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Why Delaware and Florida stand out among other states
For forming an LLC, Delaware, and Florida offer unique advantages and exceptional appeal compared to other states in the U.S. Let’s explore!
About Delaware
Delaware is well-known for being a top business-friendly state in the US. In fact, it has consistently been ranked highly among the most beneficial states for various business structures, including LLCs, by trusted magazines for several years.
Moreover, Delaware is home to some of the largest businesses in the world, such as AstraZeneca and Walmart. The state boasts expertise and experience in business law.
Especially for businesses incorporated in Delaware, the state has a Court of Chancery to deal with business cases effectively.
Read more on the 5 key benefits of starting a business in Delaware.
About Florida
Much like Delaware, Florida is renowned for its business-friendly atmosphere, making it a sought-after destination for entrepreneurs to form LLCs.
Florida has earned high rankings in famous publications for its numerous advantages. For instance, Chief Executive Magazine ranked Florida second among the top states suitable for doing business.
This state is also home to some of the largest companies in the world such as PetMed Express, Inc., Burger King, and DHL America.
Since the state’s ultimate goal is to encourage incorporation, they are much more concerned with creating a favorable environment than simply attracting investments.
Comparison: Delaware LLC vs. Florida LLC
What are the key factors to consider when comparing Delaware LLCs and Florida LLCs? Let’s find out in the section below.
Common benefits of the two states
Delaware and Florida share a common trait as business-friendly states, offering many benefits to businesses. These advantages include low taxes, straightforward formation procedures, and flexible laws.
No minimum capital requirements
Unlike some other states, Delaware and Florida do not have minimum capital requirements for LLCs. As a result, you can form your LLC with less financial burdens.
Flexible legal regulations
Both Delaware and Florida offer adjustable regulations, allowing businesses to customize their structures to suit their needs.
For example, in Delaware, LLCs can choose to have different classes of membership, enabling businesses to create different voting rights and ownership structures.
Don’t have enough time to go through the whole article? Here’s a summary of Delaware and Florida LLCs’ features for your convenience. Dive in now!
The differences between what they offer
While both Delaware and Florida are known for being business-friendly states for LLCs, there are some notable differences you should keep in mind:
Taxation
Delaware LLCs can choose to be taxed as a partnership, S corporation, or even a disregarded entity.
Meanwhile, Florida LLCs can ask to be taxed as a corporation, partnership, or sole proprietorship.
LLC in Delaware will be taxed at a flat annual $300, while the sole proprietorship will be charged the personal income tax. However, your LLC will be subject to sales tax.
On the other hand, both partnership and proprietorship in Florida will not be taxed, unless these LLCs have employees. Do note that certain taxes and fees (e.g. state taxes, corporate income taxes, Franchise and LLC taxes) might be applicable.
taxes to pay ?
forms to file ?
Find the answers you need in this guide.
Incorporation and maintenance fees
The total expenses will depend greatly on the type of business you are running and the state of incorporation.
Delaware LLCs are generally more expensive to set up and maintain than Florida LLCs, but the seamless procedures may make them worth the extra cost.
In particular, foreigners can incorporate their offshore business in Delaware without having a presence in the state. This is done by enlisting a registered agent physically located in Delaware who can accept the service of the process.
Although incorporating in Florida is generally more cost-effective, you should be cautious about any additional fees that may arise.
Ready to take the leap and incorporate your business in Delaware?
Our committed team is here to make the process smooth and hassle-free for you. With our company formation services, you can experience a streamlined process and ensure legal compliance with ease.
Start your Delaware LLC journey with BBCIncorp today!
Asset protection
When it comes to asset protection, both Delaware and Florida offer safeguards for LLCs. However, Delaware’s laws provide more robust protection, treating LLCs as separate entities from their owners.
The owner’s personal assets are better shielded from the LLC’s creditors. If asset protection is a top priority, forming a Delaware LLC is highly recommended.
With these features in mind, you should thoroughly consider what your LLC needs most in the long run to balance the benefits and drawbacks of both states.
To wrap up
In conclusion, we’ve highlighted the vital aspects to guide your choice in selecting the optimal state for your LLC incorporation.
If flexibility is prioritized, a Delaware LLC may be the preferred option. On the other hand, if you seek ease of management, a Florida LLC is a better-suited choice. Remember, seeking guidance from professionals is vital.
Don’t hesitate to contact our team via service@bbcincorp.com for timely support on setting up your LLC business.
Frequently Asked Questions
Should you incorporate an LLC in Delaware or Florida?
The answer to this question depends on some factors, including the nature of your business, your business goals, and your personal preferences. If you’re looking for the most flexible and advantageous legal structure for your business, incorporation in Delaware may be the best option.
Can a Delaware LLC do business in Florida?
Yes, a Delaware LLC can do business in Florida. However, the LLC will need to register as a foreign LLC with the state of Florida. The process for registering a foreign LLC is relatively simple and can be done online.
Is Delaware the best state to form an LLC?
Delaware may be the best state to form an LLC for some businesses, but not all. Consider your business goals and needs when deciding where to incorporate your LLC.
What is the Delaware loophole in taxation?
Delaware has a unique tax mechanism called “the Delaware loophole” that allows intangible assets such as trademarks, copyrights, and patents to pass through taxation.
Suppose that you run a studio with over $US 100 million of yearly net income in California. Your income is then hit with state income tax, alternative minimum tax, and a federal corporate tax rate.
If you set up a Delaware subsidiary, you can pay for the rights to use your own patent. Since Delaware doesn’t impose corporate income or sales tax, you would get better retention from the bottom line.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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