Why do people form LLCs in Delaware?

People form LLCs in Delaware for its business-friendly legal system, privacy protections, and flexible LLC statute.

Delaware's LLC Act allows maximum freedom in structuring operating agreements, meaning members can customize governance, profit distribution, and management rights however they choose. The Court of Chancery resolves business disputes quickly without juries. Delaware does not require member or manager names in public filings (only the registered agent is listed). However, Delaware LLCs cost $300 per year in annual tax, which is higher than many other states. If you do not plan to raise VC funding and operate in a single state, forming in your home state is often more practical and cheaper. Delaware LLCs make most sense for multi-member LLCs with complex operating agreements or companies planning eventual conversion to a C-Corp.