Guide to Forming a Delaware LLC

Step 1: Name your Delaware LLC

Pick a name for your LLC in Delaware. Naming your business can be a fun process. You may already have a name or two in mind. But you’ll still have to follow Delaware’s naming guidelines.

Delaware LLC Name Availability

First, your name must be unique in the state of Delaware, as in not in use by an existing business. By law, it must be distinguishable from any other Delaware company so as to avoid confusion. To learn how to see if the Delaware LLC name you want is available, visit our Delaware Business Entity Search page.

Can my filing be rejected because of the name I pick?

You bet. As it states on the Delaware Division of Corporations website, “We reserve the right to reject a filing for non-compliance with the Delaware Code.”

Not following the Delaware naming standards is one of the most common reasons an LLC submission gets denied. You can reapply with a different name, but being rejected obviously slows things down.

Business Name Reservation

Though not required, once you select a name, consider reserving it so that nobody else takes it before you form your business. Delaware allows you to reserve a name for up to 120 days by submitting an Application for Reservation of Limited Liability Company Name and paying a fee.

Choose a designator

A designator refers to the words or abbreviations that follow the names of certain business entities, like “limited liability company” or “Inc.” The name of your LLC in Delaware must end the designator “limited liability company,” “LLC,” or “L.L.C.”

Other Naming Regulations

Delaware code has some other considerations for your LLC name:

• You can’t use the word “bank” or any variation of it.
• You can use the name of a member or manager in the business name.
• Unlike many states, you can use the following words (or their abbreviations) in your LLC’s name: “Company,” “Association,” “Club,” “Foundation,” “Fund,” “Institute,” “Society,” “Union,” “Syndicate,” “Limited,” “Public Benefit,” or “Trust.”

Keep these restrictions in mind when you name your LLC.

Is your Delaware LLC name available as a web domain?

An important factor worth considering when deciding on an LLC name is its availability on the web. Finding a business name you like that’s also available as a URL means you’ll have a website that’s easier to find and remember for marketing purposes.

You can use our domain name search tool to see if your desired business name is available as a URL. If you find such a domain name, you might want to lock it down before someone else does.

You can also check to see what social media handles are available. Many businesses market on platforms like Facebook, Instagram, and Pinterest, so snagging the appropriate social media names can be important for effective online marketing.

We have a domain name service to help you find and purchase a domain name for your business. We can also help you create a business website and provide domain name privacy.

Register a domain name for your new LLC in Delaware

When you’re coming up with an LLC name, it’s wise to consider whether you can secure a matching domain name. This way your future company’s website can be easily found online. An online presence is so critical for many businesses that you may want to settle for your second or third desired business name if you can’t easily match your top choice with a strong URL.

We have a tool to help you do a preliminary domain name search. You can use our domain name registration service to help you get the online name that will best serve your company.

Check for existing trademark registrations

Even if the state approves your Delaware LLC name, that doesn’t mean you’re in the clear. The name you want could already be trademarked.

Trademarks happen at both the federal and state levels. You can check the U.S. Patent and Trademark Office website to see whether your company name is trademarked at the federal level.

To check to see if your name is trademarked at the state level, contact the Delaware Division of Corporations at (302) 739-3073. As an added measure, you can try Googling the name and looking through phone directories for similar names. To be really thorough, you could also hire an attorney specializing in trademarks.

You can also consider getting your own trademark. The process for a federal trademark is too long and expensive for many small businesses, but a state trademark is more practical. It only applies within the state borders, but it’s less expensive and easier to obtain.

You can register your state trademark by filing the State of Delaware Application for Registration of Trademark or Service Mark with a payment for the fee.

Filing a DBA in Delaware

If you plan to do business under a name other than your Delaware LLC’s legal name, you’ll need to get a DBA in Delaware. A DBA or “Doing Business As” name is sometimes used by an LLC when they want to market a new store or line of products under a new name.

If you’re interested in a DBA, you’ll need to complete the Registration of Trade, Business, and Fictitious Name Certificate, have it notarized, and submit it in each county you plan to do business in. There’s a small filing fee for this.

Step 2: Appoint a registered agent in Delaware

Designate a registered agent for your LLC in Delaware. Like other states, Delaware requires new LLCs to appoint a registered agent as part of the business formation process. A Delaware registered agent’s primary purpose is to receive official state correspondence as well as legal documents (such as notices of lawsuits) on behalf of your business.

What if the state can’t find my Delaware registered agent?

Acting as your own Delaware registered agent or appointing a friend or family member to be your agent might seem the simplest course of action. But consider what could happen if a process server or the state is unable to find you or your appointed agent.

This can occur if you or your appointee isn’t in the office (for example, out of town, on vacation, sick, etc.) when they try to reach the agent. It can also happen if the agent moves or quits and you forget to update your paperwork with the state.

Failing to maintain a registered agent could mean that the state will dissolve your LLC in Delaware, and you’ll lose your liability protection (which was likely the main reason you started an LLC in the first place).

Another scary prospect could be that a process server can’t find you to notify you of a lawsuit. In that scenario, a court case against you could actually go forward without your knowledge.

The registered agent must be available during normal business hours to accept certain notices like subpoenas in person and relay them to the business owners. Note that the agent doesn’t dispense legal or financial advice. The registered agent must:

• Be a Delaware resident or business entity authorized to do business in the state of Delaware
• Have a physical street address (called the “registered office”) in Delaware (a P.O. box is not allowed)
• Be available in person during normal business hours

Unlike many states, Delaware allows the LLC itself to be its own registered agent.

Using a Registered Agent Service for Your LLC in Delaware

Many owners think they should serve in this position for their company and use their business’s primary location as the registered office address. However, this approach can lead to unintended consequences, such as a process server showing up with court papers at your office and in front of clients.

Using a registered agent service like ours helps make sure you comply with Delaware’s registered agent statutes and avoid situations like the above. It also alleviates the need to constantly be present at the office to receive legal notices.

ZenBusiness can provide your registered agent

One of the many services we offer is our registered agent service. When you sign up, we’ll provide you with a registered agent in Delaware, meaning that there will always be someone available to receive important legal, tax, and other notices from the state.

Not only will this keep you in compliance with the registered agent statutes, but it avoids embarrassing scenarios where you could be served papers for a lawsuit in front of clients.

Our service also keeps you organized. When you get important documents, we will quickly inform you and keep them together in your online “dashboard” so that you can view, download, and/or print them whenever you want. No more digging through piles of papers to try to find misplaced critical documents.

Step 3: File a Delaware Certificate of Formation

Complete and file your Certificate of Formation. This is the document (sometimes referred to as the Articles of Organization in other states) that makes your LLC in Delaware official once it’s approved.

You can file your Certificate of Formation online with the Delaware Division of Corporations (not the Delaware Secretary of State). Alternatively, you can fax or mail your paperwork. The filing fee is $90 at the time of this writing.

Filing official government documents like this can be intimidating and/or complicated for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done correctly the first time.

What information do I need for my Certificate of Formation?

The Delaware Division of Corporations provides a fillable PDF on their website for the Certificate of Formation. They ask that you include the following information:

• The full name of your LLC in Delaware, including the designator
• The name and address of your registered agent
• The signature of an authorized person for the LLC. The name of the person must be typed or written legibly underneath the signature.

The Division of Corporations also asks that you include a cover letter, which you can download from their website. You can submit the documents using their Document Upload Service or by mail. You’ll need to pay the filing fee at the same time you file.

How long does the processing take?

The Division of Corporations’ website doesn’t commit to a time frame for getting your Certificate of Formation processed. It says that the times will vary by the work volume at the time. You can call them at (302) 739-3073, option 2, to get an estimate. Generally speaking, online submissions will be faster than postal mail submissions.

If you’re in a hurry, Delaware has plenty of options for expediting your processing for a fee. Depending on how much you’re willing to spend, you can have your Certificate of Formation processed the next day, the same day, in two hours, or in one hour. See the latest fee schedule on the Division of Corporations website.

If your Certificate of Formation is approved, you’ll receive a stamped “Filed” copy of the submitted document. You can also request a certified copy for a fee.

Amending the Certificate of Formation

You only need to file your Certification of Formation once. However, if you end up making any changes to your business’s name or your registered agent down the road, you’ll need to file a Certificate of Amendment for a Delaware Limited Liability Company and pay the requisite filing fee.

If you do need to file an amendment, we have an amendment filing service that can handle it for you as well as our Worry-Free Compliance service, which includes two amendment filings every year.

Keep all newly formed DE LLC documents organized

If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.

Once you get your physical paperwork back from the state approving your new LLC in Delaware, you’ll want to keep it in a safe location along with your other important documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.

Step 4: Create an operating agreement

Make an operating agreement for your Delaware LLC. An operating agreement is critical for an LLC because it establishes the rules for your company, how it will be managed, how much ownership each member has, how profits will be divided, and more.

An operating agreement can allow you to:

• Prevent and resolve conflicts between members by clearly indicating the powers and privileges of each member
• Customize your business’s rules and procedures to serve your LLC’s interests, requirements, and expectations.
• Define your LLC’s management structure
• Put a plan in place for what happens if a member leaves or becomes incapacitated
• Set the rules for bringing new members into the company
• Further separate your business from your personal assets, providing an additional layer of protection for your savings from legal liability

These benefits are why we find operating agreements to be an essential part of the LLC formation process.

Do I need an operating agreement if I’m the only owner?

Because it seems like most of the things in your operating agreement are intended to avoid disputes among the LLC members, you might think you don’t need one for a single-member LLC. But potential investors, future business partners, and others may want to see your operating agreement.

Some banks won’t let you open a business bank account without one. Your operating agreement can also spell out what you want to happen to the business if you die or become incapacitated.

What’s more, occasionally someone will take an LLC owner to court to try to prove that the owner and the LLC are the same entity so that they can go after the owner’s personal assets. If that happens, having an operating agreement in place is one more thing to further demonstrate to the court that the owner and the LLC truly are separate.

Delaware LLC Operating Agreement Template

You may be uncertain as to how to draft an operating agreement for your LLC in Delaware. In that case, we offer a  customizable template to help get you started.

Step 5: Apply for an EIN

Get an Employer Identification Number (EIN). After forming your new Delaware LLC with the Division of Corporations, you’ll likely need to register with the federal government and get an EIN, also known as a Federal Tax Identification Number, from the Internal Revenue Service (IRS) for tax purposes.

An EIN is like a Social Security number for your business, permitting you to hire employees, apply for a business bank account, and pay taxes.

You can get your Delaware LLC’s EIN through the IRS website, by mail, or by fax, but if you’d just as soon avoid dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle of having to deal with the good ol’ Internal Revenue Service.

Register with the Delaware Division of Revenue

If you generate sales in Delaware, have employees working in Delaware, or have property or a business location in Delaware, you’ll need to register your business with the Division of Revenue by applying for a business license.

Can filing as an S corp lower my taxes?

The LLC business structure is meant to be flexible, and one of those flexibilities comes in how you can choose to have your LLC taxed.

By default, an LLC is taxed as a sole proprietorship if it has only one member or a partnership if it has multiple members. This appeals to most owners of LLCs because it avoids “double taxation,” in which a business pays taxes at both the business level and again when the income is paid to the individual owners. But some LLCs opt to be taxed as a C corporation or an S corporation because it works to their advantage.

Being taxed as a C corporation does mean you get double taxation, but, for certain LLCs, the pros can sometimes outweigh the cons. C corporations have the widest range of tax deductions, which could be an advantage in some scenarios, especially for more profitable LLCs. For example, insurance premiums can be written off as a business expense.

S corp is short for “Subchapter S Corporation” and is a tax status geared toward small businesses. Having your LLC taxed as an S corp has pass-through taxation like a standard LLC, but there’s an additional potential advantage:  It could reduce your self-employment taxes. 

Self-employment taxes are the portion of your taxes that pay for Social Security and Medicare. In a typical LLC, you would pay these on all of your profits.

But filing as an S corp allows you to be an “employee-owner” and split your income into your salary and your share of the company’s profits. In this way, you pay self-employment taxes on your salary, but not your profits. (You’ll still pay the other applicable taxes on your LLC profits, of course.)

The drawback is that the Internal Revenue Service scrutinizes S corps more closely, meaning you’re more likely to get audited. S corps also have more restrictions for qualifying.

While it’s possible that one of the above options could work better for your LLC, we don’t need to tell you that taxes are very complex. They’re also very specific to your situation. That’s why you truly need to consult a tax professional to see which taxing method works best for your Delaware business. If you decide to form your LLC with an S corp status, our S corp service can help you do that.

For Employers

Do you plan to hire employees? If so, you’ll need to file workers’ compensation and unemployment insurance forms, along with registering for a withholding account. You’ll need to register with the Delaware Division of Unemployment Insurance and the Delaware Office of Workers Compensation.

Delaware has a website called “Delware One Stop” that can guide you through the process of completing these requirements online.

You’re also required to report all new hires to the Delaware State Directory of New Hires within 20 days after an employee is hired, is re-hired, or returns to work.

Delaware LLC Business Banking

Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your company and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds.

Commingling funds not only makes your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your Delaware LLC are truly separate entities (you may get sued not just for your LLC’s assets, but also for your personal assets).

Get a business bank account

We offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your company to use the account, we have a banking resolution template to simplify the process.

Managing your new Delaware LLC’s finances

For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and maintain clients all in one place.