If you’re starting a business in Delaware, the first step you’ll need to take is to form a Delaware LLC. A Delaware LLC will separate and protect your personal assets. It will also legitimize your business in the eyes of your potential customers.
This article will walk you through all the steps required to form your Delaware LLC and get your business started on the right foot. Be sure to bookmark this page, as the process may take you a few days from start to finish.
Have a Professional Handle your FilingIf you want to save time and ensure your LLC filing is properly taken care of, consider using a professional LLC service:
ZenBusiness ($39 + state fees)
How to Form a Delaware LLC – Quick Version
- Choose a name for your LLC (and get the domain name)
- Assign a registered agent (use a registered agent service)
- File Your LLC Certificate of Formation (Delaware Division of Corporations’ Online System – $90 filing fee)
- Create Your Delaware LLC Operating Agreement (here’s a free template)
- Get an EIN (IRS EIN Assistant)
Steps to Form a Delaware LLC
Forming an LLC in Delaware on your own doesn’t have to be difficult. Just follow these simple steps below and your new business will be up and running in no time!
Step 1. Choose a Name for your Delaware LLC
The first step to forming a Delaware LLC is to choose a name for your business. Deciding on the perfect name for your new business is one of the most crucial parts of starting a company. Choosing a name that’s easy to remember and stands out in search engine results will help you get more customers, which means more revenue, which leads to more growth!
When choosing a name, there are a few searches that you need to complete before you settle on the final option:
- Delaware LLC Name Search – Search here – This is the database of all “taxable entities” in Delaware. Essentially, your name must be unique to all existing entities in the state.
- Domain Name Search – Search here – You’ll want to ensure that your business’s name is available as a URL so that you can keep up your branding online. In many cases, the .com name may be taken. If this is the case, you can try adding “modifiers” to your name or use a different TLD (.co, .net, .biz, etc…) until you find an available domain name. Don’t skip this step. Even if you aren’t ready to start a website today, it’s important to register your domain name so that no one else snaps it up in the meantime.
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3. Social Media Search – Depending on your business, you may want or need to have a strong presence on the different social media platforms. Even if you don’t think you’re going to use them, it’s still wise to search Facebook, Twitter, Instagram, LinkedIn, and any other socials to see if your handle is available.
Delaware LLC Naming Rules
The Delaware Division of Corporations has a few rules when it comes to naming LLCs:
- You must use an LLC designator (ie. “LLC” “L.L.C.”, or “Limited Liability Company”, etc…) in your LLC’s name.
- You cannot use a designator that could confuse your LLC with another business type (ie. “Corp”, “Inc”, “Non-Profit”, etc…).
- To use a term like “bank”, “university”, “law center” or other assuming words in your name, you must obtain approval from the proper authorities. This generally requires that your business hold the correct charters or have members with certain licenses before applying.
- Your name can’t be so similar to another business name that it could confuse customers.
To see the actual statutes and regulations governing the Delaware Limited Liability Company naming process, see the State of Delaware 102 Business Entity Name Standards and Process.
Common Issue:The most common reason that LLC applications are denied is an issue with the name. If you follow the rules outlined above, you should be in the clear, but if you aren’t 100% sure then you may want to work with an LLC formation service to ensure you get it done right the first time. Our recommended LLC provider, ZenBusiness is only $39 + state fees.
It’s worth noting that you should be fairly certain that the name you select is the name you are going to stick with. Changing an LLC’s name isn’t impossible, but there are a lot of headaches and fees associated with the process.
If down the road, you do decide that your LLC’s name no longer serves the branding of your business, a simple solution would be to create an assumed name (also known as a DBA). An assumed name allows you to keep your LLC name the same and operate under a trade name different from the LLC’s.
Once you’ve decided on a name that follows all of the guidelines above, move on to the next step.
Step 2. Assign a Registered Agent in Delaware
The Delaware Division of Corporations requires all LLCs to appoint a registered agent.
A registered agent is a person or entity that is assigned to receive tax forms, legal documents, official notices, and any other documents or correspondence from the government on your business’s behalf. This person can be yourself, a friend or family member, another member of your business, or a hired registered agent service.
In order to act as a registered agent, the person or entity must:
- Have a physical street address in Delaware (not a P.O. Box)
- Be available at all normal business hours to accept service of process (official documents)
The registered agent will be assigned on the Certificate of Formation when filed.
Our recommended company, ZenBusiness offers a year of their registered agent service for free when you use them to form your LLC ($39 + state fees). After that, it’s only $119/year.
Should You Be Your Own Registered Agent?
A common question is whether or not you should “be your own registered agent”. Taking this position for your business is absolutely possible, but there are some downsides that you should think about before making this decision.
The first and most important downside in acting as your own agent is that you lose any anonymity that your LLC would have provided you. Since your LLC formation is a public record, this means that your name, address, and any other contact information will be available for anyone to see. This generally results in lots of junk mail, solicitations, and possibly even unwanted visitors at your home address.
The second issue is a bit less common but just as important for some folks. If you don’t have a physical address in Delaware, then you won’t be able to file for an LLC. This affects non-residents or those trying to form a foreign llc.
Fortunately, using a registered agent service solves all of these issues at a very low cost. These service providers hold a physical office in each state and make the process simple for small businesses.
Recommended Service:ZenBusiness offers their Delaware registered agent service free for one year when you form your LLC ($39 + state fees) with them.
Step 3. File Your Delaware LLC Certificate of Organization
After choosing your registered agent, the next step is to file the LLC Certificate of Formation with the Delaware Department of State. This is the document that actually forms your LLC as a separate legal entity.
With your application, you’ll need to pay the Delaware LLC Filing Fee: $90.
The simplest way to file a Document Filing and Certificate Request is online. If you don’t want to use the online system, you can download the LLC Formation form. Your mailed filings must include a cover sheet. Mail your copy and a check or money order for the $90 fee to:
Delaware Secretary of State
Division of Corporations
401 Federal St. Suite 4
Dover, DE 19901
Tip:Most folks choose to use an LLC formation service instead of taking on this task on their own. The low cost, simplicity, and confidence of accuracy of these services make it a no-brainer. Our number one rated company, ZenBusiness is only $39 + state fees.
Step 4. Create Your Delaware LLC Operating Agreement
Once you’ve filed your Certificate of Formation, your next task is to complete your Delaware LLC Operating Agreement.
A Limited Liability Company Operating Agreement is a governing document that lays out the inner workings of your business’s structure. Think of this document as something similar to a prenup, except a lot simpler and less expensive. It will protect the interests of all parties involved in the case of any sort of trouble in the future.
There are six articles in a standard Operating Agreement:
- Organization – Lays out the members and business structure of the company (ie. single-member, multi-member, series LLC, limited partnership, etc…)
- Management and Voting – Goes over how the management operates and votes about changes in the LLC
- Capital Contributions – Discusses initial and subsequent capital contributions made by members
- Distributions – Explains how the profits and losses will be distributed among members
- Membership Changes – Outlines how members are added and removed from the company
- Dissolution – Describes how the affairs of the LLC will be wound up in the event of dissolution
In Delaware, you don’t need to file your operating agreement with the state, but this doesn’t mean that you should skip this step. If you don’t have this document in place and something happens to you or another member, it’s possible that the state could step in to settle any disputes. It’s better to have everything lined up at the beginning, rather than wait until it’s too late.
Free Delaware LLC Operating Agreement TemplateOur friends over at TRUiC offer a free Delaware LLC Operating Agreement PDF for download. It’s robust enough to handle the needs of most single-member LLCs. If you have a multi-member LLC, manager-managed LLC, or other, more complicated setup, they offer a fill-in-the-blank Operating Agreement for all other uses. It’s also free of charge.
Step 5. Get an EIN (Employer Identification Number)
The last formation step for your business is to get an EIN (Employee Identification Number). An EIN is essentially like a social security number for your LLC. The IRS issues EINs and will use it to keep track of your business’s tax reporting.
The main reasons that you’ll need an EIN are:
- Opening a business bank account and/or credit card
- Hiring employees
- Tax purposes
- Further separates your personal identity from your business
To get your EIN, head to the IRS EIN Assistant and fill out the form. One of the requirements to obtain an EIN for your business is that you’ll need to enter either your personal Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN). If you don’t have either of these, then you’ll need to jump through a few more hoops to get your EIN.
Steps After Forming Your Delaware LLC
First off, congratulations on forming your LLC! Taking this first big step shows that you are serious about your new business and shows its legitimacy to the rest of the world!
Now that your LLC is formed and you have a separate legal business entity, you’ll need to take care of a few more things before you start selling.
Open a Business Bank Account
The main job of an LLC is to separate the business’s assets from you, the business owner’s personal assets. This separation is called the corporate veil. Essentially, it ensures that if your business is ever sued or has any other financial debts that your personal assets are sheltered from these liabilities. This is where the “limited liability” in LLC comes from.
The easiest way to break your corporate veil is to mix your personal bank account with your business’s. This mixing of funds is called commingling. This opens your personal bank account up to undue exposure and completely breaks the asset protection that your LLC was meant to provide.
The good news is that avoiding this danger is extremely simple. Open a business bank account using your EIN number, transfer in any initial funds (keep a record of this transfer), and do your best to never cross personal and business funds in the future.
If you ever need to take money out of the business or invest more of your personal funds in just be sure to keep records of these transactions. This includes the transfers you make when paying yourself a “salary”.
Build Your Business Website
No matter what type of business you operate, you need a website in order for your customers to take you seriously. Almost all businesses transactions today start with an online search, so if you aren’t there to be found then your customers will find your competition. It’s that simple.
Luckily, it’s gotten a lot simpler to build and maintain a website on your own without any prior experience or knowledge of data science or code. Drag-and-drop website builders have improved to the point that anyone can get their business online with about a day’s work.
Our Recommended Website BuilderWe recommend the GoDaddy Website Builder for all small businesses. It’s flexible enough to handle most types of small businesses and simple enough to actually use. Its AI-powered generation process will help you to get your site up and running in about 5 minutes. Seriously. After that you can change the text and images to match your business and that’s it; you have a fully functioning website.
Register Your LLC for a Delaware State Tax Permit
Delaware does not require a sales tax on taxable goods or services. However, some businesses may be subject to Delaware’s Gross Receipts Tax.
The Gross Receipts Tax means the total gross revenue of your business operating within the state. The exact gross receipts tax rate also depends on the type of your business.
Get the Proper Licenses, Permits, and Insurance
When starting a business, there are often several licenses and permits required before transactions can begin. Which licenses you need will depend greatly on the type of business you plan to operate and the location.
Delaware Business Licenses and Permits
Finding the specific licenses and permits your business needs to operate will start with a few simple searches. To get started, you’ll need to quickly search the websites of:
- The state-level – (State of Delaware Business One-Stop)
- The county-level
- The city-level
Once you’ve identified the different location-based permits, you’ll need to acquire any licenses required by your industry. This includes licenses like the Delaware real estate license, the Delaware insurance license, the Delaware liquor license, and so on.
Delaware Business Insurance
Once you’re up and running, it’s important to have the proper insurance policies in place for your Delaware business. Some coverages will be required by the state if you have employees, while others will be required by landlords. Others still are “optional” but widely accepted due to their protective nature.
A few of the most common business insurance policies are:
- General Liability Insurance – Protects against claims of bodily injury, personal injury, or property damage. This coverage is generally required to rent office or warehouse space and to bid on certain jobs.
- Professional Liability Insurance – Protects against claims of inaccurate or negligent work. This coverage is most common in the “professional” space where businesses offer services or advice to other businesses or consumers.
- Workers’ Compensation Insurance – Protects your employees from on-the-job injuries or illnesses. Delaware requires businesses to carry workers’ compensation coverage that has one or more employees.
Our Recommended Business Insurance ProviderWhen it comes to protecting your business, it’s wise to work with a company that can provide quotes from multiple insurance companies. This ensures that you get the best rate for the most appropriate coverage. CoverWallet is an independent insurance broker, meaning they represent many different brands, giving you the best price available.
Delaware Franchise Tax and Annual Report
Delaware requires LLCs an annual franchise tax. You can file the franchise online through the Delaware Corporations Information System by entering your Business Entity File Number.
The annual taxes in the amount of $300 for LLCs are due by June 1 of each year following the calendar year in which their Certificate of Formation becomes effective.
Delaware also requires multi-member LLCs to file an informational tax return with no filing fee by downloading the Delaware form 300-I and submitting it by mail to:
Division of Revenue
P.O. Box 8703
Wilmington, DE 19899
How much does it cost to start an LLC in Delaware?
The filing fee for Delaware LLCs is $90. Using a recommended LLC filing service like ZenBusiness starts at $39 + state fees.
How long does it take to get an LLC in Delaware?
The general filing time for Delaware LLCs is at least 14 business days but can be expedited for an additional fee.
Can I start a Delaware LLC for free?
No. When filing an LLC in Delaware there is a $90 filing fee for all applicants.
What taxes do LLCs pay in Delaware?
While there is no state income tax or personal income tax in Delaware, there are several other Taxes that your LLC may encounter. We recommend speaking with a licensed tax professional to ensure you are filing and paying the proper taxes.
What is the cheapest way to get an LLC in Delaware?
The cheapest way to get an LLC in Delaware is to follow the steps above and file yourself. There is an LLC filing fee of $90, but this is required whether you file on your own or use an LLC filing service.
Can I be my own registered agent in Delaware?
Yes. See above for more information.
Do Delaware LLCs expire?
LLCs in Delaware don’t “expire,” but they can be dissolved. If you fail to file annual Franchise Taxes and reports, then your LLC may be subject to fines and fees. Over time, this could lead to an “automatic dissolution.”
We recommend working with a professional registered agent service who will inform you of upcoming reports and even help you file them.
Delaware Secretary of State Contact Information
Delaware Department of State
Division of Corporations
PO Box 898
Dover, DE 19903
Delaware Department of State
Division of Corporations
401 Federal Street, Suite 4
Dover, DE 19901
Monday – Friday, 8 a.m. to 4:30 p.m.
Phone: (302) 739-3073
Information on this page is not to be considered legal or tax advice. Data was gathered from a multitude of sources and most recently updated in July 2021.
Any Information on this site is not guaranteed or warranted to be correct, accurate, or up to date. StateRequirement and its members and affiliates are not responsible for any losses, monetary or otherwise. StateRequirement is not affiliated with any state, government, or licensing body. For more information, please contact your state's authority on insurance.
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