When you are genuinely looking into business entities in Delaware, it is really easy to get extremely confused. You must understand that you have already won half the battle when you completely understand the language that is utilized for Delaware LLCs and corporations.
When it refers the “lingo” of business entities, the first and foremost issue is to find out who the owner of the business is. In corporations, the owners are just called as shareholders. This is for the reason that the ownership of the business is being indicated by paper shares. A person purchases a specific number of shares with a view to indicate his or her interest in the company.
A Delaware LLC works a little differently. You won't have to buy shares. LLCs are overlooked entities so they are considered either as a “sole proprietorship” or as a “partnership”. You won't be referred to as a shareholder but as a “member.” LLCs are owned by members and share holders simply own a company corporation.
Establishing a business entity in Delaware (in fact in a different state as well) is also one more area where terminology is usually battered. One “incorporates” with a view to begin a corporation. You have to go through the procedure of filing articles of incorporation with the Secretary of State. With a view to set up an LLC entity in Delaware, you will need to file articles of “organization” with the Secretary of State. Yes, the dissimilarity might seem pretty simple, but it is significant that you don't file the wrong paperwork as it may lead to the null and voiding of your firm; which is a total disaster.
This is the part where you ask “Who will be accountable for governing the business entity?” In a company corporation, the governing body is the Board of Directors. The corporation's bylaws fix the number of the board of directors who are elected by the shareholders. Members of the board of directors typically serve for just one year. LLCs are completely different. The members govern an LLC business. If there are greater than some members, a manager is then designated - however, this doesn't need to be. The manager also serves for one year as well.
LLC's and corporations are many of the times differentiated by the formalities of their respective businesses. Corporations are generally cracked upon as they follow formalities that are required to keep it operating. These formalities comprise of holding meetings, giving appropriate notice of meetings and officialising the minutes of meeting in the corporate book. LLC's don't comprises of as many formal tasks, but that does not mean you should not take the required precautions in the event of future disputes.