How to Start an LLC in Delaware: If you’re interested in setting up a Delaware LLC, you’ve come to the right place. Having an LLC not only protects your personal assets but also is less complicated than other business structures. Delaware’s laws make it easy to establish your LLC in Delaware. On this page, You’ll find all the steps that must be taken to ensure that your Delaware LLC has been correctly established. We recommend you read the whole article very carefully word by word, don’t miss anything 🙂
On this page, you’ll learn about the following:
- How to Start an LLC in Delaware
- After Starting Your Delaware LLC
- Delaware Foreign LLC
- Delaware LLC Formation Review
How to Start an LLC in Delaware
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection.
If you wish to start an LLC in Delaware, mainly you have to file your Certificate of Formation with the State and pay a filing fee of $90. There are some more steps to follow to get your LLC established in Delaware. The following steps explain everything you need to create your LLC in Delaware in 2022. Let’s get started!
Step 1: Decide a Name for Your Delaware LLC
The very first step while forming an LLC in Delaware is to give a proper name to your LLC. Before you name your business, you must know that the name should be easy to remember, available in the state, and follows all the LLC naming guidelines.
Delaware LLC Naming Guidelines
There are a few specific requirements all the LLCs in Delaware have to follow while naming their Company. Some of the most important requirements are as follows:
- Your business name should be available and no other existing business in Delaware can have the same name. Perform a name search from the below-mentioned source to be sure your name isn’t taken already.
- “Limited Liability Company”, “LLC”, “L.L.C.”, “LC”, “L.C.”, and “Limited Company” – any one of these has to be used as a suffix in your business name.
- You cannot use any name for your business that is confusing or misleading. Terms such as “Treasury”, “State Department”, “FBI”, “CIA”, etc. shouldn’t be included.
- Terms like “Bank“, “University“, “Attorney“, “Doctor“, etc can be added only after the additional requirements by Delaware State Government are fulfilled.
- (Optional) It’s better to name your business something for which your desired domain is available.
|Important Links –||Submit Offline Form to –|
|Delaware Business Entity Search – Online Name Search|
Name Reservation Form – PDF
Delaware LLC Name Search Guide – Instructions
Name Availability Standards – Guidelines
|Delaware Division of Corporations|
401 Federal Street – Suite 4
Dover, DE 19901
Reserve Business Name for Future
If you do not wish to file your LLC right now but want to hold the name you have decided then you can reserve your LLC name for 120 days. To keep the name, you have to file a name reservation application and pay $75 to reserve your name with the Delaware Secretary of State.
Doing Business As (DBA) or Trade Name
Once you have a legal name for your LLC, you can register it. However, it is not mandatory. You can, instead, use DBA, Fictitious Name, or Trade Name. In that case, you must register your name with the Delaware Secretary of State by submitting a Fictitious Name Certificate Form along with the filing fee of $25.
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ZenBusiness gives you a business domain for free. It’s always a good idea to get a “.com” domain for your business but these days you can also use other TLDs like “.company”, “.xyz” etc. The same service also lets you set up your website, it’s an amazing deal for everyone.
It is not legally mandatory to use the word LLC in your domain name or email. If you want you can use it. However, it is recommended not to use LLC in the domain name. A domain name should be short and easy to remember.
Step 2: Assign a Registered Agent in Delaware
The second step to forming a Delaware LLC is to appoint a Registered Agent. A registered agent is a person or business entity that will act or work on your LLC’s behalf. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Delaware. Hence, hiring a competent Delaware Registered Agent for your LLC is necessary.
Make sure your registered agent is a resident of Delaware or has a physical street address. Their business address or the principal address should be in Delaware. Most LLC formation companies also provide registered agent services. Below are two great LLC setup services, even if you buy their cheapest plan (normally $49/year) you also get registered agent service for free for the first year (normally $100+/year).
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Delaware. Compare them to check what is the best option for you. These same companies also provide standalone Delaware registered agent services.
A person who is above 18 years of age and has a physical address in the state of Delaware can be a Registered Agent. A Registered Agent can be an independent person or can be a business entity. One who is responsible for handling all the legal documents.
Yes, you can be your own registered agent if you are a resident of the state of Delaware and you are above 18 years of age. To become a registered agent you must have the authority to conduct any type of business in Delaware.
Step 3: File Certificate of Formation in Delaware
The third and most important step in forming a Delaware LLC is to file the Certificate of Formation. This Delaware Certificate of Formation is a legal document needed to officially register your business with the Secretary of State. It costs $90 (online and by mail filing) to file your formation certificate in Delaware. (Read more on LLC cost in Delaware).
The Certificate of Formation includes details like the name of the LLC, registered agent’s name, address, employees’ details, and structure of the company (member-managed or manager-managed). Before hiring employees in Delaware LLC, one should know about the rules and regulations thoroughly. Also if you are expanding your existing business (an LLC) to Delaware then you need to register as a Delaware Foreign LLC.
How to File Online
How to File by Mail
If you prefer filing real-life forms for your Delaware LLC registration, then you can download the LLC formation form. Read the form thoroughly, fill it out, and send it to the address mentioned below. Along with the Form, make sure to submit the Cover Memo as well.
Mailing Address: Delaware Division of Corporations
401 Federal Street
Suite 4 Dover, DE 19901
Processing Time: It takes 2 weeks to form an LLC in Delaware. The process can be expedited by paying additional fees. However, the time can be different due to various factors.
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Step 4: Create Your Delaware LLC Operating Agreement
Moving on to the fourth step, filing your operating agreement. An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to filing a Delaware LLC Operating Agreement, the state does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all the details of your business operation. Like Delaware, there are other states that do not have a mandatory rule to file operating agreements. But, this document would be useful if you decide to dissolve Delaware LLC later. Hence, having an operating agreement may not be necessary but it is definitely ideal.
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Step 5: Filing a Delaware LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify the type of business for tax purposes and taxes in general. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in Delaware LLC requires following specific rules and regulations. On the other side, EIN for Delaware foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Enter details of your LLC, and finally complete the form and send it to the address given. You can also get an EIN Assistant who can help you with the process.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
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Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
Congratulation, you are now done with all the necessary steps to form your Delaware LLC. If you do it yourself it should take you a long time to properly understand and do all the steps. However, if you use a professional service it should take fewer hours and you always have live chat with expert support for any help you need.
After Starting Your Delaware LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Delaware business permits & licenses
- Get general liability insurance and professional liability insurance with coverage for employees
- File a Delaware LLC annual report or biennial report
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Cost of Delaware LLC
Forming an LLC in Delaware is no doubt more cost-effective than other structures of a business. There are some fees and charges one has to bear to form a Delaware LLC. LLCs have pass-through taxation. Hence, your Delaware LLC won’t bring you a massive tax burden. Here are some of the fees and taxes are needed to be paid while forming an LLC in Delaware,
|Fees/Tax||Amount to be Paid|
|Name Reservation Fee|
Certificate of Formation Fee
|$75 for 120 days|
In Delaware, LLC name reservation is not mandatory. You can register your LLC name at the time of registering your LLC. If you wish to hold the name for some time without registering your LLC, then a Name Reservation is needed. It can be filed by paying $75. Your LLC name will be reserved for the next 120 days. In some states, Name Reservation is mandatory.
According to the Franchise Tax rule, LLCs have to pay this tax on a yearly basis. Annual Franchise Tax reports are considered to be the annual revenue report or annual report of the LLC. If you evaluate LLC costs in Delaware, the amount of Franchise tax is not as high as for any other form of business ownership.
Delaware Foreign LLC
If you are interested in forming a Foreign LLC in Delaware then you need to file the Certificate of Foreign LLC to the Delaware Secretary of State. Foreign LLCs allow you to operate your business in more than one state. Along with the Certificate of Foreign LLC, you need to submit some more documents like the Certificate of Good Standing, etc. to the Delaware SOS to form your foreign LLC in Delaware. To know more in detail, check out our guide on Delaware Foreign LLC.
Reasons to Start an LLC in Delaware
It is always cost-effective to start an LLC in Delaware. The filing fee is fixed and it takes more if you require same-day service or expedited service. Other than that no prominent tax liabilities are there. Business taxes such as sales taxes, receipt taxes, payroll taxes, and such are less and sometimes zero in Delaware. Other than tax benefits there are business funding options and incentives that Delaware LLC receives from the government. Some of the long-lasting benefits are as follows,
Business Laws are Cutthroat
The biggest and most critical aspect of running a business is that a person should abide by all the rules and regulations. Only in this case will one achieve success. The same laws and regulations must apply to the employees of the company. That is why it is best to choose LLC in Delaware.
The rules in Delaware State are stringent, due to which keeping an eye on the employees and regulating them becomes easy. Moreover, these rules make business-to-business meetings more trustworthy and reliable. If a person opens up their LLC in Delaware, then the chances of getting cheated are decreased manifolds.
Legal Bodies are Very Active
Delaware government legal bodies are more active than any other state. Also, they have the proper right to interfere if the businesses are not working in the right way. The state government will quickly solve any business issue between rivals or other similar instances.
Flexible Federal Taxes
The taxation system designed in the state is very flexible for business owners. There is the flexibility provided to the Delaware LLC in which they were given a time period to provide the taxes. Due to this, the businesses get some extra time. Moreover, there are different slabs of taxes set according to the type of business a person owns. Read more on Delaware’s classification of LLC tax.
Formation of Series of LLCs is Allowed
Here you will get plenty of expansion opportunities. The government also allows a person to make more than one LLC for the same company. The benefit of the LLC series is that one can hire different members in the new LLC at top management. Along with that, if one series is under debt, then this debt will not affect other LLC of the series.
Top Delaware Businesses
If you are an entrepreneur and are thinking of forming an LLC in Delaware, then the very first decision you need to take is to think of a business to start with. Out of plenty of business ideas, one needs to figure out which is the best profitable niche to start a business in? So, here are the best ideas a business person can consider.
If you look at Delaware, then the main business established in the state is agriculture. The backbone of the state’s economy is Agriculture. Delaware is the largest producer of corn, and its demand is increasing day by day, due to which the demand of businesses is also growing. You can easily select a product and apply it for processing that raw product, which has increased demand in the country and nearby countries.
Manufacturing of Paper Product
Paper and its products are supplied to the whole country from Delaware, and its demand is increasing day by day. That is why there is more demand for paper industries in the state. So, you can think of starting a paper industry also.
If you look at the statistics of soil present in Delaware, then the sand and gravel in the state have magnesium present in it. That is why the mining businesses are thriving well in the State of Delaware. If a businessman is looking to invest more money in business, they can take a site and start their mining. On the other hand, if one has less money to invest, one can think of manufacturing magnesium products currently in demand.
Small businesses that one can also think of starting are mentioned below.
- Dairy Farm
- Microbrewery Business
- Digital Marketing
Delaware LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming a Delaware LLC. Click on the steps in this list to read the full detail.
- Name your Delaware LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a Registered Agent
In Delaware, it is mandatory to select a registered agent for your LLC. Get a professional Registered Agent from LLC formation services like ZenBusiness to get things done hassle-free.
- File a Formation Certificate
Filing a formation certificate is necessary when forming an LLC in Delaware. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create an Operating Agreement
An operating agreement is not a strict requirement in Delaware but something encouraged when you start an LLC to avoid future conflicts.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Delaware
If you’re looking for an answer to the question “How fast can I form an LLC in Delaware,” then you’ve come to the right place. This state allows you to file your Delaware LLC online, via mail, or fax. In addition to filing fees, you must prepare an LLC operating agreement and submit it to the Division of Corporations. Additionally, there are other important steps you must complete. Listed below are some of the most important things you need to do when you want to form an LLC in Delaware.
When forming an LLC in Delaware, you will need to choose a registered agent. Your registered agent can be anyone, as long as they are a Delaware resident. Your friend or family member can also act as your registered agent. You can also hire a third-party company to handle this role. If you’d prefer to avoid the registration process altogether, you can choose a professional service that will handle all of the details for you.
Your LLC name should include “limited liability company” or one of its abbreviations. However, it must not contain words that may confuse government agencies. Choosing a name that includes such restricted words may require additional documentation or even a licensed individual to be a part of the LLC. Additionally, it must be distinct from other entities in Delaware. To find out if your chosen name is already used by another company, check the Department of State’s website.
If you are a resident of Delaware, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $90 (domestic LLC) and $200 (foreign LLC), LLC costs in Delaware include $300 for Franchise Tax Reports every year. LLCs are not liable to pay sales tax.
It takes 2 weeks to get an LLC in Delaware if you file it online or by mail. It can be expedited by paying an additional amount. If you hire a professional LLC service, then it might take less than that. We recommend ZenBusiness which has impeccable turnaround time.
Every year all the LLCs have to submit a Franchise Tax Report (Annual Report) and pay $300 to the Delaware Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens. Read more on the Delaware Classification of LLC Tax.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Delaware at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.