Regardless of the American state where you reside or the professional field you specialize in, you may decide to start a company at some point in your life. If you live in Delaware and wish to establish a limited liability company (LLC), consider filling out the Delaware LLC operating agreement template.
Operating agreements are crucial for companies with limited liability. They prove the entity’s existence, identify its proprietors, and state its administration policies.
Whether you are acting alone or have business partners, it is good to prepare a free printable operating agreement template for your company. You can complete a single-member agreement if you are the only person managing and owning the company. A multi-member agreement fits if you have at least one partner.
For a group of entrepreneurs, an operating agreement is a handy way to establish fundamental management rules, so everyone understands ongoing processes in the company. For a person who manages their entity alone, the helps to split their personal assets from the assets they have invested in the business.
The state of Delaware does not obligate business people to create and file operating agreements for their companies. Even though it is not compulsory, company owners usually prefer to sign the agreement, notarize it, and distribute the signed copies to the parties involved.
Operating agreements are thorough documents with plenty of irreplaceable details. The document’s structure in Delaware coincides with the format in other American states. These documents are considered valid if all company’s shareowners date and sign them. In each such agreement, you have to include:
If the company has more than one proprietor, it is reasonable to work on the operating agreement’s content collectively, so each proprietor gets a chance to propose their thoughts on the template and conditions. Once all members sign the form, remember to share copies with them.
If you are wondering where to get the correct Delaware LLC operating agreement template, use our advanced form-building software to generate it and any other legal form.
Before defining the laws applicable for companies with limited liabilities in Delaware, let’s consider the key difference between LLCs and other entities.
Limited liability companies’ proprietors risk less than owners of sole proprietorships because they are liable only in frames of the amount they invest. In case the company becomes a loss-making entity, the proprietors’ private capital is safe, and they will not sacrifice more than they have invested. It is a feature of companies with limited liabilities gained from huge corporations.
On the other hand, companies with limited liability can use the simpler tax regime and evade double taxation, as it happens with moderate entities. There is an additional advantage: LLCs can be owned by individuals, other companies, and partnerships.
In the United States, regulations regarding entities with limited liability vary from state to state. If you are interested in creating such a company in Delaware, you should act in conformity with Chapter 18 of Title 6, Subtitle II of the Delaware Code.
Section 18-101 of the Delaware Code proposes all definitions of the terms relevant to the topic. There, you’ll find the description of an operating agreement in Delaware and a set of norms under which you should create such documents.
In this article, we have added a guide on establishing a company with limited liability in Delaware. Keep reading to find out the basic steps to take when starting an entity of this kind.
The creation of such companies in Delaware is easier than you may think. Apart from the various documents listed below, you should prepare the money to pay the required fees.
1. Devise a Name of Your Future Entity
You should pick the name following Section 18-102 of the Delaware Code.
As is customary in American states, your company’s name should incorporate either the acronym (LLC or L.L.C.) or the words (“limited liability company). You can also add a member’s name to the company’s name if you like.
Other words that you can include at will in the company’s name are stated in Section 18-102 of the Delaware Code. You cannot use misleading terms like “partnership” or “corporation.”
Before reserving the name, check if anyone else has used it before and ensure there is no existing company with the same name. The guidelines on how to reserve your company’s name are described in Section 18-103 of the Delaware Code.
2. Decide Who Will Be Your Company’s Registered Agent
Usually, all companies with limited liability should appoint a registered agent. This is an individual or an entity that deals with inquiries from the public authorities, incoming letters, lawsuits (in case a company faces one), and so on.
Section 18-104 of the Delaware Code offers various options of who (or what) can be your company’s registered agent:
So, you can choose from a wide range of professional agencies, appoint yourself, or ask any other company’s shareowner to become an agent.
3. Define Your Company’s Type and File the Required Certificate
Domestic companies are located and registered in Delaware, while foreign companies are located outside the state. Choose the suitable type for your company.
Depending on the type, you have to file a Certificate of Formation for domestic companies and a Certificate of Registration for foreign entities). Filing fees also vary from 90 US dollars for the first type and 200 US dollars for the second.
In such certificates, you have to describe your company: write its name and address, specify your registered agent, indicate what the company will work on, and state other relevant info. You also have to prepare a Cover Letter form with the certificate.
Once all the documents are ready, submit them by regular mail. Another option is to attend the Division of Corporations of Delaware.
4. Form an Operating Agreement
Discuss with other members what to include in the agreement. Then, complete the form, sign it, and give copies to those who need them.
You will not file this agreement anywhere because the public authorities in Delaware do not require it. Nonetheless, we have explained in detail why the agreement is useful for your business, so do not hesitate to make and sign one.
5. Ask for the Tax Number
Having a tax number is crucial for your entity. This number enables your company to work at full capacity. After getting the tax number (also referred to as EIN, FTIN, or FEIN), you can start recruiting employees, completing banking transactions, and other business operations required for your company’s success.
The Internal Revenue Service (IRS) is responsible for issuing unique tax numbers in the United States. After completing all procedures described above, you should apply to the IRS to finish your entity’s formation process.
Some states require you to prepare and submit reports regarding your entity’s results (for example, at the end of the year). Delaware is not very strict, but you still have to cover all the taxes in the required period.