How to Form an LLC in Delaware

Forming an LLC in Delaware is easy

To form an LLC in Delaware you will need to file a Certificate of Formation with the Delaware Secretary of State, which costs $90. You can apply by mail or in-person. The Certificate of Formation is the legal document that officially creates your Delaware Limited Liability Company.

Follow the step-by-step guide below to start your Delaware LLC today and get your business up and running.

STEP 1: Name your Delaware LLC

Choosing a company name is the first and most important step of starting an LLC in Delaware. Be sure to choose a name that complies with Delaware naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines:

• Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
• Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
• Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
• Your name must be distinguishable from any other Delaware limited liability company, corporation, partnership, or limited partnership.

2. Is the name available in Delaware? Make sure the name you want isn't already taken by doing a Delaware Entity Search on the Department of State's website.

3. Is the URL available? We recommend that you check online to see if your business name is available as a web domain. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

FAQ: Naming a Delaware LLC

STEP 2: Choose a Registered Agent in Delaware

You are required to nominate a Delaware registered agent for your LLC.

What is a registered agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a registered agent? A registered agent must be a resident of Delaware or a corporation, such as a registered agent service, authorized to transact business in Delaware. You may elect an individual within the company including yourself.

TIP

Recommended: ZenBusiness includes Registered Agent Service with their LLC formation package ($39 for the 1st year + State Fees).

FAQ: Nominating a Delaware Registered Agent

STEP 3: File the Delaware LLC Certificate of Formation

To register an LLC in Delaware, you will need to file the Certificate of Formation with the Secretary of State. You can apply by mail or in-person. Some states refer to the Certificate of Formation as the Articles of Organization or Certificate of Organization.

The Certificate of Formation for an LLC (limited liability company) in Delaware is a legal document to officially form your business. You’ll be expected to provide the name of your LLC, choose a registered agent, list the services your LLC will offer, and pay the state filing fee. After you file the Certificate of Formation, we recommend you obtain an Employer Identification Number (EIN) if you plan to hire employees and open a business bank account. 

Now is a good time to consider whether your Delaware LLC will be member-managed or manager-managed. We recommend learning more about member-managed vs manager-managed LLCs before you file.

If you’re expanding your existing LLC to the State of Delaware, you will need to form a Foreign LLC.

FAQ: Filing Delaware LLC Documents

STEP 4: Create Your Delaware LLC Operating Agreement

An operating agreement is not required for a Delaware LLC, but it's a good practice to have one.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our Delaware LLC operating agreement guide.

FAQ: Creating a Delaware LLC Operating Agreement

STEP 5: Get a Delaware LLC EIN

What is an EIN? The Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), is a nine-digit number issued by the Internal Revenue System (IRS); an Employer ID Number is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a social security number (SSN) for the company.

Why do I need an EIN? An EIN number is required for the following:

• To open a business bank account for the company
• For Federal and State tax purposes
• To hire employees for the company

Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

NOTE

FOR INTERNATIONAL APPLICANTS: you do not need an SSN to obtain an EIN. For more information, read our guide on how to obtain an EIN as a foreign LLC.

FAQ: Getting a Delaware LLC EIN

Protect Your Business & Personal Assets

Business Banking for Personal Asset Protection

Using dedicated business banking and credit accounts is essential for personal asset protection.

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 protect your business with these two steps:

1. Opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

2. Getting a business credit card:

• Helps you separate personal and business expenses.
• Builds your company's credit history, which can be useful to raise capital later on.

Get Insurance For Your Delaware LLC

Business insurance helps you manage risks and focus on growing your business. 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 against claims of malpractice and other business errors.
• Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. Get a free quote with ADP.

Properly Sign Legal Documents

Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your company, you could follow this formula to avoid problems:

1. Formal name of your business
2. Your signature
3. Your name
4. Your position in the business as its authorized representative

See the image below for an example.

This ensures that you are signing on behalf of your LLC and not as yourself.

Keep Your Company Compliant

Delaware Business Permits and Licenses

To operate your Delaware LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Find out how to obtain necessary licenses and permits for your business or have a professional service do it for you:

• Federal: Use the U.S. Small Business Administration (SBA) guide.
• State: Visit the State of Delaware Business One-Stop where you can register for taxes and obtain business licenses.
• Local: Contact your local county clerk and ask about local licenses and permits.

Delaware LLC Taxes

Depending on the nature of your business, you may be required to register for one or more forms of state tax.

Delaware Sales Tax

Delaware is one of five states that does not impose a sales tax on taxable goods or services. However, some businesses may be subject to Delaware’s Gross Receipts Tax.

Delaware Employer Taxes

If you have employees in Delaware, you will need to register for Unemployment Insurance Tax on the State of Delaware website. Employers who are required to pay Employee Withholding Tax must register online with the Delaware Division of Revenue.

Delaware Gross Receipts Tax

The Gross Receipts Tax is assessed on the total gross revenue of all businesses operating in the state. The exact gross receipts tax rate will depend on your type of business.

FAQ: Additional Delaware LLC Taxes

Federal LLC Tax Requirements

Most LLCs will need to report their income to the IRS each year using:

• Form 1065 Partnership Return (most multi-member LLCs use this form)
• Form 1040 Schedule C (most single-member LLCs use this form)

Franchise Tax

In Delaware, all LLCs are required file and pay an annual franchise tax. This can be done online.

State Income Tax

Delaware requires most multi-member LLCs to file an informational tax return on Delaware form 300-I. This can be done by mail.

Avoid Automatic Dissolution

LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.

Make Running Your Business Easier

After starting a business, two of the most important things you can do are get professional accounting and hire the right employees. Streamlining these processes can save you time and money as your business grows.

Hiring Employees in Delaware

If you plan to hire employees for your Delaware LLC, stay compliant with the law by following these steps:

• Verify that new employees are able to work in the US
• Report employees as "new hires" to the State
• Provide workers' compensation insurance for employees
• Withhold employee taxes
• Print compliance posters and place them in visible areas of your workspace

FAQ: Hiring Employees in Delaware

Accounting For Your Delaware LLC

It’s critical 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 your annual tax filings.

The right software makes accounting easy. Look for software that:

• Syncs with your bank automatically.
• Matches transactions to invoices, bills and purchase orders.
• Can be accessed from your phone.

Interfacing with Clients and Customers

In the day-to-day of running a business, it's hard to be readily available for new clients or customers who want to contact you. For service-based businesses that don’t already have a brick-and-mortar location, a virtual office can solve this problem. You can get a dedicated business mailing address and a business phone number with call-forwarding so that you never need to worry about losing a potential customer.

Women in Business Tools and Resources

If you have a woman-owned business, many resources are available to help you concentrate on your business’s growth:

• Funding - (ie. grants, investors, loans)
• Events - (ie. conferences, meetups)
• Guides - (ie. business formation, personal growth)
• Support - (ie. advice, communities, business strategies)

Our information and tools will provide educational sources, allow you to connect with other women entrepreneurs, and help you manage your business with ease.

More Information

Foreign LLCs in Delaware

Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Delaware, you will need to register as a foreign LLC. This can be done by mail.

How to Obtain a Certificate of Good Standing

A Certificate of Good Standing, known in Delaware as a Certificate of Status, verifies that your Delaware LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:

• Seeking funding from banks or other lenders
• Forming your business as a foreign LLC in another state
• Obtaining or renewing specific business licenses or permits

You can order a Delaware LLC Certificate of Status by mail.

Dissolve Your Delaware LLC

If at any point in the future you no longer wish to conduct business with your Delaware LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your Delaware LLC, there are two broad steps:

• Close your business tax accounts
• File the Delaware Articles of Dissolution

When you are ready to dissolve your LLC, follow the steps in our Delaware LLC Dissolution Guide.