of their stock may be as low as $.00001. Par value affects your Franchise Tax, so you can save money by assigning a low value. A $0 par value is usually recommended for companies with 1,500 shares or less.

No-par stock is stock that is essentially issued without a face value. It can be issued to shareholders without the exchange of funds, goods or services.Having no par value will not restrict the selling of your shares to investors at the price determined by the Board of Directors and accepted by the investor (just like shares that do have a par value).It should be noted that some U.S. states do not allow corporations to issue no-par stock.Fortunately, Delaware is not one of those states. The Delaware Division of Corporations allows Delaware general corporations to hold up to to 1,500 shares of no-par stock fee-free.