If you’re thinking of starting a new business in Delaware, you might not be sure where to begin. Thankfully, forming a Delaware limited liability company (LLC) is relatively straightforward and affordable. If you complete each of the required steps in the correct order, you’ll form your new LLC in no time.
With a solid understanding of Delaware’s LLC formation requirements, you can confidently launch your new company. This comprehensive toolkit will show you what you need to do to form a new LLC in Delaware.
Once you’ve formed your new Delaware LLC, you’ll be able to focus on growing your business. This guide simplifies LLC formation so you can start serving customers as quickly as possible.
The 5 steps to form an LLC in Delaware:
In Delaware, forming an LLC requires registering your new business with the Delaware Division of Corporations and filing a Certificate of Formation. In your Certificate of Formation, you’ll need to select a registered agent to communicate with the state of Delaware on your behalf.
After you file the required paperwork, you’ll still have some other boxes to check to ensure your company starts on the right foot. For example, you’ll likely want to draft an Operating Agreement and register your company with the IRS.
There’s no need to feel overwhelmed by these requirements. Below, we’ll break everything down into five simple steps. If you follow this guide, you’ll have your new LLC as soon as possible.
Step 1: Name Your Delaware LLC
Choosing a name is the first step on your LLC formation journey. Selecting the perfect business name is more than just branding — you’ll also need to follow specific legal requirements. For example, you’ll have to distinguish your company from other Delaware businesses and include some version of “LLC,” “Limited Liability Company,” or “L.L.C.” at the end of your business’s name.
To see if the LLC name you want is available, visit the Delaware business name database. Once you select a name, consider reserving it so that nobody else takes it before you form your business. To do this, you’ll need to complete an Application for Reservation of Limited Liability Company Name, which will save your chosen name for 120 days. Within that window, you’ll have enough time to file your Certificate of Formation. The application requires a $75 filing fee — you can submit a paper copy or file online.
Something else you’ll want to think about when it comes to your LLC name is whether you want a DBA. A DBA or “Doing Business As” is another name you can use for your business. If you’re interested in a DBA, you’ll need to complete the Registration of Trade, Business, and Fictitious Name Certificate, which can be done by filling out the form online, printing it, and either mailing it in or delivering it yourself. You’ll need to have the form notarized. The filing fee is $25. Please note that you’ll need to fill out this form for each county where you plan to do business.
It’s also a good idea to check the United States Patent and Trademark Office website to see whether your business name or logo is trademarked at the federal level. At the state level, you can register your trademark by filing the State of Delaware Application for Registration of Trademark or Service Mark with a payment of $35.
All forms can be mailed to:
Delaware Division of Corporations
401 Federal Street
Dover, DE 19901
Step 2: Appoint a Registered Agent in Delaware
Like other states, Delaware requires new LLCs to designate a registered agent as part of the business formation process. A registered agent’s primary purpose is to communicate with the Delaware Division of Corporations and receive legal documents on behalf of your business.
A registered agent can be a person or business entity, but they must have a registered physical office address in the state of Delaware — not a P.O. box.
Many business owners think they should serve as the registered agent 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 business and in front of clients.
Among other things, such as ensuring you remain in good standing and giving you significant privacy, working with a designated registered agent service enables you to keep your primary office outside the state of Delaware. If your headquarters is in another state, you’ll need to work with a third party with a physical Delaware address.
Accordingly, many business owners decide to hire an outside registered agent who can receive paperwork on the LLC’s behalf, eliminating the headache of interacting with the state.
If you’ve already listed yourself as your business’s registered agent and want to start working with a professional like ZenBusiness instead, you’ll need to file a Certificate of Amendment with the Delaware Division of Corporations. The fee for this amendment is $50.
Step 3: File Delaware Certificate of Formation
You’ll need to file your Certificate of Formation online (sometimes referred to as the Articles of Organization in other states) with the Delaware Division of Corporations and pay a fee of $90. Alternatively, you can fax or mail your paperwork. The Delaware Certificate of Formation is quite simple, and it is approved by the Delaware Secretary of State. All you need is your business’s name and information regarding your registered agent.
Required by Delaware law, you only need to file your Certificate 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 and pay the $50 fee.
Step 4: Create an Operating Agreement
Delaware doesn’t require new LLCs to have an Operating Agreement before doing business. However, we strongly advise that business owners draft and adopt an LLC Operating Agreement, whether you’re operating alone or with other business partners.
The benefits of an Operating Agreement include:
- Prevent and resolve conflicts between stakeholders 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
- Further separate your business from your personal assets, sheltering your savings from legal liability
Step 5: Apply for an EIN
After forming your new LLC officially with the Delaware Division of Corporations, you’ll likely need to register with the federal government and get an Employer Identification Number (EIN) 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 apply for an EIN through the IRS’s website and have it issued immediately. Plus, the application process is free.
How much does it cost to start an LLC in Delaware?
Reserving your business name will cost $75, and if you choose to have a DBA and trademark, you’re looking at an additional $60. As mentioned earlier, the cost of filing your LLC’s Certificate of Formation is $90. Delaware is unusual because it offers a range of expedited processing options, ranging from $50 next-day service to $1,000 for same-hour processing.
Plus, you’ll need to spend resources navigating the LLC formation process, putting together an Operating Agreement, and finding a registered agent. That’s where ZenBusiness can be a huge help — we provide practical support and expertise, holding your hand through the LLC formation process.
What are the benefits of an LLC in Delaware?
LLCs are one of the most popular business structures in Delaware because they provide limited liability protection, operational flexibility, and favorable taxation. The following are some of the most exciting benefits of LLCs in Delaware:
- Shield your assets. Delaware has some of the strongest laws protecting LLC members from personal liability for business debts and obligations due to an abundance of pre-established cases in the state.
- Operate anywhere. People from various states and countries can form a Delaware LLC to run a business, manage investments, or hold property. You don’t need a Delaware bank account or physical office to take advantage of Delaware’s favorable LLC laws. Just remember — if you’re from out of state, make sure to partner with a Delaware registered agent service.
- Avoid Delaware income tax. Unless your business has physical business operations in Delaware, you won’t have to pay state income tax. This benefit of Delaware LLCs is especially useful if you elect your LLC to be taxed as an S Corporation.
How is an LLC taxed in Delaware?
LLCs provide the benefit of avoiding “double taxation.” The business pays no income tax, passing the income straight through to the LLC’s owners. Then, each owner pays taxes on the earnings as regular income. LLC owners can also elect to be taxed as a corporation if they wish.
The IRS administers federal taxes based on each member’s share in the LLC. So, if you own 66% of an LLC and are entitled to 66% of the profits, the IRS will tax you on 66% of your LLC’s earnings. LLC owners may also need to pay self-employment tax to the IRS.
When it comes to income tax, Delaware upholds pass-through taxation unless the LLC elects to be taxed as a corporation. Nevertheless, Delaware LLCs are subject to a variety of non-income-related taxes, such as unemployment tax, taxes related to certain products or services, and taxes for using public resources. All LLCs are also subject to an annual franchise tax of $300.
While there is no sales tax, some businesses might also be subject to Delaware’s gross receipts tax.
The simplest way to comply with regulatory requirements is to work with a trusted expert who can help you figure out what your business must pay.
Delaware LLC FAQs
- What is the processing time to form my Delaware LLC?
According to the Delaware Division of Corporations, regular processing usually takes at least 10 days. However, you can choose a wide range of expedited processing options to get your documents approved in as little as one hour.
- Do I need to file my Operating Agreement with the state of Delaware?
No, you do not need to file your LLC’s Operating Agreement with the state of Delaware. However, drafting one has a wealth of benefits, including legitimizing your business, preventing future disagreements, and customizing your LLC’s rules.
- What tax structure should I choose for my Delaware LLC?
Most entrepreneurs elect pass-through taxation at the state and federal levels — owners pay state and federal taxes on the income they earn from the business, but the LLC does not pay taxes as an entity. Some LLCs (particularly those with very high earnings) may choose to file taxes as corporations. This option has some distinct tax advantages, which you can learn more about here. We suggest working with a professional who can explain the benefits and drawbacks of each tax regime.
- Does Delaware allow a Series LLC?
Yes. Delaware permits the Series LLC structure, in which several separate LLCs operate under one overarching “umbrella” LLC entity. Individual LLCs (sometimes called “cells”) may have different members, assets, and liabilities.
- Which licenses and insurance are required for an LLC in Delaware?
If your LLC does business in Delaware, it is required to get a Delaware Business License. You can do this online (you’ll need to create an account) or by mail. Depending on your location, you may need a separate business license from your town, city, or county.rnrn rnrnAside from general business licenses, there are many other licenses and permits your business may need. These can be at the federal, state, and local levels and can be industry-specific, so you’ll need to do some research.rnrnThis list of Delaware-regulated industries can help you determine whether you’ll need any special permissions before starting operations. Plus, if you have employees or collect taxes, you’ll have to register with the Delaware Division of Revenue. Businesses must also report new hires to Delaware’s State Directory of New Hire Reporting.rnrnWe recommend working with someone like ZenBusiness to ensure you have all the business licenses, permits, and insurance your LLC requires to remain in good standing.
- How do I dissolve my Delaware LLC?
If you decide to dissolve your business, you’ll need to file a Certificate of Dissolution with the Delaware Division of Corporations. The fee to file the Certificate is $204.00 plus, if the document is more than 1 page, an additional $9.00 per page. Plus, you’ll need to pay off any business debts, sell off assets, and distribute any remaining profits or losses between the members. A well-drafted Operating Agreement should describe the dissolution procedure in detail.