If you are looking to form a business and trying to determine which state has the most to offer your company, there is a good chance that both Florida and Delaware have come up in your research. Both states have a good track record of attracting and supporting businesses through supportive regulations, incentives, and resources. Here, we’ll focus on the formation of a limited liability company (LLC) and the benefits that each state has to offer.
Delaware enjoys a well-established reputation as a prime location for business incorporation and formation. Many corporations have chosen Delaware to incorporate in thanks to their corporate-friendly laws and Court of Chancery, among other aspects. For this reason, Delaware corporations and LLCs tend to be more attractive to investors that favor this experienced and savvy environment for business.
Apart from their corporate tradition, however, there is not much to separate Delaware from other popular LLC formation locations. In fact, it tends to be a more expensive choice when compared to other states. If your company does not already have a physical presence in the state, you will be required to register and maintain an additional registered agent. Delaware also requires corporations to pay franchise tax, which can outweigh the similar taxes and fees of other states. Additionally, Delaware is not the most favorable location for small businesses, as most of the focus and benefits are geared toward large corporations with numerous shareholders. Small businesses are unable to benefit from the corporate-friendly laws to the same degree.
The state of Florida is also considered a very business-friendly state. In comparison to Delaware, however, Florida does not impose a franchise tax. This results in relatively low annual fees in Florida, as the only corporate fee the state requires is a corporate status fee of $150. In addition to this aspect, there are many advantages to a Florida LLC.
If you ensure the correct formation, your LLC can provide strict privacy protection for your personal information and other assets. While Florida does have disclosure requirements for its LLCs, implementing a Florida Double LLC will allow you to achieve complete anonymity. Through implementing a Florida Double LLC, any person searching for your Florida company will see the name of a separate LLC that you have formed anonymously in a different state. Consult with an expert LLC formation service to ensure this process is carried out correctly.
With a Florida LLC, your company profits and losses will pass directly onto your members. LLCs fall into a default classification by the IRS and are therefore taxed much liked a partnership would be. For this reason, LLCs avoid the double taxation that corporations are subject to. Taking advantage of this benefit could result in significant tax savings for your company.
Not only are LLCs simple to form in the state of Florida, they also provide greater flexibility in management style compared to that of a corporation. With an LLC, members are allowed to define and implore the management structure as they see fit. Additionally, they can decide how profits are to be distributed among members, unlike corporations which are beholden to shareholders. Similarly, LLCs have fewer restrictions on ownership. Membership for LLCs can be unlimited and consist of non-citizens and entities.
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