Step 1) Verify & Secure Brand Name
The first step to getting your Delaware LLC off the ground is choosing a great business name. Choosing a unique name isn’t only important for legal purposes, but for brand recognition as well. If your name sounds too similar to an established business, people may have difficulty differentiating between you and your competition.
Legally, Delaware requires your LLC name to:
- Be “distinguishable” from any other registered business name in the state.
- Contain the abbreviation “LLC” or the words “Limited Liability Company”.
See Delaware business name statutes section 18-102 for more details on LLC name requirements.
What To Do:
First things first, run a quick business name search through the Delaware state website. Heads up, it’s not the easiest site to navigate, so you might consider bookmarking the link above.
Once you’ve decided on a business name, you can either reserve it or hussle on through to the formation phase. If you feel like you need a little extra time to get everything sorted, you might want pay the $75 fee to reserve your business name for 120 days. Delaware doesn’t require business name reservations, so the choice is yours.
While you’re at it, it’s also a good idea to search for a domain name on GoDaddy to make sure there’s a decent URL available for your business. Having a business website that’s easy to find will be super beneficial to your brand!
Remember, this isn’t optional in Delaware -- it’s mandatory.
Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use GoDaddy to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!
Step 2) Appoint A Delaware Registered Agent
Before officially forming your LLC, you’ll need to find a registered agent. Your registered agent will be the middleman between you and the state. They may be an individual who’s a resident of Delaware, or a company that’s authorized to represent Delaware businesses.
Delaware does allow business owners to act as their own registered agents, but make sure to consider what it’ll entail before you sign yourself up:
- You’ll be responsible for keeping normal business hours (Monday through Friday, 9 am to 5 pm) at your home or business address.
- If you run your business from home, you’ll have to make your home address public.
- You could be served in front of customers, family or friends.
Appointing a professional registered agent is really in your best interest, if only to be sure that no important document goes missing or unnoticed. Keep in mind that you’ll have to provide the name and address of your registered agent on the Certificate of Formation!
What To Do:
If you’re considering acting as your own registered agent, check out our guide for a closer look at what this responsibility requires. If it sounds like something you can handle, then by all means, list your own name on the formation documents!
Otherwise, the simplest way to get professional registered agent services is through an online filing company. Some providers, like IncFile, offer a year for free when you form your LLC with them.
Step 3) File 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.
Delaware handles their formation documents differently than most states. Rather than providing the exact form to fill out, they offer only templates for you and your registered agent to use as a guide. Their LLC formation template asks for:
- The full name of your company
- The name and street address of your registered agent
- The name and signature of an authorized person
It’s also required to be submitted with a cover memo and $90.00 filing fee.
What To Do:
Since Delaware’s LLC formation requirements are more complicated than most other states, we highly recommend using an online 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. Head over to our top 7 business filing services to learn about our favorite providers’ pricing and features!
Step 4) Get An EIN
An EIN, or Employer Identification Number, is the federal government’s way of monitoring your business. It’s essentially like a social security number for your company. Obtaining an EIN is fairly painless, but before you apply, I recommend looking over the requirements.
Your LLC is required to have an EIN if:
- You plan to hire employees
- Your business has more than one member (i.e. you’re not starting a single-member LLC)
- You plan to be taxed as a corporation
Refer to this IRS page for other conditions that require an EIN!
What To Do:
There are several ways to obtain an EIN, but our recommendation is to simply do it yourself directly through the IRS. Their free online application is the most efficient method, as you’ll get your 9-digit EIN as soon as you’re done filling it out. However, if the online approach doesn’t suit you, check out our guide for additional ways to get an EIN for free.
Step 5) Draft An Operating Agreement
Especially if you’re working with partners, having an operating agreement in place is essential for settling disputes and maintaining control of your business in the face of obstacles.
Delaware is one of the few states that legally requires your LLC to have an operating agreement, although it may be “written, oral or implied”. That said, we really recommend having a formal, written document that addresses:
- Each member’s title and responsibilities
- The company’s profit and loss distribution
- What percentage of the company each member owns
- What happens if a member chooses to leave
…and some other details about how your LLC will be run.
What To Do:
My two favorite approaches to creating an operating agreement are as follows:
- Add a customized operating agreement to an existing incorporation package. If you’re already using/planning to use an LLC filing service, this may be the simplest and cheapest way to draft an operating agreement.
- Use an online operating agreement template. Most of these services charge a monthly fee, but some offer free trials. Check out our top 3 operating agreement templates for our recommendations on the best templating services out there.
Step 6) Open A Business Bank Account
Whether you’re starting a single-member LLC or working with partners, it’s vitally important to keep your personal and business finances completely separate. Otherwise:
- You’ll find yourself in a mess of trouble when tax time rolls around
- Your personal assets may be put at risk
- You won’t be able to take advantage of business banking perks
Opening a bank account designated for business expenses is a necessary first step to smart financial management.
What To Do:
Depending on your location, you may shop around local banks like WSFS, and credit unions like Wilmington Trust. Local banks often have a lot to offer in the way of customer service and small-business perks. However, we also recommend checking out some of the national backs that operate in Delaware, like Chase or Wells Fargo.
Before you commit to any bank, make sure you fully understand the details of what they have to offer. Think about what your top priorities are: online banking, easy ATM access, customer service, minimum account balances, etc. To get started on your research, have a quick read through our top 7 business bank accounts.
Step 7) Handle Licensing & Permits
The final step is to figure out exactly what you need in the way of licenses, permits and taxes. After this, you can focus your attention on building and marketing your brand!
When it comes to licensing and taxes, remember to consider federal, state and local requirements:
- Federal: You can find a ton of information on federal licenses and permits on the Small Business association website. The IRS is the most direct resource for small business taxes -- head over to their business taxes page to get the ball rolling.
- State: You can apply for a general business license through the Delaware state website. Depending on your industry, you may be obligated to obtain other special permits or pay additional taxes. Click around on the Delaware Department of Finance page to learn more.
- Local: You may be required to adhere to other special requirements depending on the borough or city in which you’re running your business. To be totally sure you’re not missing anything, contact your local Chamber of Commerce.
What To Do:
If the nature of your business requires you to get quite a few permits and licenses, you may want to consider using a business license service. These companies will research all of the federal, state, and local business requirements on your behalf, and send the necessary applications right to your doorstep (or inbox) so you know exactly what needs to be done.
Need Help Forming an LLC?
If you’re ready to put in the hours, you may be able to handle the Delaware LLC formation process on your own.
However, this is a time-consuming process, so many Delaware business owners opt for professional assistance to make sure everything goes as planned. Of all the resources we’ve mentioned throughout this guide, here are the top three we recommend:
– IncFile ($49 + state fee) = Best Price & Overall Value
– LegalZoom ($79 + state fee) = Best For Brand Recognition