Liability Protection. As an owner or director of a U.S. corporation, you cannot be held personally liable for its business obligations and activities (we surely need not point out how such protection from liability can be a lifesaver under certain economic circumstances). Although the liability protection of a European corporation is very similar, setting up a European corporation is quite expensive and requires a substantial amount of paid-in capital (for example, Germany requires a minimum cash capital of US$55,000, and during the two-month set-up process the incorporator is personally liable with all of his assets). Since the shareholders and directors of a U.S. corporation enjoy much higher liability protection than in a European corporation, a U.S. corporation is to be recommended even for businessmen who have no intention of being active in international business.
Anonymity. This should not be regarded as a call for tax evasion or other criminal activities. But there are many other good reasons for which one may wish to remain anonymous. In the states recommended by us, the owner (i.e. the shareholder) of a corporation does not need to be registered. Only the founder (i.e. we) and the directors and officers are registered with the state. You yourself can remain completely anonymous by appointing others to be directors and officers. Our UK, EU and foreign customers often ask about anonymity, confidentiality and privacy with regard to the owners, officers and directors of a corporation or members and managers of a LLC formed in Delaware.
The owners of an LLC are called members - not shareholders. And they own membership interests - not shares of stock. A membership interest in usually stated as a percentage. So in an LLC with five owners who have invested equally in the business, each would normally have a 20% membership interest. The attributes of the members vary according to the management structure utilized by the LLC, and thus members in one LLC may be similar to partners, while in another, be more like shareholders. For example, if the management is vested equally in the members, then they take on the characteristics of partners. If management is vested in select members, most of the members have attributes of limited partners. If the management is vested in outside managers, however, members possess shareholder-like qualities.
Like shareholders in a corporation, the members of a LLC are protected from personal liability in excess of their capital investment. Like the partners in a partnership, members of a LLC can flexibly allocate management responsibilities and gains and losses. The LLC also allows members to contribute passively as in the limited partnership. Unlike the limited partnership, however, where the general partner remains personally liable in the event of a business loss, the LLC allows all members to contribute without risking personal liability.
In addition, the names of members are not disclosed in the certificate of formation, thereby preserving confidentiality. The owners, officers and directors of a corporation and the members and managers of an LLC can remain anonymous in Delaware corporations and LLC's during and after their formation in Delaware. In Delaware the only name and address, which is required to be on record, is the name and address of the Incorporator and registered expert. Delaware will accept the filing of the Annual Corporation Franchise Tax Report and payment without the listing of Officers and Directors and signature. This explanation and comparison will help you make your choice of State if you are looking for anonymity, privacy and confidentially when you incorporate or form Delaware LLC.
Unlimited business activities. In the states recommended by us, our attorneys are in a position to formulate the Articles of Incorporation in such a way that the business activities are not restricted to any particular purpose, but that the corporation may engage in any business or activity not forbidden by law. Thus, the corporation does not need to be re-organized in case it wishes to engage in a different business enterprise.
Capitalization. Capitalization through selling shares. A U.S. corporation can pledge its shares, which represent a mathematically precise proportion of the company, as security for loans or sell them as investment objects. (In comparison with this, a limited liability Company such as a GmbH cannot issue shares and is difficult to capitalize.) A U.S. corporation can sell its shares to investors throughout the world, although for sales within the USA there are certain restrictions imposed by the Securities & Exchange Commission (SEC) and state agencies.
Capitalization through bank loans. Not counting branch offices, there are a total of 24,437 U.S. banks with capital in excess of 50 trillion dollars. (There are less than half as many banks in all the rest of the world.) With such competition between money lenders, it is understandable that the credit climate in the USA is significantly more favorable than anywhere else in the world.
Capitalization through venture capital. Venture capitalists control billions of dollars of investment capital. Since a venture capitalist participates in the profits of the capitalized venture, he is naturally much more risk-friendly than U.S. banks, which are forbidden to participate in the financial success of an enterprise. Thus, if a corporation cannot offer sufficient security for a bank loan or afford the expense of going public, a connection with a venture-capital company is the most promising path to capitalization.