Delaware and New Hampshire, two states known for their unique landscapes and distinct qualities, offer different environments for businesses looking to form a Limited Liability Company (LLC).
In this side-by-side comparison, we will examine the key factors that entrepreneurs and business owners should consider when choosing between Delaware and New Hampshire for their LLC formation.
From legal requirements and taxation policies to business opportunities and regulatory frameworks, exploring the similarities and differences between these states will help navigate the decision-making process effectively.
Delaware vs. New Hampshire LLC
Taxation: Delaware has variable personal and corporate income tax rates but does not impose a state sales tax.
New Hampshire has no broad-based income tax on individuals, imposes a 5% tax on interest and dividends only, and also does not have a state sales tax.
Filing Costs: Delaware has a lower initial filing fee but an annual franchise tax of $300.
New Hampshire charges a slightly higher initial filing fee and an annual report fee of $100.
Income Tax Variation: Delaware offers a range of personal income tax rates based on income levels, providing flexibility.
New Hampshire does not have a broad-based income tax on individuals but has a specific tax on interest and dividends.
| Delaware LLC | New Hampshire LLC |
|---|---|
| Delaware charges a lower initial filing fee of $90. | New Hampshire has a slightly higher initial filing fee of $102 online or $100 by mail. |
| It imposes an annual franchise tax of $300 on LLCs. | It requires LLCs to file an annual report with a fee of $100. |
| Delaware has a fixed corporate income tax rate of 8.70%. | New Hampshire imposes a lower corporate income tax rate of 7.50%. |
| It has variable personal income tax rates ranging from 2.20% to 6.60%. | It does not have a broad-based income tax on individuals but imposes a 5% tax on interest and dividends income. |
| Delaware does not have a state sales tax rate. | New Hampshire also does not have a state sales tax, benefitting businesses and consumers. |
| Registered agent fees in Delaware can range from $100 to $300 or more per year. | Registered agent fees in New Hampshire are in a similar range, typically $100 to $300 per year. |
| Delaware allows for a higher level of anonymity, not requiring public disclosure of member names and addresses. | New Hampshire provides moderate privacy regulations but may require more member information to be publicly available. |
| It is home to the Delaware Court of Chancery, a specialized business court known for efficiently handling corporate disputes. | It lacks a specialized business court, potentially affecting the resolution of business-related legal matters. |
| Delaware LLCs are required to file an annual report along with the payment of the annual franchise tax. | New Hampshire requires an annual report with a fee, but it is relatively lower compared to Delaware’s annual franchise tax. |
Cost Breakdown of The Two
You may use our free LLC cost calculator by state to find out filing fees, tax percentages, income taxes, and more.
Delaware LLC:
Filing Fees: The initial filing fee for a Delaware LLC is $90.
Annual Franchise Tax: Delaware imposes an annual franchise tax of $300 on LLCs.
Registered Agent Fees: Registered agent fees in Delaware can range from $100 to $300 or more per year, depending on the service provider.
New Hampshire LLC:
Filing Fees: The initial filing fee for a New Hampshire LLC is $102 if filed online or $100 if filed by mail.
Annual Report Fee: New Hampshire requires LLCs to file an annual report with a fee of $100.
Registered Agent Fees: Registered agent fees in New Hampshire can vary but are typically in a similar range as Delaware, ranging from $100 to $300 per year or more.
Related Posts:
- Delaware LLC: Cost Breakdown, Pros and Cons, Requirements
- New Hampshire LLC: Cost Breakdown, Pros and Cons, Requirements
Similarities Between Delaware and New Hampshire LLC
No State Sales Tax: Both Delaware and New Hampshire do not have a state sales tax.
This can be advantageous for businesses as it eliminates the need to collect and remit sales taxes on goods and services.
Limited Liability Protection: In both states, LLCs offer limited liability protection to their members, shielding their personal assets from the company’s debts and liabilities.
Registered Agent Requirement: Both Delaware and New Hampshire require LLCs to designate a registered agent with a physical address within the state.
The registered agent is responsible for receiving legal documents and official correspondence on behalf of the LLC.
Privacy Regulations: Both states typically do not require extensive public disclosure of member names and addresses in formation documents.
Providing a certain level of anonymity for LLC owners.
Tax Flexibility: Both Delaware and New Hampshire offer tax flexibility, allowing LLCs to choose how they want to be taxed.
Either as pass-through entities or as corporations, based on their business needs.
Business-Friendly Environments: Both states are known for being business-friendly and have relatively straightforward LLC formation processes.
Making them accessible to small and medium-sized businesses.
Additional Resources:
Steps to Form LLC in Delaware
Choose a unique name for your LLC and ensure it’s available for use.
Designate a registered agent with a Delaware physical address.
File the Certificate of Formation with the Delaware Secretary of State and pay the $90 fee.
Create an operating agreement outlining how your LLC will be managed.
Obtain an Employer Identification Number (EIN) from the IRS.
Register for Delaware state taxes if necessary.
Comply with any local permits or licenses.
File annual reports and pay franchise taxes to maintain good standing.
Steps to Form LLC in New Hampshire
Choose a unique name for your LLC and ensure it’s available for use.
Appoint a registered agent with a New Hampshire physical address.
File the Articles of Organization with the New Hampshire Secretary of State and pay the filing fee (online: $102, by mail: $100).
Create an operating agreement outlining how your LLC will be managed (not mandatory but recommended).
Obtain an Employer Identification Number (EIN) from the IRS if you have employees or multiple members.
Register for New Hampshire state taxes if applicable to your business.
Comply with local permits and licenses as required.
File annual reports and pay the annual report fee of $100 to maintain good standing.
Feature Comparisons Between Delaware LLC vs. New Hampshire LLC
Delaware LLC:
Business-Friendly Reputation: Delaware is renowned for its business-friendly legal environment, attracting many large corporations and investment firms.
Specialized Business Court: Delaware houses the Delaware Court of Chancery, a specialized business court known for efficiently handling corporate disputes.
Tax Flexibility: Delaware offers flexibility in taxation, allowing LLCs to choose between pass-through taxation and corporate taxation based on their needs.
Privacy: Delaware allows for a higher level of anonymity, as it does not require the public disclosure of member names and addresses in formation documents.
Annual Franchise Tax: Delaware imposes an annual franchise tax, which can be substantial for larger corporations.
New Hampshire LLC:
No State Sales Tax: New Hampshire, like Delaware, does not have a state sales tax, which can benefit businesses and consumers.
Moderate Taxation: New Hampshire imposes a 5% tax on interest and dividends but does not have a broad-based income tax on individuals.
Simplified Legal System: New Hampshire has a straightforward legal system, making it accessible for small and medium-sized businesses.
Lower Initial Costs: New Hampshire charges a slightly higher initial filing fee than Delaware, but it may have lower ongoing costs for some LLCs.
Annual Report Requirement: New Hampshire requires LLCs to file an annual report with a fee of $100.
Business Environment
Delaware LLC:
Business-Friendly Reputation: Delaware has a long-standing reputation for being business-friendly and is a preferred choice for many large corporations and investment firms.
Specialized Business Court: Delaware is home to the Delaware Court of Chancery, a specialized business court known for its expertise in corporate law and efficient resolution of business disputes.
Legal Expertise: The state has a well-developed legal system with extensive experience in accommodating various corporate structures and transactions.
Privacy: Delaware allows for a higher level of anonymity, as it does not require the public disclosure of member names and addresses in formation documents.
New Hampshire LLC:
Simplified Legal System: New Hampshire offers a simpler and more straightforward legal system, making it accessible for small and medium-sized businesses.
Moderate Taxation: New Hampshire imposes a 5% tax specifically on interest and dividends but does not have a broad-based income tax on individuals.
Making it tax-friendly for certain types of income.
Lower Initial Costs: New Hampshire charges a slightly higher initial filing fee compared to Delaware, but it may have lower ongoing costs for some LLCs.
No State Sales Tax: New Hampshire does not have a state sales tax, which can benefit businesses and consumers.
Read Also:
Delaware vs. New Hampshire Taxes
Delaware:
State Income Tax: Delaware imposes a personal income tax with a variable rate ranging from 2.20% to 6.60% based on income levels.
It also has a corporate income tax rate of 8.70%.
Sales Tax: Delaware does not have a state sales tax rate, making it favorable for retail businesses and consumers.
Annual Franchise Tax: Delaware LLCs are subject to an annual franchise tax, the amount of which varies based on the number of authorized shares.
New Hampshire:
State Income Tax: New Hampshire does not have a broad-based income tax on individuals’ earned income.
It imposes a 5% tax on interest and dividends income, which can affect individuals with such income.
Sales Tax: Similar to Delaware, New Hampshire does not have a state sales tax rate, benefiting businesses and consumers.
Corporate Income Tax: New Hampshire imposes a corporate income tax with a rate of 7.50%, which is lower than Delaware’s corporate income tax rate.
Flexibility in Rules and Regulations
Flexibility in rules and regulations can be a significant factor when choosing where to form an LLC. A comparison of the flexibility in rules and regulations between Delaware and New Hampshire:
Delaware:
Business-Friendly Legal Environment: Delaware is renowned for its business-friendly legal environment and extensive experience in accommodating various corporate structures.
Legal Expertise: It offers a well-developed legal system with specialized courts like the Delaware Court of Chancery, which handles business disputes efficiently.
Tax Flexibility: Delaware provides flexibility in taxation, allowing LLCs to choose between pass-through taxation and corporate taxation based on their business needs.
Privacy: Delaware allows for a higher level of anonymity, as it does not require the public disclosure of member names and addresses in formation documents.
New Hampshire:
Simplified Legal System: New Hampshire offers a simpler and more straightforward legal system, making it accessible for small and medium-sized businesses.
Moderate Taxation: It does not have a broad-based income tax on individuals and imposes a 5% tax only on interest and dividends, offering a tax-friendly environment for certain types of income.
Lower Initial Costs: While New Hampshire charges a slightly higher initial filing fee compared to Delaware, it may have lower ongoing costs for some LLCs.
No State Sales Tax: Similar to Delaware, New Hampshire does not have a state sales tax, which can benefit businesses and consumers.
Key Differences Between Delaware and New Hampshire- An Overview
