If your Shopify-powered e-commerce business is thriving and you’re ready to take to the next level, you may have some questions about how to do so. The natural next step would be to incorporate your business so that it can become an independent entity and limit your liability as a business owner. Incorporating your business is a fairly simple process, but where you incorporate it can impact your investment into your business venture.
So, the questions is…where should you incorporate your Shopify-powered business? While you can incorporate in any state including your own, some states are more business-friendly than others thanks to their business laws. Delaware is considered one of the most business-friendly states when it comes to incorporating, and hey, we might be a little bit biased, but for Shopify store operators specifically, registering in Delaware offers many benefits:
Less Legalities - Filing as a Delaware incorporating is a great option for a small business, especially a Shopify store, because there aren’t as many legalities to navigate.
No Minimum Capital Requirement– Another reason for the ease of incorporating in Delaware is that there is no minimum capital requirement for a Delaware corporation. So, no matter the size or scale of your Shopify business, you’ll be eligible to incorporate in the state.
You Don’t Have to Be Resident – You don’t have to live in Delaware to incorporate there. Furthermore, the business doesn’t have to carry out any of its business in Delaware. You can be based anywhere in the U.S. – or the world.
No Local Tax Liability – When business is carried out outside of the state, a Delaware corporation is not liable for local taxes.
Whether you’re taking your Shopify-powered e-commerce store to the next level, starting a brick-and-mortar business or want to legitimize your side venture, registering a corporation or LLC in Delaware is an easy and efficient process.
Delaware Business Incorporators offers a comprehensive array of registration and legal services to get you there. To learn more about incorporating in Delaware, visit our “Start a Company” dropdown tab or call us directly at 302-996-5819 for more information.
Last year, the Supreme Court ruled in favor of the state of South Dakota in the case of South Dakota vs. Wayfair, Inc. which overruled the physical presence rule for remote sales tax collection. This decision, commonly known as “the Wayfair Decision”, not only reflects the impact of eCommerce on our economy but has also held great impact on the way states are enforcing tax. Not only did the Supreme Court enact the Wayfair Decision, but they remanded the case back to the South Dakota Supreme Court to ensure that it met standards of constitutionality. Through the Wayfair decision, states are able to begin taxing remote retailers and regain the tax revenue.
This is great for state governments, but how has the Wayfair decision impacted business, especially small businesses owners over the last year? For instance, starting April 1stof this year, California is now required to collect sales tax from eCommerce companies who sell to a California address on any “physical” process, but not “digital” or electronic goods or services. This may be a confusing law within the new “digital” tax era, but it’s a great example of how complex these new tax developments can be especially within the scope of state governments and their varying laws. Let’s break down ways the Wayfair decision has (or will) impact remote sellers – and what it means for small business owners or companies who need to start collecting sales tax.
What the Wayfair Decision Means for Businesses
States can now tax remote sellers. Ultimately, this will vary depending on which products a state decides to tax (i.e. the California tax law mentioned above) and can include tangible property, digital services, or both. The intention behind this new mandate is that states will increasingly standardize product definitions and which products are taxed.
Retailers now have to track sales levels and tax law changes. This applies to all states where the retailers do business.
Retailers must set up operations to collect tax wherever they sell. Retailers must also then pay taxes on that state’s schedule.
Competition is a more even playing field. For remote retailers, this effect isn’t so beneficial. Now that they have to start charging tax, they lose the competitive edge of being tax-free, which is a huge competitive advantage. However, this does even the playing field for brick-and-mortar retailers.
Large online businesses most likely won’t feel much of an impact on these new laws mostly because of the size and scale of their business and profits. However, smaller businesses, if they reach the benchmarks, will feel the impact of these new state laws. And what about those who fall somewhere in between? Medium-sized businesses will feel the effect of these tax laws the most by having to deal with tracking law changes, sales volumes in varying jurisdictions, and collecting and paying the sales tax when needed.
If your company has an online retail component, it will be impacted by the recent Wayfair decision and that states’ new tax laws.
Delaware Business Incorporators, LLC (DBI) is pleased to announce that CEO and Founder Douglas Murray is celebrating 50 years in business as of April 1, 2019.
A Media, Pennsylvania native, Murray attended West Chester University and served in the Air Force before settling in Wilmington. He sold tree services for a short time before becoming self-employed. He began Telectronics Corporation d/b/a/ Delaware Telephone Answering Service on April 1st, 1969 at the suggestion of a local doctor. Murray’s oldest son Russell joined the business in 1977 and now serves as Vice President of Operations & Marketing for DBI.
Officially founded in 1986, DBI has provided a variety of incorporating and registered agent services over the years. Murray's youngest son Bryan joined the company in 1986 as Projects Manager. Since its founding, the company has successfully adapted to the ever-changing technological and economic landscape of the business world. Today, DBI provides legal services including LLC and corporation formation, corporate kits, virtual offices, mail forwarding, and more out of their Wilmington office location. Murray continues to serve DBI as President and CEO.
A former member of the Wilmington Kiwanis, Murray has enjoyed recruiting new members for the organization over the years. His loving wife of 58 years, Ruth, continues to support him in his business endeavors. When he’s not in the office or reading the latest best-selling novel, you can find him on the dance floor as “Dancin’ Dougie” where he enjoys dancing to local blues music.
Here's a list of the top 9 initial public offerings expected to be brought to the public markets this year. Will these companies be able to successfully bring their IPOs to market before this 10 year bull market runs out of steam? Investor appetite remains strong for some of these well-known companies and brands.
Uber - $120 Billion Valuation Expected
Uber is the well-known number one ride-hailing company in the world. Founder Travis Kalanick was replaced in 2017 by Dara Khosrowshahi, the former CEO of Expedia Group. Without wasting any time, Khosrowshahi spent time recruiting a new Uber CFO, Nelson Chai from Merrill Lynch to prepare Uber's IPO. The IPO plans were filed confidentially with the SEC in December. Uber's plan was to beat rival Lyft to Wall Street. The first half of 2019 will see an Uber IPO. Uber Technologies, Inc. is incorporated in Delaware.
WeWork - $42 Billion Valuation Expected
Digital nomads and startup entrepreneurs around the world are familiar with WeWork, the office space sharing startup. The "hip" real estate company, which rents shared office spare in its, modern, open work spaces, doubled its revenue to $422 million in the 2nd quarter of 2018. WeWork is losing money and lost $723 million in the first half of 2018. WeWork is a Delaware corporation incorporated in 2013.
Lyft - $15 Billion Valuation Expected
While not as large as Uber, Lyft is looking to go public with their IPO in the first half of 2019 as well. It will be even more incumbent for Lyft to reduce labor costs and turn a profit. Amazingly, both Uber and Lyft filed their IPO's on the same exact day in December. The competition between these two companies is extremely intense. Companies that are looking to make large investments in Lyft and Uber are Alphabet, General Motors, Fidelity and Icahn Enterprises. Lyft, Inc. is a Delaware corporation.
Airbnb - $31 Billion Valuation Expected
Airbnb, the mammoth room, apartment, and house rental matching serivce is expected to cut out underwriters and go with a "direct listing". With a direct listing shares are sold directly to the public. The drawback is that Airbnb will not get any of the proceeds. Even though Airbnb will not benefit directly, insiders will be able to convert their shares to cash.
Slack - $10 Billion Valuation Expected
You may not have heard of Slack, but they have a loyal following of 8 million daily users and 3 million paying subscribers. They are experiencing growth of 45%. Slack is a workplace messaging application used by corporate users. Slack is preparing an IPO to be completed by years' end. In December 2019, the company hired Goldman Sachs as the lead underwriter. Slack Technologies, Inc. is a Delaware corporation.
Palantir Technologies - $30 Billion to $40 Billion Valuation Expected
While not well known to the general public, Palantir Technologies is well known to intelligence agencies and governments. The company is a data analytics and intelligence firm and was instrumental in the 2011 capture of Osama bin Laden. Employees and investors are ready to cash out even though the company may not be all that excited to come under the scrutiny of Wall Street on a quarterly basis. The secretive company is very guarded about its business. Palantir Technologies, Inc. is incorporated in Delaware.
Robinhood - $5.6 Billion Valuation Expected
Popular with the millennial generation, the no-free stock trading platform has more than 5 million accounts. Robinhood now has more users than E-trade but has only been in business for 5 years. Robinhood makes it money by earning interest on account balances, selling order flow to stock exchanges and margin trading. Jason Warnick became CFO after working at Amazon as vice president of finance. This IPO will be one the biggest IPOs to watch in 2019. Robinhood Markets, Inc. is a Delaware corporation.
Pinterest - $12.3 Billion Valuation Expected
Pinterest, a very popular consumer image search and sharing application website, is looking to list in April, 2019. Many fashion brands and online retailers find Pinterest an indispensable advertising partner. Pinterest 2018 revenue is estimated to be approximately $700 million, which is up about 50% year-over-year. Pinterest claims 250 million active, highly engaged users. Pinterest, Inc. was incorporated in Delaware in 2008.
Postmates - $1.2 Billion Valuation Expected
Postmates is a food delivery app that is in the process of going public towards the end of 2019. For companies like Postmates, 2019 is shaping up to be the year to go public before the bull market comes to an end. The company's fierce competition includes DoorDash, UberEats and GrubHub. Postmates is a Delaware corporation that was incorporated in 2011.
As one of Delaware's premier incorporating companies, Delaware Business Incorporators, Inc. is proud to bring you informative articles about startups, IPOs and cutting-edge businesses. DBI serves the legal and accounting professions with Delaware entity formation services and registered agent services. For more information about our services, call us 1-800-423-2993 or 302-996-5819.
All Domestic LLCs and Foreign LLCs, General Partnerships and Limited Partnerships registered or formed in Delaware are required to pay an annual tax of $300. Annual reports are NOT required for LLCs, LPs, or GPs.
There is no pro-ration on alternative entity taxes. Annual taxes are assessed if the entity is active in the records of the Division of Corporations anytime during January 1st through December 31st of the current tax year.
Ongoing Annual Tax
Each year on or before June 1, a LLC franchise tax is due in the amount of $300. This year the tax due date falls on Saturday, June 1, 2019. We highly recommend paying your Delaware LLC tax on or before May 31, 2019. This tax is same regardless of the size of your company, gross assets, or profit or loss. You can pay your LLC tax online here. You'll need your Delaware 7-digit file number. If you don't have your number, call us at 1-800-423-2993 or 302-996-5819 and we'll be happy to provide it to you.
Late Fee Penalty and Interest
For any payments received AFTER June 1, 2019 Delaware charges a late fee of $200 plus monthly interest at the rate of 1.5% on the unpaid balance. If Delaware Business Incorporators, Inc. is your Delaware registered agent, we'll send periodic email alerts to remind you of your franchise tax due date. There is no pro-ration on alternative entity taxes. Annual taxes are assessed if your entity is active in the records of the Delaware Division of Corporations anytime during January 1st through December 31st of the current tax year.
Annual Report Requirements
Delaware does NOT require that an annual report be filed for a LLC. No information is collected by the State of Delaware. However, your Delaware registered agent is required to keep your contact information.
Good Standing Protection Service (Compliance Service)
Some registered agent companies offer a compliance service. Delaware Business Incorporators, Inc. offers a compliance service called Good Standing Protection Service (GSPS). Our GSPS service guarantees that your LLC / LP/ GP tax is paid on time. Our service comes with a 100% guarantee. If for some reason we fail to file your Delaware taxes on time, we'll pay the late fee and any associated interest penalties.
If you have any questions about your Delaware LLC, LP or GP taxes, please do not hesitate to call us at 1-800-423-2993 or 302-996-5819. We do not have to be your registered agent to give you assistance.
Company seals (aka corporate seals) were mainly used by companies in common law jurisdictions. However, in modern times, most countries no longer require the use of corporate seals.
Traditionally, the seal was of some legal significance because the affixing of the seal signified that the document was the act and deed of the company, whereas when a document was merely signed by a director, then that was deemed to be an act carried out on behalf of the company by its agents, which was subject to applicable restrictions and limitations under the ordinary law of agency.
Corporate seals are generally only used for two purposes by corporations today:
Documents which need to be executed as deeds (as opposed to simple contracts), may be executed under the company's common seal
Certain corporate documents, for example share certificates are often issued under the company seal
Physically, seals were used to make an impression on melted wax on the relevant document. However modern seals will usually only leave an indentation or impression on the paper (although sometimes a red wafer is used to imitate old red wax seals, and to make the sealing show up better on photocopies).
Is it necessary to have a corporate seal?
Although it is not necessary to have a corporate seal, it can be very beneficial in certain situations. For instance, when signing a commercial lease, the landlord may want you to use your corporate seal to "stamp" the document.
Do LLCs need a corporate seal?
Legal entities, including LLCs, are not required to have corporate seals. However, it is highly recommended for "stamping" or "embossing" contracts and deeds.
Are company seals still required?
No. Company seals (aka corporate seals) are not legally required. However, some companies incorporated before 1988, may still require their use. Regardless of the law, many companies still choose to use a corporate seal to "stamp" their important legal documents.
What is an official company seal?
An official company seal is the same as a corporate seal.
What should be on a corporate seal?
A corporate seal should include the following:
name of the company
year of formation
state of formation
Some states require that the Month and Day of the company's formation be indicated as well.
Does Delaware require a corporate seal?
Delaware law does not require the use of a corporate seal.
What is the purpose of a corporate seal?
The corporate seal is a tool (usually metal) used to "stamp" or "emboss" your company's important documents. When a document is "stamped" it shows that the company's Board of Directors have certified and agreed to the contents of document.
Are there different types of corporate seals?
Yes. Corporate seals come in a variety of types, sizes and colors. Types include handheld (pocket) and desktop. Seals come in sizes from 1 5/8" to 2" and sometimes larger. Seal shapes can be round, square, rectangle or oval. Corporate seals come in different colors, too i.e. brass, matte black, black and chrome, or blue.
What is the average price of a good corporate seal?
Corporate seals range in price from $32 to $56 or more.
We hope you found this article informative. If you have any questions, please do not hesitate to call Delaware Business Incorporators, Inc. for more information at 1-800-423-2993 or 302-996-5819.
It's that time of year again! The state of Delaware is collecting franchise taxes for all corporations that were incorporated as of December 31, 2018. If you have a Delaware corporation, be sure to get your franchise taxes paid and file your annual report. Here's some more information and details:
Corporate Annual Report:
All active Domestic Corporation Annual Reports and Franchise Taxes for the prior year are due annually on or before March 1st and are required to be filed online. Failure to file the report and pay the required franchise taxes will result in a penalty of $125.00 plus 1.5% interest per month on tax and penalty.
Franchise Tax Rates:
If using the authorized shares method, the minimum tax is currently $175.00 for 1500 shares of NO par value stock. The Minimum Tax using the Assumed Par Value Capital Method is $350.00 with a maximum tax of $200,000.00 for both methods unless it has been identified as a Large Corporate Filer, then their tax will be $250,000.00.
Taxes are assessed if the corporation is active in the records of the Division of Corporations anytime during January 1st through December 31st of the current tax year.
The Delaware Code allows a qualified domestic corporation to file as an exempt corporation. The definition of an exempt corporation is as follows: In order to file as an exempt corporation you must meet the requirements of 391 (j) as follows: “…the term “exempt corporation” shall be defined as any corporation organized under this chapter that is not authorized to issue capital and that: is exempt from taxation under § 501(c) of the United States Internal Revenue Code or any similar provisions of the Internal Revenue Code, or any successor provisions;
qualifies as a civic organization under § 8110(c)(1) of Title 9 or § 6840(4) of Title 16;
3) qualifies as a charitable/fraternal organization under § 2593(1) of Title 6;
4)is listed in § 8106(a) of Title 9;
5) is organized primarily or exclusively for religious or charitable purposes; or
6)(i) is organized not for profit and (ii) no part of its net earnings inures to the benefit of any member or individual.
Most corporations will pay a total of $225 per year. This breaks down as follows: a franchise tax fee of $175 and an annual report fee of $50. These fees are due at the same time.
Here's a quick video about 2018 Delaware Franchise Taxes:
Delaware Annual Report | File Delaware Annual Report | Delaware Business Incorporators, Inc. - YouTube
If you need assistance with paying your 2018 Delaware Franchise Taxes and filing your annual report, please do not hesitate to call us at 1-800-423-2993 or 302-996-5819. We'll be happy to help you.
The State of Delaware passed some new regulations that went into effect January 1, 2019. As a Delaware registered agent, Delaware Business Incorporators, Inc., is required by law to screen all company names and contact names against the Department of the Treasury's OFAC database. Here's the announcement from the State of Delaware:
Regulations promulgated by the Secretary of State and slated to take effect Jan. 1 will require that new business entities formed in Delaware be screened against lists of persons and groups that have been prohibited from doing business in the United States.
These new “Know Your Customer” rules were crafted to help ensure that bad actors and those who may seek to access Delaware’s business entity registry for nefarious purposes will be prevented from doing so. The rules also require regular crosschecks to ensure that existing Delaware entities associated with newly prohibited parties are flagged and ultimately dissolved.
“Delaware’s reputation as the corporate capital of the world should not be undermined by those who would use our state as a place to create their unscrupulous business entities,” said Secretary of State Jeffrey Bullock. “Combined with the diligent efforts of our business services community, these new regulations will help cut off their access to a legal home in Delaware.”
According to the new regulations, a Delaware registered agent will be required to vet the identity of any potential customer seeking to form a Delaware entity such as a Limited Liability Company (LLC) or a corporation. Next, the agent is required to check that identity information against lists of persons, foreign nationals, groups and entities that have been sanctioned by federal authorities or are otherwise prohibited from conducting business in the United States. These lists are maintained by the Office of Foreign Assets Control (OFAC), a division of the U.S. Treasury.
In addition, the new regulations mandate that Delaware registered agents check their lists of existing clients, associated contacts and entities against the OFAC lists on a quarterly basis, at minimum. Checks also must be performed whenever client information is transferred from another agent, and whenever an agent receives new contact information from a client.
“Earlier this year, we issued guidelines to our registered agent community outlining our expectations for client vetting and verification, which included OFAC checks and quarterly monitoring. To solidify and strengthen those policies, we brought legislation to the General Assembly and ultimately promulgated the regulations that will take effect in the coming weeks,” said Deputy Secretary of State Kristopher Knight, director of the Division of Corporations. “Throughout the process, Delaware registered agents have been great partners in our shared goal, and I thank them for their support and cooperation.”
For entities not represented by a Delaware registered agent, such as entities formed and maintained by Delaware residents and legal professionals, the Division of Corporations will perform the “Know Your Customer” checks.
To ensure compliance with the new regulations, the Division of Corporations will conduct periodic registered agent audits, as it does for rules already on the books.
Statutory authority to strengthen these regulations as well as associated penalties for noncompliance was granted this year with the passage and signing of House Bill 404, which the Department of State drafted and advanced through the General Assembly. Under the new law, the Division of Corporations also has greater latitude to refuse to process filings from a registered agent that fails to obey regulations.
If you have any questions about these new regulations, please call us at 1-800-423-2993 or 302-996-5819.
Delaware Business Incorporators is excited to share that we now offer Delaware UCC Search and Filings services. UCC Filings are a key part of starting and/or building up your small business. Essentially, a UCC Filing or Uniform Commercial Code Financing Statement is a legal record of an agreement between a lender and debtor to fulfill a debt. Think of it like financing a car, except you’re filing a financing statement that names collateral for securing a business loan. Before we go over the services DBI offers, let’s cover a few fundamentals of UCC Search and Filings.
What is a UCC Filing?
A UCC FIling is a shortened term for the “Uniform Commercial Code". A UCC-1 Financing Statement is a legal form that allows a creditor to give notice towards their interest in the personal or business property of a debtor. In essence it is a security agreement between a lender and a debtor and it affords the lender the possibility of acquiring a lien on the equipment and/or inventory of the small business.
What is a lien?
A lien is a legal claim that someone (usually a creditor or lender) can put on your property. It’s also a form of a security agreement that grants the lender the right repossess your property if your debt is not paid.
Who Typically Files UCC financing statements?
Typically, a UCC-1 financing statement will be filed by the lender as these statements protect the lender. A lien protects the interests of the lender in case the debtor defaults on their payments or has to file for bankruptcy. If either of those were to occur, the business assets could be foreclosed, seized, or sold off in order to fulfill the debt to the lender.
What is a Delaware UCC Search?
A UCC search involves searching the Delaware Secretary of State's database of "UCC-1 Financing Statement" filings. Delaware only provides certified searches. There is no "uncertified" or plain UCC searches. Delaware uses name search logic and looks for the exact word. There will be no name variations on the search report.
Due to the way that Delaware's UCC database is structured, a searcher has to input every name variation they can think of to generate a certified listing. Delaware has a list of noise words that are ignored during UCC searches.
Delaware UCC Search and Filing Services
As an authorized Delaware UCC searcher, Delaware Business Incorporators, Inc. (DBI) takes great pride in providing fast, accurate UCC debtor searches using the Delaware Division of Corporations database.
Debtor Fees - DBI charges a fee of $35 per debtor plus the State of Delaware search fee of $25 per debtor. Payment for searching is required in advance.
Certified Copy Fees - In addition to debtor search fees, the State of Delaware charges for certified copies of search results as follows: $10 for the first page and $2.00 for each additional page. DBI charges the same amount as the State of Delaware: $10 for the first page and $2.00 for each additional page.
For example, a 10 page search result, would be charged $20 plus $36 for a total of $56. State of Delaware fees of $10 for the first page plus $2 times 9 additional pages equals $18. (Total State of Delaware fees equal $28 as well as DBI fees of $28 as well.)
Starting a business can be simple. You come up with a service or product, market it, start to make some money -- and boom, you’ve got yourself a business! However, incorporating said business requires a bit more...paperwork.
At Delaware Business Incorporators, our scope of work involves handling the legalities of the business world, so that we can help you get your business up and running. While some might be surprised by the amount of documentation involved in business ownership, when it comes to legalities -- it’s par for the course.
In this blog, we’ve previously covered essential documents you need including your Corporate Kit, the home base for all your incorporating documents. Your Corporate Kit will typically include the Company Guidebook, Corporate Bylaws, Corporate Resolutions, Corporate Seal, a Meeting Minute Book, Membership/Stock Transfer Ledger, and Membership/Stock Certificates.
We've also explained the standard Operating Agreement, another essential document that’s key to the health, success, and legal status of your company. An operating agreement is a business contract that lays out the operations of a limited liability company (LLC) and identifies the agreements between members of that LLC. It basically serves as a way to set out all the terms and conditions agreed by the members of the LLC, and in many ways can protect the owners from liability.
While the Corporate Kit and Operating Agreement are essential to the foundation of your company, there’s another key piece of documentation that’s needed to help clarify the roles within your company. That document is the Certificate of Incumbency.
So, what is a Certificate of Incumbency? This document is prepared by a registered agent and then notarized, and it lists the corporate officers of the company. These officers can include the owners, directors, members, managers, and even shareholders of the corporation or LLC.
The Certificate of Incumbency maps out the hierarchy of the company by explaining which people hold which positions. The document can be used to prove their involvement with the company in case they are needed to participate in any legal transactions on behalf of the organization. Beyond just providing a list of names, the Certificate also explains how each person attained the position they hold. Whether by appointment, election, or hiring, the Certificate breaks it all down.
The Certificate of Incumbency is important because it helps to solidify the legality of the corporation. Banks, attorneys, and anyone else who may want to confirm the status of your corporation, and those holding positions within it, might request it, so it’s essential to have one on hand.
Your corporate secretary will typically be responsible for issuing the corporate resolution. This document will also require a corporate seal and the Secretary’s signature that will be notarized by a notary public. While your registered agent can assist with the Certificate of Incumbency.
Okay, so the Certificate of Incumbency isn’t just “another document”, but we knew that. It is in fact a key piece of information that’s vital to the foundation of your corporation. If you need a Certificate of Incumbency for your corporation or LLC, you can contact one of our Incorporation Specialists at 1-800-423-2993 or 302-996-5819.