Overview

According to many business owners, Delaware is the most business friendly state in the United States. Due to the amount of legal cases it makes it stable for business owners as they know what to expect in legal disputes.

The Delaware LLC is one of the most versatile LLCs in the United States because of that. From Hedge funds, to prop trading entities, to feeders and start ups. The Delaware LLC is useful for it all.

Use Cases

Hedge Fund / US Feeder

Most of the United States' hedge funds are registered in Delaware. A big reason is the amount of case law that make investor dispustes more predictable. The US Hedge Fund is actually a surprisingly simple and straight forward process.

The Hedge Fund is mostly available to accredited investors, however we can have counsel assist with blue sky laws and safe harbors to allow others in as well.

The US Fund can also be used as a feeder into an offshore fund which is typically preferred by US investors.

SAFT Issuance

The Delaware LLC can also be used to issue tokens if they comply with US regulations and US investors will be accepted. Otonomos can assist with the SAFT and make it investors ready.

Operational Company

Setting up an opersational company is very straight forward in Delaware with an LLC. There is access to multiple banking and crypto exchange providers which Otonomos can assist with opening.

Propreitary Trading Entity

The Delaware LLC is a good vehicle for a proprietary trading entity which is used to solely trade your own funds. This is generally done to shield profits from personal income. Besides that it is a good way to build a track record to use to setup an investment fund.

Tax status

The Delaware corporate tax rate is 8.7%. Besides that there is a annual franchise tax that needs to be paid to the state. US LLCs are often used as cost centres, this prevents them from booking revenue which prevents tax costs.

Otonomos works with partners who can give advice on this.

Privacy

I general, registering a company in the United States is generally anonymous compared to other jurisdictions. There is no need for certified KYC documents and Ultimate Beneficial Owners are currently not filed.

There are ongoing efforts to try to put a Beneficial Ownership Register in place known as the BOI, this is currently however put on hold.

Onboarding

Onboarding a new Delaware LLC is a simple and quick process. Once the order is completed you will receive a confirmation email with an invitation link to the Otonomos Dashboard.

After logging in, you will see a card to start filling out the details of the new Delaware LLC.

In the online form you will need to declare the following information:

• Company Name options (3)
• Nominee Participants (if applicable)
• Corporate Participants (if applicable)
• Natural Participants
• Ownership distribution
• Corporate participant information (if applicable)

KYC Verification Process

After all new company information is completed, we will share a KYC Verification link to all natural participants that have been declared for the new Delaware LLC. Each participant will need to provide a copy of ID and Proof of address and complete a live verification.

Once this is completed we can go ahead and file your new Delaware LLC.

Time to incorporate

The time to incorporate your Delaware LLC generally takes 2 business days. During busy time like tax season this can take a couple of days more. To ensure a quick turn around you can opt for a expedited incorporation which means your entity will be ready the next day.

Entity Maintenance

Keeping your Delaware LLC in good standing is very straight forward. All you need to do is make sure your annual renewal for the registered address is paid in time as well as pay the annual franchise tax of $300. You can either pay the tax to the state of Delaware directly or let Otonomos pay for it. For this we charge a $99 fulfillment fee.

Renewal Periods

Delaware LLC's are renewed on the company anniversary.

The Delaware Franchise tax is due on March 1, if you would like Otonomos to complete this it is important to pay no later than mid February to ensure there is enough time to complete it.

Reporting

Other than the annual payments there are no reporting requirements for LLC's in Delaware.

Shutting down your entity

To close down your Delaware LLC you will need to submit a Certificate of Cancellation of a Limited Liability Company. In return you will receive a stamped Filed copy of the submitted document. For an additional charge you can get a certified copy.

Before cancellation you have to make sure all taxes have been paid in full.

Submitting the form

To make the cancellation more streamlined it is advised to add a cover letter with your name, address and telephone to be contacted on if needed.

The following information needs to be submitted on the cancellation form:

• Current name of the LLC as it appears on the State records
• The date the LLC filed the certificate of formation
• This needs to be signed by an authorized person of the LLC

To initiate the dissolution you have to reach out to the support team and we will assist you from there.