Offshore Company Formation – USA (Delaware)
When businessmen talk about offshore companies in the US they actually mean Delaware State which is known as a tax heaven for non-residents of the US. Delaware is considered to be a corporate capital of the US based on common law; the major act is the LLC Act of 1992. The governing authority is the Secretary of State. Companies are incorporated in the form of a Corporation or LLC (LLC is more preferable due to its simplicity).
Basic Information and Calculation of Expenses
Non-resident companies in Delaware carry out business or trade outside the US. Corporations may be engaged in trust and banking activity provided that a special license is obtained from the authorities. LLCs are not allowed to do that at all. Note that Corporations must convene GM of Shareholders in any part of the world whereas LLCs are not obliged to do so. The registered Agent and address located in Delaware are obligatory (they are provided upon registration). The secretary is optional.
Optional services include notarization (USD 150), a bank account (from USD 300 to USD 900 depending on a jurisdiction), the issuance of additional certificates (USD 150-300), mail service (USD 300 per year), corporate design (letterheads, logos, etc.). The renewal price for the 2nd and subsequent years is about USD 500.
The registration procedure takes 1-2 working days (notary certification takes 1-3 working days, and 3-5 days for delivery of documents):
- Selecting a corporate name for a new company. Note that there are a number of name restrictions imposed by law. Corporations’ name end in Corp, Inc, Ltd, for LLCs the abbreviation LLC or LC is applicable.
- Considering corporate structure (number of directors and shareholders), the share capital, nominee services if needed.
- Preparation of the documents. Individuals provide a copy of passport and confirmation of residential residence. Legal entities provide their corporate documents and passports of shareholders.
- Payment of fees.
- Filing the documents to the Secretary of State; approval of a company’s name by the Secretary.
- Upon the confirmation of registration the set of corporate documents is sent to the client by courier.
- Additional services if applicable (Notary certification, Apostille, translation services).
Taxation in Delaware
Non-resident companies are free from any taxes provided that income is derived outside the US. Therefore, companies do not submit an income tax return to the authorities including form SS-4. However, companies pay an annual fixed tax rate in the amount of USD 300 for LLCs and franchise fee of USD 225 for Corporations (it may be higher id a company is entitled to issue more than 1500 shares).
Generally, Delaware companies do not file financial statements to the Government. It should be noted, that corporations complete a Franchise Tax Report which indicates the company’s officers every year (not available to the public). An Annual Report is necessary only if profits are distributed among US residents. Audit and currency control are not required. Companies keep their financial records reflecting the financial status.
Advantages of Offshore Companies in Delaware
- Exemption from any taxes provided that business is carried out outside the US.
- Reputable jurisdiction.
- High level of privacy and strict confidentiality.
- Absence of public register of a company’s officers.
- Nominee services.
- No accounting and audit requirements.
- Paid up capital is not required.
- No currency control.