If you want to launch your dream business and live in the First State, you may consider starting a Delaware LLC. Delaware is famous for being a business-friendly state, and LLCs are a business-friendly concept, so pairing them up appeals to many entrepreneurs.

Even so, learning how to form an LLC in Delaware can feel like fighting the beach traffic during peak tourist season. But don’t worry. Our Delaware LLC guide will walk you through the process. You can enjoy the flexibility and personal asset protection an LLC provides soon enough.

LLC in Delaware Pros and Cons

If you’ve ever so much as made a purchase in Delaware, you know that the state has no sales tax. Its reputation for being pro-business comes from a variety of factors, including lower taxes, limited exposure of the business owner’s personal information, and business-friendly laws.

Delaware also has the Court of Chancery, a unique 215-year-old business court that has written most of the modern U.S. corporation case law. The Delaware Court of Chancery uses judges, not juries, which means cases involving business are usually resolved more quickly than they are in other states.

As we explain on our Delaware Benefits and Risks page, though, smaller businesses from outside the state may not reap the benefits that larger corporations would. While Delaware is the leading jurisdiction for publicly traded corporations listed on U.S. stock exchanges, according to Delaware’s own corporate law website, “For many small business entities, formation in the state where the corporation will do most of its business may be more cost-effective.”

LLC in Delaware Benefits

A limited liability company (LLC) is a legal business entity combining elements of corporations and sole proprietorships. Like a corporation, it offers limited liability protection to the business owners. If the business is sued or goes into debt, the personal assets of the LLC owners are usually protected.

Like a sole proprietorship, though, the LLC’s profits are usually not taxed at the business level before being distributed to the LLC owners (called “members”). This avoids the “double taxation” of a traditional corporation, where the profits are taxed at both the business and personal levels. LLCs also require less paperwork and have more flexibility in how they’re run.

Steps to Form an LLC in Delaware

This article will take you through the basic steps of starting an LLC in Delaware. First, you’ll choose a name for your new business and appoint a registered agent. Once you have those, you can file a Certificate of Formation to officially register your LLC with the state.

From there, you can create an operating agreement to govern how your LLC in Delaware will be run and secure an Employer Identification Number (EIN) from the IRS. We’ll also touch on some other points, like getting your business license and registering for state taxes.

As we take you through the steps, we’ll also show you how our services can help cut through the red tape so you can get to the more enjoyable parts of running your new business.

When you’re ready, read on to learn what to do in the 302 to form an LLC.

Note: The following steps are for forming a domestic LLC in Delaware. A foreign LLC, meaning one that originated in another state, will follow a different process.

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.

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.

If you’d rather not mess with this yourself, our business name reservation service can handle the process for you. It also includes a name search to make sure that your desired name is available.

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.

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.

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.

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.

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.

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.

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.

Delaware Business Resources