Question 1

Why do so many companies incorporate in Delaware?

Accepted Answer

Delaware is the preferred incorporation state for the majority of large U.S. corporations due to several key advantages. The Court of Chancery provides expert, efficient resolution of business disputes by judges (not juries) who specialize in corporate law. Delaware's General Corporation Law is the most flexible and well-developed corporate statute in the country, with extensive case law providing predictability and certainty. The state's Division of Corporations offers expedited filing services, and Delaware law allows for significant flexibility in corporate governance arrangements. Additionally, Delaware does not impose corporate income tax on companies that are incorporated in Delaware but do not conduct business within the state.

Question 2

How do I form an LLC in Delaware?

Accepted Answer

To form an LLC in Delaware, you must file a Certificate of Formation with the Delaware Division of Corporations and pay a $90 filing fee. Delaware LLCs must maintain a registered agent with a physical address in Delaware. The state requires an annual franchise tax of $300 for LLCs. Delaware's LLC Act is one of the most flexible in the country, allowing members to customize the governance structure through the LLC agreement. Delaware does not require LLCs to file annual reports or list members/managers publicly, providing privacy advantages. An operating agreement, while not required to be filed, is essential for defining member rights and management structure.

Question 3

What is the Delaware Court of Chancery?

Accepted Answer

The Court of Chancery is a specialized equity court in Delaware that handles business disputes, corporate governance matters, trusts, estates, and other equitable claims. Unlike most courts, the Court of Chancery does not use juries — cases are decided by chancellors and vice chancellors who are experts in business law. This court has developed an extensive body of case law on corporate governance, fiduciary duties, and LLC disputes that is widely cited and followed across the country. The court is known for its efficiency, expertise, and the predictability of its rulings, making it a primary reason businesses choose to incorporate in Delaware.

Question 4

What are Delaware's landlord-tenant laws?

Accepted Answer

Delaware's landlord-tenant laws are codified in the Delaware Residential Landlord-Tenant Code (Del. Code tit. 25, ch. 55). Security deposits are limited to one month's rent for leases of one year or more, and landlords must return deposits within 20 days after the tenant vacates. Landlords must maintain rental units in habitable condition, and tenants have the right to make minor repairs and deduct the cost from rent under certain circumstances. Delaware requires landlords to provide at least 60 days' notice before terminating a month-to-month tenancy, and evictions must go through the Justice of the Peace Court.

Question 5

Does Delaware have a state income tax?

Accepted Answer

Yes, Delaware imposes a graduated state income tax with rates ranging from 2.2% to 6.6%. However, Delaware has no state sales tax, which can offset the income tax burden for residents. Delaware also does not impose a personal property tax. For businesses, Delaware imposes a franchise tax on corporations based on either authorized shares or assumed par value capital. LLCs pay a flat annual franchise tax of $300. These tax characteristics, combined with Delaware's business-friendly legal framework, make the state's overall tax environment competitive despite the income tax.

Property Division	Equitable Distribution
At-Will Employment	Yes
State Income Tax Rate	2.2% - 6.6%
Statewide Rent Control	No
LLC Formation Filing Fee	$90
Minimum Wage	$13.25/hr
Online Notarization	Allowed
State Bar Association	https://www.dsba.org

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