This guide for starting an LLC in Delaware offers step-by-step instructions on how to file formation documents, obtain tax IDs, and set up company records.
The most widely used business structure is the LLC. They are cheap to create, allow for flexibility and are easy-to-run. Legally forming an LLC establishes your company, reduces personal liability, and allows for tax flexibility. This guide will walk you through the process step by step.
Step-by-Step Instructions for Delaware LLC
Verify Name Availability
The legal name of your LLC cannot be confused with any other registered name. Do a name search to find the availability of your preferred name.
Name Search Delaware Department of State, Division of Corporations Name Reservation Optional Suffix: Shall contain the words or abbreviation “Limited Liability Company” The designation “LLC”
Designate a Registered Agent
Before you file to establish your Delaware LLC, you must decide who your Delaware registered agents will be. Register agent is a legal representative appointed by a business to receive legal or government notices.
Each LLC must be registered by an agent under state law. You must designate the registered agent when you file Delaware articles of association with Delaware Department of State – Division of Corporations.
Delaware Certificate of Formation
For limited liability companies, you will need to file the articles.
Agency: Delaware Department of State, Division of Corporations Form:
Certificate for the Formation of a Limited Liability Company
Filing Method Send mail or fax Agency Fee $90 + optional $50-$1000 expedite fees Turnaround: ~3 weeks. $50 State expedite fee – 24 hours Same-day payment for $100 state expedite fee. 2hrs for $500 state expedite fees. 1 hour for $1000 state expedite fees. Law:
Delaware Code. Title 6 Commerce and Trade. Chapter 18 Limited Liability Company Act
Notes: Include a cover letter.
Establish Company Records
Your LLC must keep accurate and complete books. Your LLC’s initial documents are your filed articles. The LLC will also produce many other official records, such as:
- Minutes from meetings
- Operating agreement
- EIN verification letter
- The LLC may be amended or filed with other entities throughout its life.
The Operating Agreement should be created
The Operating Agreement, which is the governing document for your LLC, can be drawn (or used as a template). It outlines the procedures of how the LLC will be run, including holding an annual meeting. At your organizational meeting, you will review the agreement and vote on it.
The Organizational Meeting will be held
The organizational meeting is the first meeting for members of the LLC. This meeting will require your operating agreement as well as your filed articles. Keep the minutes of this meeting in your company record book.
Receive a Federal Employer Identification Number, (EIN).
EINs are required for LLCs that have more than one member and those who hire employees. EINs are often required in order to open a bank account.
Agency: Internal Revenue Service Form:
Filing Method Mail, phone or fax IRS fee $0 Turnaround: You can order online immediately or by telephone. 4 business days by fax. 4-6 weeks by post Notes: The IRS website is not available after hours. Before you close your session, print your EIN. Additional guidance is available at IRS Public 1635: Understanding your EIN.
Delaware State Tax Identification numbers/Accounts
Delaware LLCs need to apply for a Delaware business license. They also have to pay the gross receipts taxes. Delaware LLCs will also need to register with the Division of Revenue in order to be eligible for tax accounts. Delaware offers a simplified application that allows you to register your business with the Division of Revenue.
- Send to:
- Delaware Division of Revenue
Combined Registration Application for State of Delaware’s Business License and/or Withholding Agency
- Filing Method
- Mail or online
- $75 for the first business license. Fees are determined based on licenses, accounts, and locations.
Consider Electing C-Corp Taxation / S-Corp Governance
Your LLC is subject to pass-through taxes by default. Most LLCs retain this tax classification. Some LLCs may be eligible for C-Corp or S-Corp tax treatment.
- S-Corp helps owner-employees with more than $75,000 per annum save on self-employment tax.
- C-Corps are subject to double taxation. The corporation pays taxes on profits, and members pay taxes for distributions. C-Corps may offer low tax rates for retained earnings if profits exceed $250,000 per owner.
Apply for Business Licenses & Permits
Licenses and permits are required to legally run your business. You can search for your type of business and location using the Small Business Administration Business License & Permit Look-up Tool. This will allow you to quickly navigate through the many federal, state, local, and international requirements.
Delaware Business License-General Services
Agency: Delaware Department of Finance, Division of Revenue Law:
30 DE Code SS 2101
Notes: The Delaware Division of Revenue requires any entity or person to apply for a Delaware business licence. This includes Delaware-based entities that operate outside of the state. To determine whether you are subject to licensing or taxation for a substantial presence in Delaware, please complete the Nexus Questionsnaire. The Delaware Division of Revenue will give you guidance.
For your LLC, you will need to continue filings
You must file tax returns for both the federal and state levels.
In many states, business entities must file an annual return to keep their status with the secretary. For LLCs that were formed in Delaware, see the table below to learn if an annual report is required.
Domestic Delaware Corporation Annual Report requirements:
Agency: Delaware Department of State, Division of Corporations Filing Method
Agency Fee Annual report fee $50 + Franchise tax (minimum $175). Due: Every year by March 1. The calendar year following initial registration is when the first report must be submitted. Law:
Delaware Code Title 8 SS 502.
Original Ink Not necessary Notarize: Not necessary Penalties: Failure to file the franchise tax report and pay it on time will result in a penalty equal to $200 and 1.5% interest per mois. Notes: The corporation’s president, secretary or treasurer must sign the report. Any directors or incorporators may also sign it.