OPEN A COMPANY IN THE UNITED STATES OF AMERICA: AN UNBELIEVABLE COMPANY LAW  WITH ADVANTAGES FOR YOUR BUSINESS.

At the tax level, setting up a corporation or LLC in Delaware brings benefits only if you do not have taxable profits generated in the state of Delaware or if the company derives most of its taxable profits from royalty for example. In this case, the opening of a company in Delaware provides fiscal advantages.

THE ORIGINS OF THE "DELAWARE" PHENOMENON

Despite the accuracy of the considerations made so far and the undeniable advantages provided by its commercial regulations, I think, however, should be emphasized that the State of Delaware does not necessarily represent the ideal solution for any business reality, especially if they are companies in start-up phase, not interested in entering the Stock Exchange.
The great popularity that Delaware currently benefits, in fact, derives its origins from the phenomenon of the so-called New Economy, developed in the United States, between the end of the 90s and the first years of the new millennium. At that time, the spasmodic search by many companies of one street, which allowed them to get to the promotion of an IPO, in the quickest way, became so ingrained, that many start-ups decided to establish their headquarters directly in Delaware instead, that in the State of residence, in order to accelerate, in this way, the path towards the placement of its equity securities on the Stock Exchange.

 THE LAWS OF THE DELAWARE AS AN EVOLUTION OF THE COMMON LAW AND THE  COMPANY SETTING

Another advantage of opening a company in Delaware is the strong protection of the privacy of the names of shareholders and directors of the company but in reality other US states also offer similar privacy protection.

The real advantage of opening a company in Delaware has to do with the fact that in Delaware there has developed a strong legal-legal doctrine dedicated to the interpretation and application of the rules that regulate the operation of companies.

This tradition is of great help in all cases where a corporation is already listed on the stock exchange or when it plans to carry out mergers or acquisitions, stock exchange listing, bond issuance, when it has a holding structure, when you have foreign subsidiaries or when conflicts arise between groups of shareholders or between shareholders and the board of directors of the company.
 
Having said that, opening a company in Delaware does not even lead to disadvantages. So opening in Delaware is actually a choice like any other and does not involve any particular complications or disadvantages in terms of cost.

The documentation necessary to open a company is the same one that serves for the opening of other states. The important thing is not to be under any illusions about the alleged advantages of opening a Corporation or an LLC in Delaware, but rather understanding the right reasons for opening a company in that state.

Tax advantages related to the opening of a corp in LLC in Delaware

The establishment of a corporation or LLC in Delaware entails a tax advantage if the Corporation or LLC does not derive taxable profits from activities performed in the state. This translates into a 4-10% tax advantage, depending on the other US states with which the corporation or LLC incorporated in Delaware is compared.

The other tax advantage for a company in Delaware is realized if the corporation / LLC not only does not operate in the State of Delaware but does not even generate income in the United States. This is because a Delaware corporation that produces income, for example, in New York State, saves the state taxes of Delaware but then finds itself paying state taxes in New York State.

Another tax advantage of setting up a company [Corporation or LLC] in Delaware occurs when the company derives most of its taxable profits in the form of royalties or technology transfer agreements, for example. This is because in Delaware this kind of profits is not subject to taxation. However, federal corporate income taxes, even for companies opened in Delaware, remain valid as well as the obligation to prepare and file the tax return at the end of the year.

The legal tradition of Delaware in terms of commercial companies: the reasons why Delaware is so famous in the world

Since it is not a day that some entrepreneurs do not contact us asking us to open a company in Delaware, we wanted to get to the bottom on why Delaware is a state so celebrated on a company level. What follows is a small historical-legal analysis of why Delaware has rightly won this reputation in the world.

The legal system of Delaware is strongly rooted in the Anglo-Saxon tradition which in turn profoundly influenced the legal system of the thirteen original colonies of the United States. To understand its peculiarities, it is first of all necessary to analyze the difference between two institutes typical of Anglo-Saxon law, namely the Court of Law and the Court of Equity.

• The Court of Law decides according to the written law "black on white" [traditionally known as "the Law" of the King] and is obliged to respect the letter. Typically, a Court of Law quantifies and awards the obligation to compensate the damage in the form of money to the party who succumbs in the proceedings;

• Instead, the Court of Equity decides according to the principles of fairness, referring also to natural law. It is a type of jurisdiction that was created to overcome the rigidity typical of the Court of Law. Sometimes there are situations where it is necessary to apply different principles in order to have "justice". Typically the Court of Equity imposes on the party who succumbs the obligation to do or the obligation to refrain from doing.

The thirteen colonies originating in the United States, including Delaware, initially maintained the distinction implemented by this dual system of judgment. Over time everyone abolished it and the jurisdiction of cases to discuss "in equity" disappeared normally absorbed by the "Court of Law". In 1792, however, Delaware re-established the distinction by creating a Court of Chancery, which decides "in equity" and which still survives, more robust than ever, until today.

• The Court of Chancery of Delaware therefore decides "in equity" and, in practice, it deals with cases related to corporate matters, trusts, certain family disputes and other minor matters. The bulk of the work takes place precisely in corporate matters. Typical cases on which the Court of Chancery decides are, for example, the request of a group of shareholders to block a merger or acquisition decided by the board of directors of a company. The Court of Chancery issues a temporary injunction to the Board of Directors of "not doing" pending the possibility of examining the case and deciding definitively. Another typical field of action of the Court of Chancery are the cases of unjustified enrichment where the normal remedy is not the payment of the damage but the return or the remittance in the original state where possible. Unlike the other courts, the Court of Chancery does not have a jury: the decisions, always very rapid, are taken by the only judge who then writes detailed opinions on the reasons for the decision taken. They are competent and highly specialized judges and all of these decisions have formed a robust body of legislation in the field of corporate law.

• Delaware Superior Court is instead the court of Delaware that decides "in law". The Court of Chancery always refers to the Superior Court of Delaware for cases in which it is possible to liquidate a damage and compensate it in monetary form. The Supreme Court of Delaware decides with the help of popular juries and, like the Court of Chancery, has developed a deep expertise in corporate matters also because of the deep integration that has always existed between the two courts. So, for example, if in a normal trade dispute my company incorporated in Delaware is brought to trial, who will decide will be the Supreme Court according to the "written law".

Here is explained why Delaware has this reputation in the world of commercial law: strong specialization, speed of sentences, injunctions, opinions and decisions, possibility of decisions that take into account the particular situations of the case in question and which can also differ significantly from the letter of the law [when the case is decided in equity by the Court of Chancery]. These are noteworthy advantages, but they can only be appreciated in full by large companies, typically listed on the stock exchange.

In the wake of Delaware, other US states are beginning to adopt special sections of their courts dedicated only to corporate matters. Prior to Delaware, and until 1913, the preferred state for setting up a corporation in America was New Jersey.

• Following this link you can read the decisions of the Court of Chancery;

• On this page you can find the rulings of the Supreme Court of Delaware;

• This is the site of all the judicial organs of the State of Delaware.

The trading company in America, arm of a medium company with perhaps only one partner does not need the advantages offered by the legal system that Delaware offers in the field of commercial law. This does not mean that you can’t still decide to open your own company in Delaware. Just do it for the right reasons.