Why are LLCs in Delaware?

Delaware has a long history when it comes to company formation. Delaware became a corporate haven in the early 20th century.

While New Jersey was the first to write corporate-friendly laws toward the end of the 19th century to draw business from New York, it didn't take Delaware long to adopt a general incorporation act on March 10, 1899.

The act's purpose was to attract more business to Delaware. It has worked. Not only do many businesses incorporate and operate in Delaware, over 1,000,000 companies are incorporated in Delaware that operate or have their headquarters outside of Delaware.

Prior to the incorporating laws, it required a special act of the state legislature to form a corporation. After the general incorporation act was passed, a person simply had to file articles of incorporation with the Secretary of State and then raise money.

So while Delaware has had a long history of forming corporations, it was natural for Delaware to pass the Delaware LLC Act. The Delaware LLC statute allowed for single member LLCs, liability limited to the investment made by its members, and the ability to pass through income or losses from the LLC to individual member owners.

Delaware also has a special business court called Delaware Chancery Court that only hears corporate and business legal cases.

The State of Delaware receives a large amount of revenue from the companies that call Delaware home. To provide the best possible customer service to companies, lawyers and registered agents; Delaware devotes significant resources to the Division of Corporations.

The division has the most advanced and up-to-date computer and imaging systems available on the market. Delaware's division of corporation's staff is highly trained and while they don't provide legal advice, they generally will file new corporations and amendments very quickly.

These are some of the reasons why LLCs are in Delaware. For more information, please call 1-800-423-2993 or 302-996-5819.

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