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Old 28th April 2007, 09:23 AM   #7
SeattleCPA
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Join Date: Apr 2007
Location: Seattle, Washington
Posts: 203
Default A bit about Delaware Corps and LLCs

Thanks for welcome, Logan,

After I posted yesterday, I thought I should have mentioned the two or three reasons that ( as I understand it) people incorporate in Delaware or form their LLC in Delaware.

Note: I'm not an attorney, but the guys I taught the graduate tax class on "choice of entity: LLCs versus S corporations" at Golden Gate University with were attorneys and so we went over all this..

But back to the reasons for forming a business in Delaware:

1. Delaware corporation laws are very business friendly. Example: I'm not sure if this is still right, but to give you an idea, I think at one time Delaware , rather uniquely, allowed corporations to indemnify their boards of directors against shareholder lawsuits...

2. The Delaware Chancery courts are probably the best corporate law courts in the country. Obviously, you can never trust completely some organizations self-evaluation, but here's the text from the court's home page: "The Delaware Court of Chancery is widely recognized as the nation's preeminent forum for the determination of disputes involving the internal affairs of the thousands upon thousands of Delaware corporations and other business entities through which a vast amount of the world's commercial affairs is conducted. Its unique competence in and exposure to issues of business law are unmatched." I hear corporate attorneys say similiar things.

3. Delaware has offered large multistate corporations some very favorable tax laws, such as (I recall) the ability to source trademark royalty income to Delaware tax free.

This things all sound great, of course, but there aren't relevant or all that revelant to a small business...

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Steve Nelson, Publisher, www dot llcsexplained dot com and www dot fasteasyincorporationkits dot com.

Last edited by SeattleCPA; 28th April 2007 at 12:23 PM.
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