How to Start an LLC in Delaware (Step-by-Step Guide)

If you’re considering forming a Delaware LLC, you’re making a smart choice for protecting your assets while enjoying flexibility in business operations. This is one of the best states to form your LLC right now.

To establish your LLC successfully, you must choose a unique business name, designate a registered agent, and create an LLC operating agreement.

But there’s more.

Forming an LLC in Delaware costs about $90 and takes about ten days.

This guide will walk you through everything you need to know to start an LLC in Delaware.

What Are the Steps to Start an LLC in Delaware?

To start an LLC in Delaware, you need to:

• Step 1. Choose and search for a unique name
• Step 2. Designate a registered agent in Delaware
• Step 3. File Certificate of Formation with the state
• Step 4. Create an Operating Agreement
• Step 5. Get an EIN from the IRS
• Step 6. Obtain your business licenses and any local permits
• Step 7. File annual franchise tax

But let us dive more in-depth into these steps so I can show you how to get them:

Step 1: Choose a Unique Name for Your Delaware LLC

Choosing a name for your LLC is an essential first step. The name must be unique in Delaware, meaning no other business can have the same name.

Search for your desired name using the Delaware Division of Corporations’ Name Availability Search. This tool helps you find out if your name is already in use.

When naming your LLC, follow these guidelines:

• Your name must include “Limited Liability Company,” “LLC,” or “L.L.C.”
• It shouldn’t be too similar to an existing business.
• Avoid using words that relate to government agencies, like the CIA or FBI.
• Some words (like bank or lawyer) may need special permits.

Also, think about your online presence. Even if you’re not launching a website immediately, it’s wise to check if your desired URL is available now to avoid future hassles.

Name Reservation

If you find a name you like but aren’t ready to register your LLC, you can reserve it for up to 120 days by filling out a Business Name Reservation form.

You can submit it online or by mail to the Delaware Division of Corporations at:

Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901

The reservation fee is $75. Payment can be made with major credit cards.

Using a DBA in Delaware

If you want to operate under a different name, you can file a DBA (doing business as). This allows you to use a trade name separate from your official LLC name.

To register a DBA, fill out the Registration of Trade/Business & Fictitious Name Certificate form and submit it to the Superior Court clerk by mail or in person in each Delaware county where you’ll conduct business.

The fee is $25, and a registered Delaware notary must notarize your application.

Step 2: Choose a Delaware Registered Agent

The next step in forming your LLC is selecting a Delaware Registered Agent. This person or company will receive your business’s critical legal documents and state notices.

Who Can Be a Registered Agent?

You have a few options for who can be your Registered Agent in Delaware:

• You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
• A Family Member: A trusted family member can be your registered agent.
• An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
• A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.

Requirements for Delaware Registered Agents

Delaware law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.

Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.

What registered agents do I recommend for Delaware?

I highly recommend Northwest registered agent services for obvious reasons.

They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.

You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.

Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.

Step 3: File Certificate of Formation with the Delaware Secretary of State

You must file the Certificate of Formation with the Delaware Division of Corporations to officially start your LLC. This document serves to register your LLC and provides essential details about your business.

To file your Articles of Organization in Delaware, follow these steps:

Step #1. Complete the Form: Obtain and complete the Certification of Formation from the Delaware Division of Corporations website.

Include the following:

• Your LLC name
• The registered agent’s name and address
• The principal place of business address
• Signature of an authorized person

Step #2: File Online or by Mail: You can file your Certificate of Formation through the Delaware Secretary of State’s online registration or by mailing the completed form to:

Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901

Step #3: Pay the Filing Fee: The fee for filing online is $90. This is a one-time expense required to establish your LLC. You can also choose to send your filing by mail, but make sure to include a check.

Once your Certificate of Formation is filed and approved, the state will issue a confirmation certificate.

After approval, your LLC is officially recognized, and you can start your business activities, obtain your EIN, open a bank account, etc.

Step 4: Prepare Your Delaware LLC Operating Agreement

An Operating Agreement is an essential document for your Delaware LLC. It outlines the ownership structure and the rules that govern your business.

While Delaware does not require an Operating Agreement, having one is highly advised.

Here’s why:

• Proves Ownership: It shows who owns the LLC and their contributions.
• Bank Requirement: Some banks may request this document to open a business account.
• Legal Protection: In case of disputes, it supports your LLC’s structure and operations in court.

Your Operating Agreement is an internal document. You don’t need to file it with the state or the IRS, but it’s wise to keep it with your business records.

When you create your Operating Agreement, consider including the following:

• LLC Name and Address: Clearly state your business name and principal place of operation.
• Duration: Specify how long your LLC will exist.
• Registered Agent: List the name and address of your registered agent.
• Business Purpose: Explain the primary goals of your LLC.
• Member Details: Include the names of members and their contributions.
• Profit and Loss Distribution: Describe how profits and losses will be shared.
• Management Structure: Outline how the LLC will be managed.
• Indemnification Clauses: Protect members from liabilities.

A well-prepared Operating Agreement will help your LLC run smoothly and protect your interests.

Step 5: Obtain EIN for Your LLC

After setting up your LLC in Delaware, the next important step is to obtain an EIN. This number, which stands for Employer Identification Number, is crucial for various business activities.

An EIN is a nine-digit number issued by the IRS. It helps identify your LLC for tax reporting and other official purposes.

How to Apply for an EIN:

• Online: Visit the IRS website. This is the fastest way to get your EIN.
• By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
• By Fax: You can also fax the completed Form SS-4.
• Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.

How Much Does It Cost To Get EIN?

Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.

How Does it Take to Obtain my EIN?

• Online: Get it immediately.
• By Mail: Expect 4 to 6 weeks.
• By Fax: Usually within 1-2 weeks.

Step 6: Get your business licenses and permits

To operate your LLC in Delaware, you must obtain the correct licenses and permits. It would be best to begin by securing a general business license from the Delaware Division of Corporations.

Depending on your LLC’s location, you might need additional local licenses or permits. For instance, starting a daycare often requires specific city or county licenses.

If your LLC has a physical location, hires employees, or generates sales, you must apply for a business license and register with the Delaware Division of Revenue.

For LLCs with employees, filing forms for Workers’ Compensation and Unemployment Insurance and registering for a withholding account are also necessary.

You can apply for a Delaware Business License through the One-Stop Business Licensing and Registration Service online or by mailing the Combined Registration Application form.

The filing fee for the business license is $75. Once submitted, processing may take between 2 to 4 weeks.

If you are unsure about your business’s required licenses or permits, contact the Division of Revenue at 302-577-8778. They can provide guidance and clarify any questions you may have.

Step 7: File your Delaware LLC Annual Franchise Tax Report

Every Delaware LLC is required to file an Annual Franchise Tax Report each year. This report helps keep your LLC in good standing with the state.

The filing fee for the Annual Franchise Tax is $300. Budget for this amount annually. You must submit your report and pay the fee by June 1st each year. If your LLC was approved on March 15, 2024, your first tax payment will be due by June 1, 2025.

Filing Process

Here’s how to file your Annual Franchise Tax Report:

• Visit the State’s Online Portal: Go to Delaware’s Division of Corporations website.
• Enter Your File Number: This number is essential for filing. You can find it in the documents you received when your LLC was registered.
• Complete the Payment: Pay the annual tax fee of $300 directly through the online system.

If you miss the deadline, you will be subject to a penalty of $200 plus 1.5% interest per month on the late tax amount.

Ensure your LLC is active during the tax year to be required to pay this tax. Stay organized to avoid late fees and keep your LLC in good standing.

What are the Different Methods To Start a Delaware LLC?

Starting an LLC in Delaware can be done in several ways. Each method has its benefits and drawbacks, so it’s essential to choose the one that best fits your business needs.

DIY LLC Formation in Delaware

If your business plan is straightforward and does not involve special licenses or multi-state operations, you may choose to form an LLC. This option allows you complete control and eliminates extra costs.

Pros:

• Cost Savings: You avoid legal fees and service charges.
• Full Control: You complete the process at your own pace.
• Simplicity: Quick for straightforward business plans.

Cons:

• Time-Consuming: You must research and understand all requirements.
• Risk of Errors: Any mistakes can lead to delays or rejections.
• Limited Guidance: You may miss out on valuable insights.

Using a Professional/Online LLC Formation Services

Many people opt to use an online formation service. These companies help you file the necessary paperwork and can provide additional services that make the process easier.

Pros:

• Convenience: You can complete the process online without much hassle.
• Expertise: Many services are experienced and can guide you through all requirements.
• Customization: Services often offer different packages to fit your needs.
• User-Friendly: Most platforms have easy-to-understand instructions.
• Support Available: Many offer customer service for questions.
• Privacy benefits: Most services allow you to use their address for free, so your address doesn’t get compromised

Cons:

• Cost: You pay for their assistance, which can add up.
• Dependence on Third Parties: You rely on external companies for accuracy.

Hiring an Attorney

Hiring an attorney can benefit complex business situations, such as operating in multiple states or needing legal advice on licensing. Attorneys can draft essential documents and provide valuable advice.

Pros:

• Legal Expertise: Attorneys understand the legal landscape and can guide you effectively.
• Tailored Assistance: They can create custom operating agreements based on your needs.
• Risk Mitigation: Good legal advice can help avoid future disputes.

Cons:

• Higher Costs: Attorney fees can be expensive compared to other methods.
• Potential Delays: The process may take longer as they review and prepare documents.
• Complexity: It may be harder to communicate what you need than DIY options.

What is The Cheapest Alternative Way to Form an LLC in Delaware?

If you want to start an LLC in Delaware on a budget, the most affordable option is to do it online. By filing the Certificate of Formation directly with the Delaware Division of Corporations, you can keep costs down depending on your needs.

This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.

However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.

Consider using a registered agent if you prefer not to handle everything yourself.

They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.

Who Provides the Best LLC Services in Delaware?

There are a myriad of Delaware LLC formation services from which to choose. Choosing the wrong one can affect your Delaware LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.

Here are some top-rated options you should consider:

Best Delaware LLC Service	Google Rating	LLC Formation Cost	Registered Agent Fee
Northwest Registered Agent	4.7/5	$39	Free for 1 year
Doola	4.6/5	$0 (plus state fees)	$297/year
Tailor Brands	4.4/5	$0 (plus state fees)	$199/year
ZenBusiness	N/A	$0 (plus state fees)	$199/year

Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.

Northwest Registered Agent stands out in Delaware LLC formation due to its commitment to transparency, customer service, and privacy. Using their address helps protect your personal information, making them a reliable choice.

How Much Does It Cost To Form an LLC in Delaware?

Forming an LLC in Delaware costs around $90, which covers the Delaware LLC formation fees. However, there are other fees you need to be aware of.

Here’s a summary of the costs involved in setting up your LLC:

Requirement	Cost
Name Reservation Fee	$75
DBA Registration	$25
Certificate of Formation	$90
LLC Formation Service	$39 (via Northwest)
Registered Agent Fee	$0 (via Northwest)
Annual Tax	$300
Total Estimate	$400 – $550

Remember these fees when planning your budget for forming an LLC. The main expense is the $90 Certificate of Formation filing fee paid to the Delaware Division of Corporations.

In addition to the filing fee, remember that all LLCs in Delaware must pay an annual tax of $300. This tax is due each year on June 1, but you won’t need to file an annual report.

Pros and Cons of Forming an LLC in Delaware

6 Important Things To Do After Forming Your Delaware LLC

After forming your Delaware LLC, you must take crucial steps to ensure your business runs smoothly. These steps include obtaining necessary licenses, setting up finances, understanding taxes, and establishing a solid online presence.

1. Research the Best Licenses and Permits for Your Business

Every business needs specific licenses and permits to operate legally. The licenses required depend on your industry and location. Start by checking with the Delaware Division of Professional Regulation.

You may need:

• Local business licenses from your city or county.
• State permits are based on your business’s nature (like health permits for food services).

Make a list of the required licenses and apply for each well in advance to avoid delays.

2. Create Business Accounts for Your Delaware LLC

Setting up separate business accounts is essential for managing your finances effectively. Opening a business bank account and a business credit card should be a priority.

Keeping your LLC’s assets distinct from personal funds is crucial for maintaining the liability protection the LLC structure offers. This ensures that only the business assets are at risk if your LLC incurs debt or is sued.

3. Understanding Delaware Tax Requirements and Managing Your Taxes

Familiarize yourself with the tax obligations for your LLC. Delaware has specific tax requirements that include:

• Franchise Tax: Paid annually based on your company’s structure.
• Sales Tax: Delaware has no state sales tax, but depending on your business, you may need to pay other taxes.

Research the Federal Income Tax, as LLCs typically pass income to their owners. You may also need to pay Self-Employment Taxes if you’re actively involved in running the business.

Hire an accountant or use tax software to help you stay compliant.

4. File your Annual Report

Unlike many other states, Delaware does not require LLCs to submit annual reports to remain active. This annual filing updates contact information in other states and maintains the LLC’s records.

Since Delaware lacks this requirement, you must notify the state through other means when your information changes.

For instance, if you change your registered agent or their address, you must submit a specific form and pay a $50 filing fee. Similarly, if you need to change your certificate of formation, you must file an amendment and pay the same fee.

5. Get Business Insurance for your LLC

Just as you wouldn’t leave your home without coverage, your LLC also needs the right business insurance to guard against potential risks and liabilities. Insurance protects your company’s assets and ensures financial stability in case of unforeseen issues or legal claims.

Your insurance needs will vary based on your business operations.

For example, general liability insurance covers risks such as slip-and-fall accidents or property damage if your LLC operates from a physical storefront.

Conversely, if you run your business as a consultant and work remotely, you might only need professional liability insurance to cover potential service errors or omissions. Assessing your business needs helps you choose the appropriate coverage to protect your LLC.

6. Setup Your Business Online Presence (optional)

In today’s digital age, online presence can significantly benefit your business. Start by creating a professional website. This platform allows you to showcase your services and connect with customers.

Consider using social media to engage your audience. Platforms like Facebook, Instagram, and LinkedIn can enhance your visibility.

Delaware LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations

When starting a business in Delaware, you have several structures, each with unique features.

Here’s a breakdown:

Sole Proprietorship

A Delaware sole proprietorship is the most straightforward way to start a business. Imagine you’re running a lemonade stand on your own. You make all the decisions and keep all the profits.

However, there’s no legal separation between you and your business. If your lemonade stand faces financial trouble or legal issues, your assets, like your car or home, could be at risk. It’s easy to set up and manage, but it does leave you personally responsible for any business debts.

Partnership

A Delaware partnership involves teaming up with one or more people to run a business together.

Think of it as joining forces with a friend to open a café. You share the profits and responsibilities, and you both make business decisions.

However, like a sole proprietorship, each partner is personally liable for any business debts or legal issues. If the business encounters financial trouble, your assets could be at risk, too. Partnerships are relatively easy to set up but require clear agreements between partners to avoid conflicts.

LLC (Limited Liability Company)

An LLC offers a blend of flexibility and protection.

Picture it as a protective umbrella over your lemonade stand. This structure separates your assets from your business, so if your LLC faces legal issues or debts, your personal belongings are generally safe.

LLCs are more formal than sole proprietorships or partnerships but offer management and tax treatment flexibility. They are ideal for small—to medium-sized businesses that want liability protection without the complexity of a corporation.

S-Corporation

An S Corporation is a more structured business form.

Think of it as a business where owners are shareholders, much like a small-scale company with multiple investors. It protects liability and allows profits to pass through to your tax return, avoiding double taxation.

This means you report the income and losses on your personal tax return, which can be beneficial for tax purposes. However, S Corps have stricter operational requirements and formalities compared to LLCs.

Corporation

A Delaware corporation is the most complex structure, suitable for larger businesses aiming for significant growth. Imagine a big company with many shareholders. A corporation offers robust liability protection and is a separate legal entity from its owners, meaning your personal assets are protected.

Corporations can raise capital more efficiently by issuing stock and can offer employee benefits.

However, they come with extensive regulatory requirements, formalities, and paperwork, making them more suitable for businesses with significant resources and expansion plans.

My Final Thoughts: Forming an LLC in Delaware

To start an LLC in Delaware, follow these steps:

• Choose a name for your LLC.
• File the Certificate of Formation with the Delaware Division of Corporations.
• Pay the filing fee of $90.
• Get an Employer Identification Number (EIN) from the IRS.
• Pay the annual franchise tax for your LLC.

Understanding the costs involved is critical. The initial filing fee is $90.

You will also need to pay an annual franchise tax of $300. Being aware of these costs helps you budget better.

Delaware is a popular choice for forming LLCs. It offers benefits like no sales tax and friendly business laws, and many entrepreneurs appreciate the simplicity of the process.

Learn More About Starting an LLC in Delaware

If you need additional help to start an LLC in Delaware, check out these valuable resources:

Frequently Asked Questions

Can I change my registered agent in Delaware?

Yes, you can change your registered agent in Delaware. To do so, you must fill out a form and file it with the Delaware Division of Corporations. Make sure to notify both your old and new agents.

How do I change my Delaware LLC’s name?

To change the name of your LLC, you must file a Certificate of Amendment with the Delaware Division of Corporations. Ensure your new name complies with Delaware naming rules and is available.

How do I renew my Delaware LLC?

Delaware requires LLCs to pay a $300 franchise tax each year.

How do I dissolve an LLC in Delaware?

To dissolve your LLC, you must file a Certificate of Cancellation with the Delaware Division of Corporations. This officially ends your LLC’s existence.

How do I add a member to a Delaware LLC?

To add a member, you should check your LLC operating agreement. You may need to draft an amendment to this agreement and formally document the new member’s admission.

How do I add a DBA to an LLC in Delaware?

To add a “Doing Business As” (DBA) name, you must file a Registration of Trade Name with the Delaware Division of Corporations. This allows you to operate legally under a different name.

Can a minor own an LLC in Delaware?

Yes, a minor can own an LLC in Delaware. However, their ability to enter into contracts may be limited. It’s advisable to have an adult involved in the management.

What is the Cost of the Delaware Annual Franchise Tax?

The Delaware Annual Franchise Tax is $300. This fee is required to maintain your LLC status and must be submitted annually.

Does LLC expire in Delaware?

No, an LLC in Delaware does not expire as long as you continue to file your annual franchise tax and pay the required fees. If you fail to do so, your LLC may be declared void.

Can a non-resident open an LLC in Delaware?

Yes, a non-resident can open an LLC in Delaware. No residency requirements exist for owners or members, making it an attractive option for many.

Can I buy a house or car with my LLC in Delaware?

Yes, you can buy a house or a car using your LLC in Delaware. However, the LLC must be appropriately set up and have its bank account to handle these transactions.

Can you have multiple businesses under one LLC in Delaware?

Yes, you can operate multiple businesses under one LLC in Delaware. You can do this by using different DBAs for each business while still filing as one entity.

Is Delaware an excellent state in which to form an LLC? Is it worth it?

Delaware is often considered a good state for forming an LLC due to its business-friendly laws and favorable tax treatment. Many businesses choose Delaware for these advantages.

Can one person form an LLC in Delaware?

Yes, one person can form an LLC in Delaware. Like any other LLC structure, this single-member LLC offers personal asset protection.