Starting an LLC in Delaware is Easy
You can start a Delaware LLC (Limited Liability Company) yourself by registering the Certificate of Formation with the Department of State. The cost to create an LLC in Delaware is $90.
Follow our free How to Form an LLC in Delaware guide below to get started.
If you are thinking about hiring a professional service to register your LLC, read our Best LLC Services review.
Step 1: Create A Name For Your Delaware LLC
First off, in order to launch a successful Delaware LLC, you need to give it the right name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes. We go into depth on this topic in our LLC naming guide, but we’ll go over the legal basics below.
Legally, your business name must:
- Contain the words limited liability company, limited company, or the abbreviation LLC or L.L.C.
- Not contain the word bank or any variation of it.
- Be distinguishable from any other entity or trade name registered in Delaware.
For a complete list of naming rules, you can visit the state webpage.
If you’re having trouble coming up with a name that captures your brand, don’t let that stop you from forming your LLC. For now, you can focus on the legal requirements and consider applying for a trade name after you’ve nailed down your branding.
What To Do:
Once you’ve decided what you’d like to call your LLC in Delaware, do a business name search to find out whether or not it’s in the cards. If your business name is available, you’ll be able to lock it down when you file your Certificate of Formation.
Need help naming your LLC? Check out our LLC name generator to find the best name for your LLC. After you get your business name, your next step is getting a unique logo. Get a logo with our free small business logo maker to make a logo yourself! No design experience necessary!
Quick Note: Before you commit 100% to a name, you should see if there’s a good URL available. Use GoDaddy to search for your options. If there’s a quality domain name for purchase, we advise buying it right away because even if launching a business website isn’t on your radar right now, it’s going to be soon.
Step 2: Appoint A Delaware Registered Agent
When you file your Certificate of Formation, you will be asked to appoint a Delaware registered agent.
Your registered agent will be responsible for receiving important legal documents like tax forms and service of process notices on behalf of your LLC. Your registered agent can be an individual resident of the state or a company that’s legally authorized to represent businesses in Delaware.
Delaware does give you the option to act as your own registered agent, but many business owners choose to appoint a professional instead. Here are a few things to think about before you decide to act as your own:
- You’ll have to maintain normal (9 am - 5 pm) business hours at the address you provide.
- If you run your business from home, you’ll be required to make your personal address public.
- You must keep up on important notices, dates, and deadlines.
- You could be served in front of your family or coworkers.
What To Do:
If you’re considering acting as your own registered agent, do some research, starting with our registered agent guide. If you decide you’re up for the task, go ahead and list your own name and address on your Delaware Certificate of Formation.
If you’re leaning toward hiring a professional, we recommend doing so through an online LLC formation service. Many registered agent services offer up to one year of registered agent service free when you form your Delaware LLC with them.
Step 3: File the Certificate Of Formation
Congrats, this is a big step! Once you’re through filing your Certificate of Formation, you’ll be a legitimate Delaware business.
What To Do:
If you choose to complete this step on your own, note that Delaware handles their formation documents differently than most states. Rather than providing the exact form to fill out, they offer a template for you and your registered agent to use as a guide. The filing fee is $90.
You can mail in this form or drop it off at the following address:
Delaware Division of Corporations
401 Federal Street
Dover, DE 19901
The processing time is about two weeks, but it can be expedited for a fee.
Since Delaware’s LLC formation requirements are a little more complicated than most other states, we recommend using a professional LLC filing service for this step. They’ll take the reins on the formation process and make sure your Certificate of Formation is filed perfectly. They’re also able to provide a bunch of additional services if you need extra help along the way.
Step 4: Create A Delaware LLC Operating Agreement
Creating a Delaware LLC operating agreement is the only way for you and your members to fully define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you all something to return to if a dispute or lawsuit arises.
Your operating agreement should outline the following:
- each member’s responsibilities
- how new members will be admitted
- how existing members may transfer or terminate their membership
- how profits and dividends are to be distributed
From there, you can add as many provisions as you want, provided they are not in conflict with Delaware business law. Learn more about Operating Agreements in Delaware here.
To learn more, read our What Is an LLC Operating Agreement guide. You can also download a template or create a custom Free Operating Agreement using our tool on How to Start an LLC. No credit card required, ever.
Step 5: Obtain An EIN (Employer Identification Number) For Your LLC
The Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), is essentially a Social Security number (SSN) for your company. State and federal agencies use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
We think the best way to get an EIN for your Delaware LLC is by using the free online application on the IRS website. We prefer this method because it's the most efficient, but you can apply by phone, fax, or mail. You can read through our How to Get an EIN guide to find out how.
Maintain Your LLC's Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
Now that you’ve made it through the formation process for your Delaware LLC, you’ll need to take steps to protect your personal assets and establish your business as an independent entity.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your Delaware LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can go a long way in protecting your assets with these three steps:
1. Open a business bank account.
A business bank account separates your personal assets from your company's assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Startups and Entrepreneurs review to find the best online bank, eCommerce banks, the best for tech startups, real estate investment banks, and more.
2. Get a business credit card.
A business credit card helps you separate personal and business expenses. A business credit card will also build your company's credit history, which can be useful to raise capital later on.
3. Designate an authorized representative.
Make sure all documents are signed by a representative of your Delaware LLC and not by you (or other LLC members) directly. This will help separate you from liability incurred by the LLC.
4. Learn how to build business credit
A good business credit score will help establish your business’s fundability. It can help with many things, including credit cards that are issued in your business’s name and score instead of depending on your personal credit score, better interest rates on loans, higher lines of credit, and more.
Reduce the Liability of Your Delaware LLC
Business insurance helps you manage risk and focus on growing your Delaware LLC. Carrying the right coverage protects your LLC from liability and keeps you safe in the event of a loss.
The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers claims of malpractice and other business errors.
There are free services available that quickly assess your business’s insurance needs. These services suggest customized policies with various insurance carriers so that you can choose the best value. One such reliable and respected service is CoverWallet.
You can reduce your LLC’s liability by being fully compliant with employment laws such as:
- Verifying new employees are allowed to work in the US.
- Reporting employees as "new hires" to the state.
- Withholding employee taxes.
- Printing workplace compliance posters and placing them in visible areas of your workspace.
If you plan to hire employees, you might also be required to invest in Workers' Compensation Insurance. This type of policy provides coverage for employee job-related illnesses, injuries, or loss of life.
Find out more information from the Delaware Department of Labor website.
As a new LLC in Delaware, you will need to stay compliant with permits, licenses, taxes, and state filings. This is serious business; failure to comply can lead to fines, tax penalties, and dissolution (the end) of your Delaware LLC.
Business Licenses and Permits
To operate your Delaware LLC, you must comply with federal, state, and local government regulations. The details of business licenses and permits vary from state to state, so make sure you research carefully and plan accordingly.
Find out how to obtain necessary licenses and permits for your business or have a professional business licensing service do it for you:
Federal: Use the U.S. Small Business Administration (SBA) guide.
State: Use Delaware's Division of Corporations website.
Local: Contact your local county clerk and ask about local licenses and permits.
Delaware does not have a state sales tax.
If you have employees in Delaware, you will need to register for Unemployment Insurance Tax through the Delaware Division of Unemployment Insurance’s Online Employer Services Portal. You will also need to sign up for Employee Withholding Tax through the Delaware Division of Revenue. To learn more about LLC taxes, visit our LLC Tax guide.
Annual Franchise Tax
Delaware requires all LLCs to pay an annual franchise tax of $300. If you miss state filings like the annual report, you could face fines or even automatic dissolution. A quality registered agent service, like ZenBusiness, can help protect your assets by keeping track of filing requirements for you.
File online with the Department of State
The Delaware Department of State
Division of Corporations
P.O. Box 898
Dover, Delaware 19903
Due Date: Tax filing and payment due on or before June 1st.
Late Filings: Delaware charges a penalty of $200 plus 1.5% interest per month if you miss the June 1st filing deadline.
Reduce Administrative Burden
There will be many demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go. The two most important business tasks to get help with are:
It's important to get your books in order — even if you haven't officially opened for business. A well-managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify and file your annual taxes.
You can maintain your accounting in two ways:
- Use a DIY accounting software. This can come with an increased risk of errors especially when starting a new business.
- Hire an accounting service. They can provide comprehensive advice to help optimize your bookkeeping and taxes as well as additional services such as payroll etc.
Recommended: For most small businesses, we recommend using a reputable accounting service. Schedule a free tax consultation for your business now to avoid costly errors in the future.
If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.
Gusto is a reliable and good payroll service for small businesses.
Need Help Forming an LLC in Delaware?
Have A Professional Service Form Your Delaware LLC For You
If you’ve got too much on your agenda to worry about all the paperwork and state-requirements, there are a handful of LLC formation services that can take care of everything for you.
Here are the two most popular:
– ZenBusiness ($39 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition