Forming an LLC in Delaware

By Catherine Hodder, Esq. | Legally reviewed by Ally Marshall, Esq. | Last reviewed November 18, 2022

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A limited liability company ("LLC") is a popular business structure for small business startups, and Delaware LLCs offer a few advantages over other states. You can form a series LLC, an anonymous LLC, and benefit from Delaware's Court of Chancery. You can start an LLC in Delaware with the step-by-step guide below.

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Table of Contents

Steps to Form an LLC in Delaware

1

Name Your LLC

Before you can formally create your LLC, you need to have a name that you can use for your LLC. According to the Delaware Limited Liability Company Act, your Delaware LLC name must:

  • Be distinctive: The name must differ from any other business name registered with the Delaware Secretary of State.
  • Have a proper LLC ending: Your name must contain the words "Limited Liability Company". If you prefer, you can use the approved abbreviations: "L.L.C." or "LLC".
  • Not contain restricted words: For example, you should not use any variation of the word "bank" in your LLC name.
  • Not be confusing: In other words, do not use any words to confuse the business with a government agency.

Search for LLC Business Name

You can run a business name search to determine if your name is available in Delaware. The Delaware Division of Corporations provides a searchable database to make this easy. You will need to find a new company name if there are any exact (or deceptively similar) matches.

Next, you should search for the name on the internet. Using an internet search engine helps to quickly determine whether any businesses are already using your desired name. To avoid legal trouble for trademark infringement, you should not use a name trademarked by another business. You can check the United States Patent and Trademark Office (USPTO) for any trademarks of your name. The USPTO has a database of all United States registered trademarks for this purpose.

Protect Your LLC Business Name

Now that you know your name is available, you may want to protect it so others can't use it. You can register for an internet domain name and trademark your name.

To register for a domain name, search the internet to see if your name is available. If so, you can register your name with a domain name registration company found on the internet.

You can trademark a business name with a federal patent through the USPTO or the State of Delaware. The state has an Application for Registration of Trademark or Service Mark. The application filing fee is $25. The certificate of registration, issued by the state, costs $10. The state trademark is effective for ten years, and you can file a renewal six months before the trademark expiration date.

Reserve Your LLC Name

If you have your name but are not yet ready to file the certificate of formation, you can reserve the name at the Delaware Division of Corporation's website. Or you can complete the Application for Reservation of Limited Liability Company Name and mail it to the Delaware Division of Corporations. The name reservation fee is $75. This reservation holds your name for 120 days.

2

Get a Registered Agent

All Delaware LLCs need a registered agent as the contact point with the Division of Corporations. A registered agent is a person or entity who accepts legal documents for your LLC. If someone sues your business, the service of process goes to the registered agent. Under Delaware law, your registered agent can be:

  • Your LLC itself
  • A Delaware business
  • An individual who resides in Delaware

The registered agent must have a physical address in Delaware, meaning a street address (not a P.O. Box). Many business owners want to form LLCs in Delaware, even if Delaware is not their home state. In that case, they use a professional registered agent to represent their company.

3

File Your Certificate of Formation

To create your Delaware LLC, you must file a certificate of formation with the Delaware Division of Corporations. The certificate of formation is a charter that formally establishes your LLC as a legal entity. To complete your certificate of formation, you will need the following:

  • Your LLC name
  • The name and address of the registered agent located in Delaware
  • Any other information you would like to add
  • The $90 state fee

There are four ways to file your LLC certificate of formation:

  • The Delaware Division of Corporations provides a Certificate of Formation form. You can complete it online and submit it using the Delaware Division of Corporation's Document Upload Service.
  • You can download the certificate of formation and mail it to the Delaware Division of Corporations, 401 Federal Street, Suite 4, Dover, DE, 19901. If registering your LLC by mail or courier service, you must include a cover memo with the certificate of formation.
  • There is now an option to set up your LLC online with the Division of Corporations using their OneStop portal. You have to create a user account to access the portal.
  • Use a registered agent service company to draft and file the paperwork for you.

If you would like to expedite your LLC registration, you can pay $100 for same-day service or $50 for 24-hour service. And if you want a certified copy of your LLC registration, there is a $50 fee.

4

Draft an Operating Agreement

Delaware does not require an operating agreement as part of the Delaware LLC formation process. However, an LLC operating agreement is a key company document that every LLC should have. An operating agreement forms a contract among members on how the company should be run, including:

  • Management structure
  • Members' rights and responsibilities
  • A profit and loss allocation plan
  • Ownership percentages
  • Voting rights
  • Procedures for removing or adding members
  • Dissolution procedures
  • Any other agreements among members

5

Get an EIN

If your LLC will have more than one member or hire employees, you will need an Employer Identification Number (EIN). An EIN is a unique federal tax identifying number that the Internal Revenue Service (IRS) issues. The IRS uses it to distinguish between businesses for tax purposes. In this way, it's like a Social Security Number for business. Applying for an EIN is easy and free. You can apply by mail, fax, or online.

You will use your EIN for the following:

  • Employee payroll
  • Tax returns
  • Opening a business bank account
  • Applying for a company credit card

Visit the IRS Small Business and Self-Employed Tax Center to learn more about your federal business tax requirements.

6

Set Up Business and Tax Accounts

Once your LLC is up and running, it's essential to follow all tax and licensing rules. These will vary depending on your location and the nature of your business.

At the Delaware Division of Revenue OneStop portal, you can begin your business registration, apply for those licenses, and register as an employer. The portal offers more information about starting a Delaware business too.

You may need city or county licenses based on the type of business you run. Delaware's Business Licenses and Registration's Business First Steps website provides licensing information for Delaware cities and counties.

Business and Tax Requirements in Delaware

When you open any business, you must set up federal, state, and local tax accounts. And if you have employees, you must set up employer withholding accounts.

State Business Tax

There is no state business tax for LLCs. However, LLCs must pay a $300 annual tax (sometimes referred to as a business entity or franchise tax). If the LLC opts for treatment as a corporation for tax purposes, the LLC pays a flat corporate state tax of 8.7% of federal taxable income.

State Employer Tax

If you have employees – even if they are also LLC members, you must register for an employer account. Delaware has a OneStop website where you can set up an account to:

  • Register as an employer with the Delaware Division of Unemployment Insurance
  • Register with the Delaware Division of Worker's Compensation if you have one or more employees
  • Register for a withholding tax account

Sales and Use Taxes

Delaware is one of the few states that does not charge sales tax. But you may need to pay gross receipts tax if you sell goods or services in the state.

Business Licenses and Permits

If you operate a business in Delaware, you need a Delaware business license. Register for business licenses at the Division of Revenue's OneStop portal. Depending on your business, you may also require local licenses and permits. Check what agency regulates your business on the Business First Steps page.

Registration in Other States

If you want to do business in another state, contact that secretary of state's office to register as a foreign LLC. They may request a certificate of good standing for proof your LLC is compliant with Delaware corporate laws. You can order a certificate of good standing by written request. The short form certificate includes the LLC's name and the current status. The certificate costs $50.

Annual Requirements in Delaware

There is only annual requirement to keep your LLC compliant in the state of Delaware.

Annual Reports

Unlike corporations, in Delaware, LLCs do not have to file annual reports.

Pay Business Entity Tax

Your LLC will need to pay a business entity tax of $300 each year after the year of your LLC's creation. The tax is due before June 1st of each year.

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FAQs About Delaware LLC Formation

    • The initial fee for the LLC certificate of formation is $90. After that, there is a $300 annual business entity tax.

    • You will pay $90 to submit your certificate of formation. For expedited registration, you can pay $100 for same-day service or $50 for 24-hour service. There is also a $50 fee to receive a certified copy of your LLC registration.

    • LLCs must pay an annual business entity tax of $300. There will be other state filing fees if you need to amend your certificate of formation or change your registered agent. You can find a complete list of these fees in the Division of Corporations Fee Schedule.

      • Single-member LLC. A single-member LLC (SMLLC) is owned by one member. The process for filing an SMLLC is the same as a multi-member LLC.
      • Multi-member LLC. A multi-member LLC has more than one owner or "members." A manager-member can be one person or a group operating the LLC.
      • Professional LLC. A professional LLC (PLLC) comprises licensed professionals running the business. Delaware does not have a special designation for PLLCs. Professionals form an LLC with a "limited liability company" or an LLC designation.
      • Series LLC. Delaware is a state that allows series LLC formation. A series LLC has an LLC parent organization with LLCs grouped under the parent. Each LLC has its own assets and business purposes. There are benefits to setting up series LLCs. Each LLC is an independent business entity, so a lawsuit against one LLC under the master does not affect the other LLCs. For example, a landlord might have a master LLC for property management and leasing, but each property is an asset of an individual series LLC. Delaware has two types of series LLCs in Delaware:
      • Protected Series LLC. This type is the original series LLC. You file one certificate of formation, reserving the right to create other series under the original entity (the "master") and pay one fee. The LLC members can add other series under the master with different names. Members create the series by amending the master LLC's operating agreement. With the Protected Series LLC, the master LLC pays one annual business entity tax of $300. Because the Division of Corporations only has a record of the master entity, they can only issue a certificate of good standing for that entity.
      • Registered Series LLC. In 2019, Delaware introduced a registered series LLC to give each series its own registration. That way, a certificate of good standing could be issued for each series LLC, not just the master LLC. The series LLCs formed under the master must contain their master LLC's name. The master LLC pays a $300 annual business entity tax, and each series LLC pays a $75 tax.

    • A certificate of formation is the initial document you file to establish your LLC in Delaware. In other states, it is called "articles of organization" or "certificate of organization." It is proof your LLC exists and that the Division of Corporations approved it. You may need your certificate of formation to open business bank accounts, credit card merchant accounts, apply for business licenses, etc. You can request a copy of the certificate of formation from the Division of Corporations. If you want a certified copy, the fee is $50.

    • A certificate of good standing is a statement by the state that your LLC exists, is authorized to do business in the state, and complies with tax and reporting requirements under state law. You may need a certificate of good standing if you want to:

      • Register to do business in another state as a foreign LLC
      • Get a bank loan or financing
      • Attract investors
      • Sell the business

      You can order a certificate of good standing by written request. There is a short form and a long form. The short form includes the LLC name and status when the certificate is issued and costs $50. The long form lists all documents filed and any name changes, and the status when the certificate is issued. The cost for the long form is $175.

    • To establish an LLC in Delaware, you need to do the following:

      • Have an available and acceptable business name for your LLC
      • Have a registered agent and registered office (a physical street address in Delaware)
      • File a certificate of formation with the Division of Corporations
      • Pay a $90 filing fee

    • One of the main advantages of an LLC is its limited liability protection. With limited liability, the LLC owners' personal assets are protected from debts or claims against the LLC. In other words, your car, house, and personal accounts are not at risk if someone sues your LLC.

      In addition to liability protection, LLCs also offer pass-through taxation. If you are a single-member LLC, you can elect for taxation as a sole proprietorship. If you are a multi-member LLC, you can elect for taxation as a partnership. The member's share of LLC profits goes on their personal income tax return. The LLC does not pay federal or state income tax.

      And an LLC has fewer reporting and recordkeeping obligations than a corporation.

      Therefore, LLCs are a popular choice for new business owners. However, a Delaware LLC has a few advantages over other states:

      • There are no annual reporting requirements.
      • Delaware allows series LLCs.
      • Delaware allows for anonymous LLCs.
      • The Court of Chancery (Delaware's business court) is known for its reliable and favorable business laws. They are a favored venue to settle legal disputes.

    • Delaware LLCs do not have to file annual reports with the state. However, you pay a $300 business entity tax each year by June 1st. Additionally, if there is a change to your LLC, such as a registered agent name or registered office, the LLC must file a certificate of amendment of the LLC.

    • No. A certificate of formation is a filing of public record establishing an LLC under Delaware law. An operating agreement is a private business document made among LLC members establishing the rules and procedures for running the company.

    • Depending on your type of business and where it operates, you may need a state and/or county license. Start with the Business First Steps page to see what agency regulates your business. You can apply for business licenses using the Delaware Division of Revenue's OneStop portal.

    • Yes. The Division of Corporations has a OneStop portal to set up your LLC online. You have to create an account to use the portal. You complete the document and upload it to the Division of Corporations. Many entrepreneurs use LLC formation service companies for filing LLC documents and registered agent services in Delaware.

    • The mailing address for corporate filings is:

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

    • You can be your own registered agent as long as you have a physical street address in Delaware. However, entrepreneurs often use a registered agent service to file the Delaware certificate of formation and serve as your LLC's registered agent. The benefits of a professional registered agent service company are that registered agents:

      • Provide a Delaware address. Many Delaware LLCs are formed by businesses in other states. They do not have a physical presence in Delaware. A registered agent gives you a Delaware registered office address for your LLC.
      • Handle services of process and sensitive matters. Registered agents accept service of process at the registered office address. Your customers aren't alerted to any disputes or claims with your business.
      • Protect your privacy. Delaware allows anonymous LLCs where the LLC's owners do not have to make their name and address a public record. The registered agent's address appears on the public record, keeping your address private.
      • Maintain your LLC's good standing. Missing a tax deadline will jeopardize your LLC's status in Delaware. Registered agents alert you to annual filing deadlines.
      • Are available. A registered agent must receive service of process during regular business hours. As a busy entrepreneur, you may not be available during those hours.
      • Offer administrative assistance. Registered agents act as a liaison between you and the state. If you need help with formation documents, a certificate of good standing, or a registration in another state, registered agents can help you with the paperwork.

    • An LLC formed under the laws of Delaware and accepted by the Delaware Division of Corporations is a domestic LLC.

    • If you want your Delaware LLC to do business in another state, you register in that state as a foreign LLC. Generally, to apply as a foreign LLC in another state, you must do the following:

      • Search the new state's business name database for business name availability
      • Apply as a foreign LLC in the new state
      • Show a certificate of good standing for your Delaware LLC
      • Pay the state application fee
      • Register for business and tax accounts if necessary
      • Follow annual reporting and tax payment obligations

    • You can operate an out-of-state LLC in Delaware, but you must register it first. To register your out-of-state LLC (foreign LLC) in Delaware, you file a certificate of registration with the Division of Corporations. To complete your certificate of registration, you will need to provide the following:

      • Your LLC's name
      • Your Delaware registered agent and registered office address
      • The nature of your business
      • The name of the state where you formed your LLC
      • The date when you first began doing business or will start doing business in Delaware

      An authorized person for your LLC will need to sign the form. With the registration, you must include a certificate of existence from the state where you organized the LLC. You may find that other states refer to this as a certificate of good standing.

    • If you no longer want to have a Delaware LLC, you should take steps to dissolve the LLC formally. Following proper procedures for closing your business avoids penalties and tax liabilities. To dissolve your LLC, you should:

    • Delaware is one of the four states allowing anonymous LLC formation. An anonymous LLC does not require the owner's name or address to appear on the LLC certificate of formation. Because the certificate of formation is a public record, the LLC owners prefer anonymous LLCs to keep their information private.

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