Wilmington based accounting firm serving individuals and small businesses in Delaware
Wilmington based accounting firm serving individuals and small businesses in Delaware
If you're in market for starting a new Delaware LLC, you've come to the right place. Talk to our business consultants about how we can properly setup your business entity, plan it for tax savings and help you shelter your assets.
Looking to have multiple investors for your business. Incorporate a business structure that will give you flexibility of having different types of shares and give you the ultimate asset protection.
We love setting up new businesses for foreign individuals and companies. We can help you form a Delaware business even if you don't have a local tax ID. Make sure to scroll below to learn more about the benefits of incorporating in Delaware
So what is the hype behind forming a Delaware Limited Liability Company? Why should I pick Delaware over any other state (e.g Wyoming or Nevada etc). We get asked these questions all the time.
Ever since Limited Liability Act of 1991 has been passed, Delaware has distinguished itself as the leading jurisdiction for LLC formations. Due to Delaware's advance tax rules and regulations, Delaware is a hotspot of american financial activity. It's up-to-date corporate laws give LLCs same asset protection and flexibility as their corporations. Below are some reasons by, you should use a Delaware Limited company to start your business.
Privacy is very important to people and businesses. Delaware allows you to be anonymous. While other states, disclose business officers and even assets for public viewing, Delaware maintains a strict guideline about what it will publish to public.
Delaware LLCs follow rules of internal agreements that aren't published by the state to general public. So, you can make changes to partnership agreements without notifying the state or people.
There is no state income tax for businesses exclusively conducting business outside of Delaware, Delaware also has no inheritance tax for non residents, no sales tax or VAT on the sale of intangible property (i.e., copyrights, patents, trademarks) for nonresidents, provided they are not conducting business in the state
Thinking seriously about starting your Delaware Corporation? Have certified public accountants at Gary Mehta CPA, EA help you with every step. Not only we can help you form the corporation, we can also get you all the necessary federal and state licenses. Let's discuss the necessary steps and how we can help.
Business Entity Structure Planning: We can help you structure your business the proper way so you have to pay less taxes. Not sure which entity structure is right for you? We can help design C-Corporations and S-corporations. If you're looking to start a not for profit, speak to a non-profit expert to see how we can help you start your organization.
Choose the Name: We will scour the internet and state databases to help you get the name you want. We will check for it's availability and even reserve it for you.
Finding a registered agent: If you would like to use a commercial registered agent, we work with several of them . We will help you find a registered agent that is dependable and affordable.
Pick your Directors: Have us help you determine who should be the director of your business. This is very important for taxes and for asset sheltering. Picking the wrong director can end up costing you thousands in taxes or someone with a high risk profile to protect your assets.
Determine your stock information: We'll help you answer important questions like who should have voting rights or get preferred dividends. We will also help you structure the cap table to save money on Delaware Franchise taxes.
Get your Federal Tax ID Number: A Federal Tax ID Number, or EIN, must be obtained by a business entity before it can open a U.S. bank account, hire U.S. employees or pay U.S. taxes. Equal to a social security number for your company, this number is the life-line of all Delaware businesses. Whether you are a resident or foreign director, we can help you get this identification number.
Absolutely. You don't even have to visit our Wilmington based office. Our accountants and business advisers will remotely help you start your Delaware company, pick the right business structure, map out your business plan for tax savings and help you file annual regulatory paperwork. How simple is that!
No. You do not need a physical location in Delaware to start a Delaware LLC or Corporation. You can use your company to conduct business anywhere in the world with all benefits given to other Delaware businesses. All you need is a resident agent who can receive basic legal documents and Delaware Franchise tax notices.
No. You do not need to share your hard earned profits with someone else. Delaware corporate laws are very friendly to foreign companies and individuals and do not require a US resident to be a shareholder.
You must have a resident agent in Delaware. A resident agent is a person or business located in Delaware, that is willing to accept legal notices and Delaware Franchise tax forms on behalf of your business. It is the your only necessary link to Delaware. We can provide these services for our clients.
Yes we can. As part of our business incorporation services, we will help you get your Federal Tax ID Number. This includes EIN for non-residents.
An EIN is required for any company to perform business activities here in US. You need the EIN number for all basic items such as opening a bank account, hiring employees or hiring a card card processor. You also need the EIN to file your annual tax returns.
Centrally located in Delaware, we understand the local laws. Professionally licensed by the state and our peer-reviewed by licensed accountant peers, our licensed accounting firm maintains the highest standards and knowledge competence to form and structure your business entity in the right manner. We understand key differences between the business structures and how it pertains to accounting, taxes, and business law. Our broadened scope of understanding allows us to help you minimize taxes, understand the impact of immigration issues, and curtail business risk. Another advantage of being local is we can quickly respond to any inquiries by state or IRS. Other business formation websites focus on a small part of business formation, which is filing the paperwork. However, we think long term tax planning, asset sheltering, and a good business plan at large.
Based in Wilmington, We provide company formation services across Delaware including Dover, Newark.
Here is an awesome article on why you should start your business in Delaware
Compare DE, PA, MD, NJ income taxes: rates, deductions,planning. Make informed financial decisions. #DelawareTaxes #PennsylvaniaTaxes #TaxComparison
When considering a move or evaluating your current location, taxes play a significant role in your financial well-being. This in-depth analysis compares the income tax landscapes of Delaware and its neighboring states: Pennsylvania, Maryland, and New Jersey. We'll dissect state and local income taxes, deductions, credits, and other crucial factors to equip you with the knowledge to make informed decisions.
Delaware has cultivated a reputation as a business-friendly state, and its overall tax structure reflects a balanced approach. While it may not be a complete tax haven for individuals, it offers certain advantages compared to its neighbors.
Delaware's personal income tax rates range from 2.20% to 6.60%, with six income tax brackets. While this may seem less appealing than a zero income tax rate, it's important to consider the overall tax burden. Delaware has no sales tax and generally lower property taxes compared to its neighbors, which can offset the impact of the state income tax.
In addition to the state income tax, residents of Wilmington, Delaware's largest city, are subject to a local earnings tax. The Wilmington earnings tax rates range from 0.6% to 1.25%, depending on residency status and income level. It's crucial to factor in this local tax when evaluating the overall tax burden in Delaware.
Despite having a state income tax, Delaware offers several advantages that make it an attractive place to live and work. The absence of a sales tax can result in significant savings on purchases, and the lower property taxes can make homeownership more affordable. Furthermore, Delaware is known for its favorable corporate laws and low franchise taxes, making it a popular choice for businesses.
Let's delve deeper into how Delaware's tax structure compares to Pennsylvania's, examining the implications for both individuals and businesses.
A. Personal Income Tax: DE vs. PA
When comparing personal income taxes, it's essential to consider both state and local rates. Delaware's graduated income tax rates, ranging from 2.20% to 6.60%, are generally lower than Pennsylvania's flat income tax rate of 3.07%, especially for those in the lower income brackets. However, Pennsylvania's local income taxes can vary significantly, with some areas, like Philadelphia, having particularly high rates.
Therefore, the overall tax burden for individuals will depend on their specific income level and location within each state. For those residing in areas with high local income taxes in Pennsylvania, Delaware may offer a tax advantage. However, for those in areas with lower local taxes, Pennsylvania's flat tax rate may be more favorable.
B. Business Income Tax: DE vs. PA
For businesses, Delaware's corporate income tax rate of 8.7% is slightly lower than Pennsylvania's rate of 9.99%. However, the more significant difference lies in the franchise tax. Delaware's franchise tax is generally considered low and predictable, making it attractive for corporations. In contrast, Pennsylvania imposes a capital stock tax, which can add to the overall tax burden for businesses.
Delaware's business-friendly tax policies, combined with its favorable corporate laws, contribute to its reputation as a hub for business incorporation. While Pennsylvania offers certain tax incentives and programs for businesses, its higher corporate income tax rate and capital stock tax can be a deterrent for some companies.
Now, let's compare Delaware's tax structure with Maryland's, focusing on the key differences and their implications.
A. Personal Income Tax: DE vs. MD
Delaware's graduated income tax rates, while not as advantageous as a zero tax rate, are still generally lower than Maryland's progressive income tax rates, which range from 2% to 5.75%. This difference is particularly significant for higher earners. Additionally, Maryland residents must also contend with county income taxes, which vary across the state and add to the overall tax burden. In contrast, Delaware's local income taxes are less prevalent and generally lower.
B. Business Income Tax: DE vs. MD
When comparing business taxes, Maryland's corporate income tax rate of 8.25% is slightly lower than Delaware's 8.7%. However, Delaware's franchise tax structure is often more favorable for corporations due to its predictability and lower rates. Maryland may also impose other business taxes, such as those on insurance premiums, which can vary by industry. The overall tax burden for businesses in each state will depend on the specific industry, business structure, and location.
Finally, let's compare Delaware's tax structure to New Jersey's, highlighting the key distinctions and their impact on individuals and businesses.
A. Personal Income Tax: DE vs. NJ
One of the most significant differences between Delaware and New Jersey is in their personal income tax structures. Delaware's graduated income tax rates, while not zero, are considerably lower than New Jersey's progressive rates, which range from 1.4% to a high of 10.75%. This, combined with the potential for municipal income taxes in New Jersey, can result in a substantially higher tax burden for residents, especially those with higher incomes. Furthermore, New Jersey has some of the highest property taxes in the nation, which further adds to the tax liability for residents.
B. Business Income Tax: DE vs. NJ
Delaware's corporate income tax rate of 8.7% is slightly lower than New Jersey's 9%. However, the key differentiator is Delaware's generally more favorable franchise tax structure, which offers lower rates and greater predictability compared to New Jersey's corporate business tax. This, along with Delaware's business-friendly environment, makes it an attractive option for corporations.
V. State and Local Income Tax Rates: A Direct Comparison
To make a truly informed decision, it's essential to compare the combined state and local income tax rates for each state. Utilizing online tax calculators provided by state revenue agencies and considering hypothetical scenarios for different income levels and family situations can help you estimate your potential tax liability in each state. Don't forget to factor in any potential deductions and credits when making these comparisons.
Both federal and state-specific deductions and credits can significantly impact your overall tax liability. At the federal level, you can choose between taking the standard deduction or itemizing deductions, such as medical expenses, state and local taxes, and charitable contributions. Additionally, there are various tax credits available, such as the Child Tax Credit and the Earned Income Tax Credit (EITC). Each state also offers its own set of deductions and credits, so it's crucial to research the specific options available in each state to maximize your tax savings.
Businesses must carefully consider the impact of state and local taxes on their bottom line. Delaware's corporate income tax rate and franchise tax are generally lower than those in Pennsylvania and New Jersey, making it an attractive location for businesses. Maryland's corporate income tax rate is competitive, but other business taxes may apply. Evaluating the overall tax burden in each state, along with other factors such as business regulations and incentives, is crucial for making informed business decisions.
Strategic tax planning is essential for both individuals and businesses. Contributing to tax-advantaged retirement accounts, such as 401(k)s and IRAs, can help defer taxes and potentially reduce your current tax liability. Utilizing strategies like tax-loss harvesting can help minimize capital gains taxes. For businesses, exploring tax credits and incentives, as well as optimizing deductions, can help reduce their tax burden.
Tax laws are constantly evolving, so staying informed is crucial. Utilize online resources provided by government agencies, such as the IRS and state revenue departments, to stay up-to-date on the latest tax laws and regulations. Seeking professional guidance from a qualified tax advisor can also help you navigate complex tax issues and ensure compliance.
Understanding the nuances of income taxes in Delaware, Pennsylvania, Maryland, and New Jersey is crucial for individuals and businesses alike. By carefully considering the factors discussed in this guide and seeking professional guidance when needed, you can make informed decisions that optimize your tax situation and contribute to your financial well-being.
Disclaimer: This blog post is intended for informational purposes only and should not be construed as tax advice. Consult with a qualified tax professional for personalized guidance.
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Hire the best accounting firm in town to help you form your Delaware business. Here a great clip about working with our firm on business formation services. To setup your business the right way, start with Gary Mehta, CPA, EA.
At Gary Mehta, CPA, EA, we've been providing exceptional accounting & tax services for over a decade. We've solved countless tax problems and helped small businesses succeed along the way.
We are proud to be from Wilmington, Delaware and have roots have deeply embedded within our community and surrounding areas.
We look forward to hearing from you and are excited to make you our next success story.
1000 N West St #1200, Wilmington, DE 19801
Phone: (732) 829-6395 Email: questions@cpadelaware.net
Experienced Delaware Certified Public Accountant serving New Castle, Sussex and Kent Counties