Delaware Business License

Written by: Mary Gerardine

Last updated:

Delaware Business License

If you’re considering starting a business in the state of Delaware, one of the first steps you may need to complete will be getting your business license(s) and/or permit(s).

The need for a business license in Delaware largely depends on your business type, as well as on its location.

This article will help you determine which licenses and permits you’ll need at the local, state, and federal levels (if any). We’ll also cover the steps you’ll need to take in order to apply for a Delaware business license, as well break down the renewal requirements that you’ll need to know.

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Do I Need a Business License in Delaware

In Delaware, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

  • General Business License: Delaware requires a statewide general business license for most businesses that generate sales within the state — issued by the Delaware Department of Finance, Division of Revenue. A broad range of businesses need this license, from retail and service providers to wholesalers and manufacturers
  • Professional Licenses: Delaware law requires individuals and businesses in specific professions to obtain a license from the Division of Professional Regulation before they can begin operating. Some examples of professional licenses include accountancy, architecture, cosmetology, engineering, nursing, pharmacy, psychology, and veterinary medicine, to name a few
  • Environmental Permits: Delaware requires certain types of commercial or industrial facilities to obtain environmental permits when they want to open or change their operations. One of the environmental permits in Delaware is the National Pollutant Discharge Elimination System (NPDES) permit, which regulates the discharge of pollutants from point sources to waters in the country

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Delaware plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

  • Local: Delaware cities or counties usually require businesses to get local licenses or permits. Be aware that the requirements can change depending on where you are and what your business does. For example, in Wilmington, businesses might need a city business license in addition to the state business license, such as licenses for coin-operated game machines, taverns-package stores, HVAC contractors, and travel agencies, among others
  • State: At the state level, the most common requirement is the general business license. This license serves as a permit for businesses to legally operate within the state. This statewide requirement ensures that businesses comply with state regulations, pay appropriate taxes, and operate legally within Delaware
  • Federal: Federal licenses and permits are often industry-specific and are required for businesses that deal with activities regulated by federal agencies. These industries include broadcasting, alcohol sales, fish and wildlife, and transportation, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

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How to Get a Business License in Delaware

In order to get your business license(s) in Delaware, you will need to complete the following steps:

  • Form Your Business
  • Obtain an Employer Identification Number (EIN)
  • Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Delaware, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Delaware to register as a Limited Liability Company (LLC). Here are a few reasons for why:

  • Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
  • Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
  • Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
  • Ease of Formation: With the Delaware Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

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Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

  • Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
  • By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
  • By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

  • Local Licenses: If you’re planning to apply for a local business license in Delaware, It’s essential to check with the specific city or county where you plan to operate your business, as local requirements can vary. You can register your business online with the One Stop Business Licensing service, which combines multiple Delaware agency registrations. Please keep in mind that cities and counties have their own specific application forms and steps for business licensing
  • Statewide Licenses: Since Delaware requires businesses to get a statewide general business license, you have the option to either register online at the One Stop Business Licensing service or complete and submit the Delaware CRA form. As part of the licensing process, the Delaware Division of Revenue will have you define your business activity in one of their recognized categories. You can check the Department’s list of categories and accompanying tax rates for more information
  • Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: Delaware provides a directory that lists the links to various counties and cities in the state. You can access it on the SOS’s County & City Directory of Local Businesses page.

Step 4: Renewal of Licenses and Permits

In Delaware, all business licenses expire on December 31 of each year, or of every three years (for those with three-year licenses.).

The renewal process can be done through the Delaware One Stop Licensing platform, through which you can add, renew, or modify licenses through the Delaware Taxpayer Portal. If you’re uncertain whether you need to renew any of your business’s licenses, make sure to reach out to the agency that issued your business license for clarification.

Alternatively, you can use a third-party service or a professional attorney for this process. This can be a good choice if you want to ensure that you avoid potential fines, as well as if you want to be as time-efficient as possible.

If you’re interested in finding out more about this process, see our article on How to Get a Business License.

How Much is a Business License in Delaware

In Delaware, obtaining a general business license will cost you $75 per annum for your primary business location, and an extra $25 per annum per location after that.

However, if a business chooses a three-year license, the total cost isn’t discounted. Instead, the business will be charged the equivalent of three annual fees upfront for the entire three-year period.

Note that Delaware’s cities and counties have their own specific business licenses in addition to the statewide business license, and so fees may vary as specified by each local government agency.

To find out the exact costs, you’ll need to know your business type and where you want to set it up. However, many business owners use third-party services or business attorneys when it comes to this in order to save time, money, and avoid being caught up in procedural rigmarole.

Delaware Business License FAQ

What do you need for a business license in Delaware?

To obtain a Delaware business license, you will need to choose a business name and register your business structure with the SOS. You’ll also need to obtain an EIN from the IRS and submit your application to the Division of Revenue. Based on your location and business type, you might also need to register with local, state, or federal authorities.

Does Delaware require a business license?

Yes. If you conduct business within the state, you must obtain a business license from the Division of Revenue. Delaware licenses ensure businesses follow state regulations, pay taxes, and operate legally. It’s important for both in-state and out-of-state businesses conducting transactions in Delaware to have this license.

Can I get a business license online in Delaware?

Yes. You can get Delaware business licenses online. The state offers its One Stop Business Licensing service, which facilitates the online registration process and renewal of business licenses. This service streamlines the process, making it convenient for businesses to get licensed without visiting a physical office. For state-specific information, check out our How to Get a Business License page.

How do I register my business name in Delaware?

To register your business name in Delaware, you’ll need to file a “Name Reservation” with the Delaware Division of Corporations. This can be done online or via mail. You must ensure that your desired name is unique and follows state naming guidelines. Once approved, the name is reserved for a specific period of time.

For all related articles, have a look at our How to Get a Business License page.