Incorporate in Delaware in 24 Hours

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 Who Are We?

Global Corporate Services, Inc.  was established in 1978 to meet the needs of attorneys banks and individuals requiring incorporation in the State of Delaware. In accordance with Delaware Law, Sections 131 and 132, a corporation must maintain a "representative to accept summons and mail on behalf of the Corporation." Global maintains a corporate office in Delaware, still servicing many of its original faithful clientele.  We act as your registered  agent in Delaware. 

Our experienced staff provides your new business venture with all of your immediate needs to enter the marketplace. At Global, we prepare and file the Certificate of Incorporation or Certificate of Formation, either by mail, phone or fax. We file the corporate papers within twenty-four hours and can offer you same day filing services at our cost to the State. 

Our service is well established, professional and reliable. We have been in business for over twenty-nine years. Why not give us a call today to discuss your corporate filing needs. The information provided is for your convenience of making a decision as to where and how you would like your business incorporated.

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Disadvantages 

• More expensive to form than proprietorship or partnerships

• More legal formality

• More state and federal rules and regulations

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. 

It is very important to note that a Close Corporation does not have the right to go public or make a public offering.

If you do not operate your business in Delaware you are not required to pay the state an income tax. However, you are required to file with the IRS every year whether or not your corporation or LLC or Limited Liability Company earns any money. Please refer to  Tax and Accounting Services.

Non Profit/Non Stock Corporation

The Non-Stock Corporation is owned by its members, because it has no stockholders. The members are defined in the by-laws, as well as the qualifications for membership. There can be different classes of members, including voting and non-voting members. 

Some organizations offer memberships to anyone who joins and pays annual dues, others define the members as a specific group of people, such as a homeowners association where the members may be all the owners of property in a specific geographic area. You define the qualifications of membership.

If you are forming a not for profit company dedicated to religious, charitable, scientific, testing or public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the providing of facilities or equipment) or for the prevention of cruelty to children or animals, then you want to start with a non stock corporation and apply to the IRS for your 501(c) (3) approval. Personal gain is prohibited in a non stock non profit corporation, except as the benefits of membership apply. 

The Non-stock form of company can also be used for political associations, homeowners associations, political candidates campaign committees, fraternal organizations, trade associations and community activities, with the proper language in the Certificate of Incorporation. 

Key Elements: 

• Board of Directors runs the corporation

• Voting members elect the Board of Directors

• May be structured to have a self-perpetuating board

• Membership qualifications defined in the bylaws

• No Stockholders, thus no "Owners"

Frequently used for:

• Charitable or Religious Organizations 

• Homeowners Associations 

• Political Organizations 

• Trade Associations

• Community Organizations 

All corporations unless exempt under Section 501(c) (3) or  Section 501(c) (4 of the IRS Internal Revenue Code who have been in existence since the beginning of the tax year (including  corporations in bankruptcy) must file an income tax return whether or not they have taxable income. If you do not operate your business in Delaware you are not required to pay the state an income tax. 

However, you are required to file with the IRS every year whether or not your corporation or LLC or Limited Liability Company earns any money. Please refer to  Tax and Accounting Services.

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 Limited Liability Company (LLC)

LLCs have long been a traditional form of business structure in Europe and Latin America. The LLC was first introduced in the United States by the State of Wyoming in 1977 and authorized for pass-through taxation (similar to partnerships and "S" Corporations) by the IRS in 1988. With the recent inclusion of Hawaii, all 50 states and Washington, D.C. have now adopted some form of LLC legislation for both domestic and foreign (out of state) Limited Liability Companies. 

Many business professionals believe the LLC presents a superior alternative to corporations and partnerships because the LLC combines many of the advantages of both. With an LLC, the owners can have the corporate liability protection for their personal assets from business debt as well as the tax advantages of partnerships or "S" Corporations. It is similar to an "S" Corporation without the IRS' restrictions.

Advantages

• Protection of personal assets from business debt 

• Profits/losses pass through to personal income tax returns of the owners 

• If you are the only member of an Limited Liability Company, you can elect to file a "Schedule C" as part of your personal tax return.

• Great flexibility in management and organization of the business

• The LLC does not have the ownership restrictions of an "S" Corporation making them ideal business structures for foreign investors

Disadvantages

•   The LLC often has a limited life (not to exceed 30 years in many states). Some states require at least 2 members to form an LLC, and LLCs are not corporations and therefore do not have stock and the benefits of stock ownership and sales. 

As with the "S" Corporation listing, these lists are not inclusive. For more detailed information, please be sure to speak with a qualified legal and/or financial advisor. You may address your questions to our  Tax and Accounting Services at tax@delawarecorp.us.

Important Note Regarding the Federal Taxation of the LLC

Before January 1, 1997, the Internal Revenue Service determined whether a limited liability company would be taxed "like a partnership" or "like a corporation" by analyzing its legal structure or by requiring the members to elect the tax status on a special form. Effective January 1, 1997, the IRS has simplified this process. 

Pursuant to these new IRS regulations, if a limited liability company has satisfied IRS requirements, it can be treated as a partnership for federal tax purposes. As such, the LLC is required to file the same federal tax forms as partnerships and take advantage of the same benefits. However, this is still a highly technical area, and if you require further information, it is recommended that you communicate with the Internal Revenue Service or consult a competent professional such as a tax accountant or attorney.

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 Incorporation Vs. Sole Owner Proprietorship

• Affords you personal liability protection. Protects your personal assets.

• Corporations afford substantial tax advantages. You can file to become a Sub Chapter "S" if all qualifications are met.

• High degree of flexibility in structuring pension plans. You can establish pension, profit sharing and stock options.

• Deductibility of health insurance premiums (in most cases).

• Greater control in transferring ownership. Owners can quickly transfer ownership interest represented by shares of stock.

• More attractive business structure for bringing in outside investors. Gives you the opportunity to raise capital without incurring debt and interest payments.

• A corporation's capital can be expanded in a private offering by issuing and selling additional shares of stock.

• Makes estate and family planning a lot easier. Shares of a corporation can be easily distributed to family members.

You may address your questions to our  Tax and Accounting Services at tax@delawarecorp.us.

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   What is a Sub-Chapter "S" Corporation?

You can elect to be a sub-chapter "S" corporation by filing the IRS Form 2553. It has nothing to do with the state where you incorporate, but refers to the way you pay your income tax.

Upon approval by the IRS for this status, you can pass early losses through to the shareholders giving you and your investor a tax write-off against ordinary income, up to the actual amount of money they have invested in the company. Once the corporation turns a profit, the Sub-Chapter "S" status eliminates taxation for the company entirely. The tax liability is passed on to the stockholders.

"S" Corporation

With the Tax Reform Act of 1986, the "S" Corporation became a highly desirable entity for corporate tax purposes. An "S" Corporation is not really a different type of corporation. It is a special tax designation applied for and granted by the IRS to corporations that have already been formed. Many entrepreneurs and small business owners are partial to the "S" Corporation because it combines many of the advantages of a sole proprietorship, partnership and the corporate forms of business structure.

"S" Corporations have the same basic advantages and disadvantages of general or close corporation with the added benefit of the "S" Corporation special tax provisions. When a standard corporation (general, close or professional) makes a profit, it pays a federal corporate income tax on the profit. If the company declares a dividend, the shareholders must report the dividend as personal income and pay more taxes. 

"S" Corporations avoid this "double taxation" (once at the corporate level and again at the personal level) because all income or loss is reported only once on the personal tax returns of the shareholders. However, like standard corporations (and unlike some partnerships), the "S" Corporation shareholders are exempt from personal liability for business debt.

"S" Corporation Restrictions

To elect "S" Corporation status, your corporation must meet specific guidelines. As a result of the 1996 Tax Law, which became effective January 1, 1997, many of these qualifying guidelines have been changed. A few of these changes are noted below: 

• Prior to the 1996 Tax Law, the maximum number of shareholders was 35. The maximum number of shareholders for an "S" Corporation has been increased to 75. 

• Previously, "S" Corporation ownership was limited to individuals, estates, and certain trusts. Under the new law, stock of an "S" Corporation may be held by a new "electing small business trust." All beneficiaries of the trust must be individuals or estates, except that charitable organizations may hold limited interests. Interests in the trust must be acquired by gift or bequest -- not by purchase. Each potential current beneficiary of the trust is counted towards the 75 shareholder limit on "S" Corporation shareholders.

• "S" Corporations are now allowed to own 80 percent or more of the stock of a regular "C" corporation, which may elect to file a consolidated return with other affiliated regular "C" corporations. The "S" Corporation itself may not join in that election. In addition, an "S" Corporation is now allowed to own a qualified subchapter "S" subsidiary." The parent "S" Corporation must own 100 percent of the stock of the subsidiary.  

• Qualified retirement plans or Section 501(c)(3) charitable organizations may now be shareholders in "S" Corporations. All "S" Corporations must have shareholders who are citizens or residents of the United States. Nonresident aliens cannot be shareholders.

• "S" Corporations may only issue one class of stock. 

• No more than 25 percent of the gross corporate income may be derived from passive income. An "S" Corporation can generally provide employee benefits and deferred compensation plans. 

• "S" Corporations eliminate the problems faced by standard corporations whose shareholder-employees might be subject to IRS claims of excessive compensation. 

• Not all domestic general business corporations are eligible for "S" Corporation status. These exclusions include:

• A financial institution that is a bank

• An insurance company taxed under Subchapter L

• A Domestic International Sales Corporation (DISC)

• Certain affiliated groups of corporations

It should be noted that these lists of qualifying "S" Corporation aspects are not all inclusive. In addition, there are specific circumstances in which an "S" Corporation may owe income tax. For more detailed information about these changes and other aspects regarding "S" Corporation status, contact your personal accountant, attorney or local IRS office.

How to File as a "S" Corporation 

To become a " S" Corporation, you must know the mechanics of filing for this special tax status. Your first step is to form a general, close or professional corporation in the state of your choice. Second, you must obtain the formal consent of the corporation's shareholders. This consent should be noted in the corporation's minutes. Once the filing is approved, your company must complete Form 2553, Election by a Small Business Corporation. This form must be filed with the appropriate IRS office for your region. Please consult the IRS' instructions for Form 2553 to determine your proper deadline for completing and submitting this form. 

You may address your questions to our  Tax and Accounting Services at tax@delawarecorp.us.

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