Are you thinking about starting an LLC in Delaware? In this article, we’ll discuss the top advantages of an LLC and how it will benefit your business in the short and long term. After that, I will walk you through the entire registration process if you decide it is the right business structure for you.
However as a quick note, if you are nervous about the filing process and would rather professionals handle it to make sure everything is filed properly, look into a service like IncFile (for $49) or LegalZoom (for $149). Both services use online questionnaires that take you less than 15 minutes to fill out and they take care of the rest.
If you’d like to handle the incorporation process yourself, keep reading for our step-by-step guide. Otherwise look into one of the incorporation services mentioned above. Do what you feel most comfortable with.
Operating an LLC can definitely help you for many reasons. To give you a better idea, below is a list of benefits of starting an LLC in Delaware.
Forming a Delaware LLC will limit your personal, financial and legal liabilities as a business owner. Once you complete the incorporation process, your business is now considered a separate entity, one that is independent and has its own rights and transactions.
With this, if it encounters any issues and problems as it operates, you will not be held accountable for any of them. It will take its own course and your business will be subjected to due process based on its own rights.
Tax savings is perhaps one of the major advantages when you start an LLC. An LLC can be subject to many tax deductions and benefits, specifically when it comes to operational costs. Operation costs include: employee salary, employee benefits, marketing costs, medical expenses, pension plans and much more. The IRS seems to favor LLC’s compared to many other structures.
LLC’s don’t require as much paperwork every year just to continue your business operations, thus, incurring less cost. Unlike other forms of legal entities such as a corporation, an LLC is not very regulated, which is why requirements and documents are less and are fairly easy to follow.
Unlike a corporation which needs to have a rigid organizational structure, the management structure of an LLC is very flexible. You can set your management structure as you please as long as you discuss and agree with your other co-founders or owners. There are no laws preventing founders/owners can’t run their own business.
Anytime when conducting business, there is high chance that you’re privacy will be violated. With an LLC, you will be able to maintain your privacy as a business owner and a private individual.
In cases where your small business encounters any kind of problem, your personal assets which include your properties, savings, and personal bank accounts are protected by the law of anonymity. In other words, they will be completely safe because in the eyes of the law they are untraceable.
IncFile is $100 more affordable than other LLC filing services & twice as fast
From a business owner standpoint, a Delaware LLC is one of the most beneficial legal entities that you can choose. If you’re fully convinced to start one, here’s how to form an LLC in Delaware.
This is the first step to form an LLC in Delaware. When naming your LLC, you need to remember 3 basic things: your chosen business name should be unique with no duplicates, it should not mislead the public, and you should name your business in a way that it will clearly deliver your company’s branding.
You can check your chosen business name before the Department of State: Division of Corporations business name database. An available LLC name may be reserved for 120 days by paying a $75 fee on the Delaware Division of Corporations website.
A Delaware Registered Agent is your partner in success and the second step so you can complete your Delaware LLC. The main responsibility of a Registered Agent is to handle important documents for you. Because of this, the Agent you hire must be the most competent, professional to be your representative.
The most basic requirements of hiring a Registered Agent: they must be a resident of Delaware, they must have a street address in Delaware, and finally they must be available during business hours.
Registered Agent fees may reach up to $160 every year; however, if you incorporate your LLC with IncFile, which is less than $100, you’ll be able to get a free Registered Agent Service for one full year.
The Articles of Incorporation is the most important document that you need to follow so you can form an LLC in Delaware. Fax or mail a Certificate of Formation of Limited Liability with the Delaware Division of Corporations.
This must include the LLC’s name and the address of the Registered Agent. The filing fee is $90.
The EIN is essentially the same as a Social Security Number and must be obtained with the IRS by the owner of the business. The EIN is an important because this is how the IRS monitors your business activities and taxes.
An LLC Operating Agreement in Delaware is not required but it is highly advisable that you make one for your business. You will be able to protect your business by simply having this agreement.
If you don’t have any idea how to create one, you can visit this site to assist you in making a customizable Operating Agreement.
You have two simple options when starting a Delaware small business: write a business plan and boost your chances of success or start without it and risk your business failing. I’m sure that you’d rather choose the first option.
Writing a business plan is highly beneficial, it will allow you to know if your business is viable or not in the first place. If you need help in writing one, here are some resources that I can suggest.
LLC’s in Delaware are required to pay $300 Alternative Entity Tax every June 1 of the year. This is specifically paid to the Delaware Division of Corporations Franchise Tax Section. If you plan to sell products/goods and pay Delaware’s gross receipts tax, you have to apply for registration before the Delaware Division of Revenue.
Registration varies depending on the taxes, but one thing’s for sure, you are required to pay your Delaware LLC Taxes. Failure to pay will result in charges, sanctions and penalties.
Different businesses have different licenses and permits to obtain as well. You need to follow all these so you can start your business officially. If you want to know the specific ones to get, visit your local country of state office to inquire which permits and licenses apply to your business.
It is important to remember that compliance is highly required of you and any delays may cause you from starting your operations.
Other than these extra requirements, you are all set to start your Delaware LLC. You might be wondering why there are no annual reports discussed in this guide. Luckily, Delaware is one of the few states that does not require LLC’s to file annual reports.
Incorporating your Delaware small business should be on top of your priority, choosing the best legal entity should be next on your list. This guide helps explain every step and every rule that you need to form your Delaware LLC. Start forming your LLC now and protect you and your business, good luck!
Please keep in mind that this guide is not meant for legal purposes and is not legal advice. If you want specific answers for forming an LLC in Delaware, consult with a professional.