How to Start an LLC in Delaware

Starting an LLC in Delaware is a lot easier than you might think. This ultimate guide teaches you everything you need to know to form your LLC.

Start An LLC In Delaware

A limited liability corporation (LLC) is a legal framework for a business. It is a corporation with limited liability and has less freedom and more formality than a partnership or sole proprietorship.

So, if you’re considering forming an LLC in Delaware, you can learn how to do so by following the steps below. In addition, we’ll go through the advantages of forming an LLC in Delaware and why so many firms do so.

Let’s first see how Delaware compares to its neighboring states as a place to start an LLC.

StateDelawareNew JerseyMarylandPennsylvaniaUS Average
Population989,9489,267,1306,165,12912,964,0566,619,825
LLC Filing Fee$90$125$100$125$130.38
LLC Annual/Biennial Fee$300 (every year)$75 (every year)$300 (every year)$70 (every 10 years)$89.34 (every year)
Corporate Tax Rate8.70%6.5-11.5%8.25%9.99%5.60%
Nominal GDP per capita$80,446$72,524$71,083$64,751$64, 773.08

Before You set up an LLC in Delaware

The basic requirements before setting up an LLC in Delaware include;

  • Certificate of Formation
  • Company name
  • EIN (Employer identification number)
  • Operating agreement
  • Registered agent

How much to start an LLC in Delaware

In Delaware, forming an LLC will cost you around $140. This includes $90 for submitting your articles of organization and $50 for the state’s cheapest business license.

Additionally, let’s have a look at other expenses required to start an LLC in Delaware:

  • A $75 filing fee is essential for the reservation of the LLC’s company name for 120 days.
  • Also, there is a $25 charge per county for LLC to function as a DBA.
  • Moreover, there is a filing fee of $200 for international LLCs, which is more than the usual $90.
  • A certified duplicate copy of the certificate of formation costs $50.
  • Expedited services range from $50 to $100.

Finally, remember that, although you are not required to make an annual report in Delaware, you will be compelled to pay a $300 yearly tax to the state.

Steps to Start an LLC in Delaware

Steps to create an LLC

Here are the steps to follow:

Choose a Name for Your LLC

The first step in forming an LLC in Delaware is deciding on a name.

Delaware law, like other states, requires you to choose a unique name for your LLC. In other words, it can’t be the same as the name of another business registered with the Division of Corporations.

So, if your name is available, you may reserve it online for 120 days. A name reservation form may also be sent or mailed to the Division of Corporations. However, reserving a name requires a $75 filing fee, which is expensive compared to other states.

Also, remember that reserving a name isn’t essential to register an LLC, but it does guarantee that your name will be available for 120 days.

Using a DBA

You may run your LLC using a fictitious business name. This implies a name that is distinct from your company’s legal name. So, to use a “doing business as” or “DBA” name, you must first register it in the county where you do business.

Please fill out the Registration of Trade, Business, and Fictitious Name Certificate form and submit it to the county Superior Court in each county where you do business. This form has a $25 filing fee and must be notarized. You may either send or present the paperwork to the appropriate Superior Court.

Find a Registered Agent in Delaware

A registered agent is a person or firm that receives legal and official mail on behalf of your company. So, if your company is sued or gets a legal or tax notice from the government, this person will be the first to contact you.

Also, in Delaware, your registered agent must be a Delaware resident. However, unlike many other jurisdictions, Delaware does not place too many restrictions on who may act as your LLC’s registered agent.

ZenBusiness – $49 + state fees to register your LLC (read review)
Incfile – $0 + $50 state fees to register your LLC (read review)

Certificate of Formation

You must next submit your certificate of formation to the Division of Corporations.

The Delaware certificate of formation (seen below) is simple to complete. All you have to do is include:

  • The name of the LLC.
  • Name of the registered agent
  • Address of the registered agent
  • Name and signature of the person who is filling out the form. This person should be connected to the business.
  • The cover page.

Regardless of how you send in the paperwork, you have to pay a $90 filing fee.

Certificate of formation

Foreign Limited Liability Companies (LLCs) Operating in Delaware

It’s worth noting that if you’re forming a foreign LLC in Delaware, the procedure for filing your certificate of formation may change somewhat.

The domestic LLCs must fill out the certificate of formation as described above, whereas the international LLCs must fill out a certificate of registration as a foreign limited liability company. International LLCs are founded under the rules of another state but wish to conduct business in Delaware.

As a result, these companies can also file online, by mail, or by fax, but they must show proof of existence from their home state and pay a $200 filing fee.

Other required documents

After choosing a registered agent, you should get a business license to finish setting up an LLC in Delaware.

Every operational Delaware-based firm must get a state business license from the Delaware Department of Revenue.

So, you may get a Delaware business license by creating a “One-Stop” account and completing the entire procedure online. Your license will cost anywhere from $50 to $450 to file, depending on what kind of business you run.

You will obtain a temporary license valid for 60 days if you follow the “One Stop” approach. Permanent licenses are usually delivered within ten days.

Operating Agreement

An operating agreement is a contract that describes the business procedures to be followed by your limited liability company (LLC). Having a written operating agreement is important for several reasons, such as dealing with disagreements over financial agreements and other possible lawsuits.

Get an EIN

Even if the company does not employ anyone, your limited liability company must get its Employer Identification Number (EIN) from the Internal Revenue Service. This is even if it has just one employee. You may get an EIN by going to the IRS website and filling out an available application. Also, there is no cost to submitting the paperwork.

The Forms You Need to Run an LLC in Delaware

  • Employment contracts
  • Independent contractor service agreements (ICSA)
  • LLC resolutions
  • Non-disclosure agreements (NDA)
  • Operating agreements

Did you know?

The first Delaware LLC was founded on October 1, 1993, when the Delaware Limited Liability Company Act established the LLC as a corporate legal organization for the first time. Currently, LLCs account for almost two-thirds of all firms created in Delaware.

LLC Taxes in Delaware

How much do LLCs have to pay in taxes in Delaware?

All Delaware-registered limited liability companies (LLCs) must pay a $300 yearly tax, due on June 1 of each year. However, you will not be required to submit an annual report.

Corporate Tax Rate Delaware

Is Delaware a good place to start an LLC?

Due to its low costs and tax duties, Delaware is often regarded as one of the finest states to register an LLC. Also, many firms register an LLC in Delaware even if they do not plan to conduct business there.

How Long To Form an LLC In Delaware

If you file online, you may incorporate an LLC in Delaware in 9–11 weeks (or 10–12 weeks if you file by mail). Also, you may pay for expedited processing if you need your Delaware LLC more quicker.

Delaware allows you to pay an additional $50 to have your LLC file examined within 24 hours (“Priority 4”). Also, this is accessible for both paper and electronic filings. Other expedited LLC alternatives are available in Delaware.

How Much Does it Cost to Run an LLC in Delaware?

It will cost you at least $140 to form an LLC in Delaware — $90 to submit your articles of organization, plus $50 for the state’s lowest business licensing charge. 

Moreover, the first year after forming your LLC, you will repay $300 in franchise tax on June 1 if the LLC intends to stay in good standing. Good standing refers to the state of not being in any arrears. 

Furthermore, the franchise tax is a tax specific commercial organizations must pay to do business and function in particular states.

What to do after starting an LLC in Delaware?

Registering your LLC provides you with legal status for doing business. So here are a few things to do after forming an LLC: maintain your LLC’s compliance and current status on the state’s website.

Create a Business Logo

A logo will represent your company’s identity wherever your clients engage with you. Be it on your website, invoices, email signatures, business cards, etc. Instead of attempting to develop your logo, use a logo creation tool like Wix. 

Create Business Cards

Once your logo is ready, make some nice-looking business cards for when you’re out networking or doing errands.

Establish a Company Website

People will discover you most easily if you have a strong internet presence. So, it would be best if you began by purchasing a domain name. Then you must choose a website builder like Wix or others. 

Select a Virtual Phone System

Your company needs a phone number so that clients, workers, and suppliers can contact you. So, consider using a platform like Grasshopper, which enables you to purchase a business phone that forwards to your mobile phone. Thus, ensuring that you never miss an important call.

Resources to Start a Successful LLC in Delaware

Start Marketing Your LLC in Delaware

  • Create a Website
  • Implement content marketing.
  • Start Blogging
  • Use social media to increase brand awareness for your LLC in the press.

How to Dissolve an LLC in Delaware

When you no longer want your Delaware LLC operational, you must go ahead to dissolve it formally.

So, there are two essential processes for dissolving your Delaware LLC:

Conclusion

This post took you step-by-step through the process of forming an LLC in Delaware. You now have all the information you need to start your LLC in the state of Delaware. 

Frequently Asked Questions (FAQ)

Filing costs, including name reservation and articles of incorporation, are more than in other states. All LLCs in Delaware must have a state business license at the very least (with associated fees). Delaware levies relatively high state unemployment taxes. At the federal level, LLC members must pay significant self-employment taxes. An annual alternative entity tax of $300 is needed. Even if you do not collect sales taxes from your consumers, you must collect gross receipts tax. When you hire your first employee, even if they only work part-time, you must get workers' compensation insurance.

You may register an LLC in Delaware without traveling, operating an office, or keeping a bank account there. Nevertheless, the Delaware LLC Act requires every corporation formed in Delaware to have a Delaware Registered Agent with an in-state street address.

Yes, Delaware LLCs, like other LLCs, pay business taxes. Delaware LLCs do have a few special tax requirements: Alternative entity tax: Delaware LLCs must pay a $300 alternative entity tax to the state by June 1. Federal and state income taxes. Gross receipts tax Payroll taxes: If you employ people, you must withhold and pay payroll taxes and unemployment taxes.

Operating agreements are strongly recommended but not required in Delaware.

On the business side, forming an LLC in Delaware is relatively quick. You can complete this procedure in a couple of hours. Generally, filing your articles of organization online will result in speedier approval timeframes. However, the Division of Corporations processes these files in 10 to 15 working days.

Delaware business licenses cost $75 per year for the first location and $25 for each site. So, you must pay it at the end of each year and may pay for up to three years in advance.

There are no sales taxes. Additionally, there is no state income tax or gross receipts tax for LLCs that do not do business in Delaware. Intangible income is not taxed (like patent and trademark leases). LLCs that do not do business in Delaware do not need a business license. Simple LLC creation paperwork and filing procedure (which also limits exposure of personal information). Few LLC naming limitations. There are few limits on registered agents; a company may act as its registered agent. The Court of Chancery is dedicated only to commercial matters.

Author

Matija

Matija

Amazing content is the core of what we do. With more than 5 years of experience in branding, name development, and business, Matija helps create and manage content production.

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