Form a Delaware LLC in just a few simple steps.
An LLC (limited liability company) is a type of business entity used in the United States. It’s a common business structure because it protects business owners from personal responsibility for their debts or business liabilities.
If you’re thinking about forming an LLC in Delaware, you have made a great choice. The state considered an excellent place to start an LLC. It offers low LLC startup and maintenance costs. The state also has limited filing fees and tax obligations.
In addition, Delaware doesn’t charge foreign LLCs tax on out-of-state income, which means you don’t pay tax on your shares if you don’t reside in Delaware. The state also has a separate Chancery court set up expressly for LLC cases.
To form an LLC in Delaware, you have to complete 6 steps:
Below, you’ll find a detailed step-by-step guide that will provide all the information your need to start your LLC. . You can also watch the below video for a quick summary.
To register an LLC in Delaware, you have to complete 6 steps:
Below, you’ll find a detailed step-by-step guide that will provide all the information your need to start your LLC. . You can also watch the below video for a quick summary.
The first step to forming an LLC in Delaware is choosing and registering your unique Delaware LLC name.
And to avoid confusing the Delaware public, your LLC name must be unique and distinguishable from any other registered Delaware corporation, LLC, limited partnership, or partnership. You can check if your chosen name is available this by using the Division of Corporations name search availability tool.
In addition, when choosing a name for your Delaware LLC, there are a few state-specific naming requirements that you should be aware of:
We can break it down into two parts:
What you must include in your LLC name:
Your business name must contain “Limited Liability Company” or one of the following abbreviations: “L.L.C.” or “LLC.”
What you cannot include in your LLC name:
You must not include the word “bank” or any reference or variation without approval from the Delaware Banking Commission. Or words that might confuse your business with a government agency, such as “State Department,” “Treasury,” “CIA,” “DIA,” “FBI,” “IRS,” etc.). In addition, avoid words deemed by the state of Delaware racist, vulgar, or objectionable.
If your business name is available and you’d like to reserve it, go to the Delaware Division of Corporation’s website, where you can reserve it online for up to 120 days.
The name reservation fee is $75.00. You can pay using a Mastercard, Visa, Discovery Card, or American Express.
You can also download, print, and mail your application for reservation of a Limited Liability Company name.
If you have questions, you can contact the Delaware Division of Corporations by phone at 302-739-3073.
Note: When applying by mail, you must include this cover memo.
Suppose you’d like to run your Delaware LLC using a fictitious business name, a name different from your registered LLC name. In that case, you can file a DBA (doing business as).
To use a DBA, you must complete the Registration of Trade/Business & Fictitious Name Certificate form, and return it to the county Superior Court clerk by mail or in-person in every Delaware county you’ll be doing business.
Note: The fee is $25, and a registered Delaware notary must sign your application.
A registered agent is an individual or business entity appointed to receive official mail, a notice of a lawsuit, and other government correspondence on behalf of your LLC.
Registered agents go by various names, including an agent for service of process, statutory agent, and resident agent. And all 50 US states, including Delaware, require an LLC to appoint one.
Delaware state allows either an individual resident to be their own registered agent, such as yourself or another member of your LLC, or a registered agent service professional agent to act on your behalf.
The registered agent must have a physical street address in Delaware, be 18 years old or over, and open during working hours to receive all Secretary of State’s communications.
To start an LLC in Delaware, you must file articles of organization–also called a Certificate of Formation–with the Delaware Department of State.
An Article of Organization is a legal document that proves your LLC is registered with the state and allowed to trade. If you need help completing your Articles of Organization, contact the Delaware Secretary of State office.
To file articles of organization, you must have a physical business. If you don’t, you can use the address of a Delaware-registered agent. The cost to form an LLC in Delaware is $90. These are state fees and are non-refundable, and you pay it to the Delaware Department of State when filing your Articles of Organization.
There are two ways you can file:
File Online –
To file online, use the Delaware Secretary of State LLC registration service. If you’d like to review the application form before applying, download the sample forms with instructions.
You can also download the LLC entity forms and submit them via the Delaware Document Upload Service.
File by Mail –
Download the Certificate of Formation of a Limited Liability Company, make your check payable to the “Delaware Secretary of State,” and return it to the following mailing address.
Division of Corporations,
John G. Townsend Building,
401 Federal Street,
Suite 4,
Dover, DE 19901
Note: You must include a cover sheet with your mailed filing.
Once your Articles of Organization Certificate is filed and accepted, you’ll be an LLC!
An operating agreement is a legal document that outlines your LLC’s ownership and operating procedures. It covers how you’ll run your LLC, who’s responsible for specific duties, percentage ownership details, and disbursement of profits and losses.
Although not compulsory when forming an LLC in Delaware, every LLC type should have an operating agreement, and here’s why:
An operating agreement ensures all members are on the same page, reducing the risk of disagreements and conflict. But more importantly, if you’re a single-member LLC, an operating agreement might help you to remain a separate entity from your business should someone sue your LLC.
Who can write your operating agreement
If you’re a single-member LLC, you can write it yourself. For multi-member LLCs, you can share the responsibility. Or, where the LLC structure is complicated, you can hire a competent Delaware attorney to write your operating agreement for you.
However, we’ll take care of the operating agreement if you get your LLC through Tailor Brands.
What to include in your operating agreement
We cover everything you should include in your operating agreement in our “what is an operating agreement” post.
But in short, a definitive operating agreement should have the following:
Form an LLC in Delaware, Hassle-Free
An EIN (employer identification number) is like an SSN (Social Security number) for your LLC business. Its purpose is to enable the IRS to track and record your LLC business tax reporting.
Only multi-member LLCs (with over one member), LLCs with employees, or single-member LLCs with excise tax liabilities need an EIN.
You can use your SSN for filing taxes if you’re a single-member LLC with none of the above.
You can apply for your EIN for free from the IRS. Getting your EIN is a straightforward process, and you can do it by mail or online using the EIN assistant.
If applying by mail, download the SS-4 Application for Employer Identification Number form and return it completed to:
If you’re applying internationally, you can get an EIN by phone. Just call 267-941-1099. Monday to Friday, 06.00 am to 11.00 pm (Eastern time).
Of course, you can get your EIN through Tailor Brands if you apply for your LLC through us!
Although LLCs do not have to file an annual report in Delaware, LLCs must pay Delaware’s annual tax of $300.00 no later than June 1st every year. Failure to comply will cause a $200.00 penalty plus 1.5% interest monthly on the tax penalty.
You must pay the yearly tax if your LLC is active (registered) with the Division of Corporations anytime between January 1st and December 31st of the current tax year.
How your LLC will be taxed
LLCs are flow-through entities (unless requested to be taxed as an S-corporation). This means your LLC does not pay income tax. Instead, members pay any tax due on wages/profits earned by reporting them on their tax returns.
See our How to File LLC Taxes post if you’d like to know more about how single-member and multi-member LLCs pay tax.
Residents of Delaware pay income tax by filing an individual tax 200-01 form. Delaware State has a graduated tax rate, meaning the more you earn, the more tax you pay. Rates start as low as 2.2%, rising to 6.6%.
Delaware Taxable Income | Rate |
$20,000 – $25,000 | 5.20% |
$25,000 – $60,000 | 5.55% |
$60,000+ | 6.60% |
Payroll taxes include Social Security, Medicare, Federal income, and Federal unemployment. Delaware requires employers to withhold state income payroll taxes from their employee paychecks. The employer’s portion of Social Security and Medicare taxes are 6.2% and 1.45%, respectively.
Employers calculate wage withholdings using the federal W-4 form, which employees must complete annually.
Delaware’s 2021 minimum wage base (the lowest wage you can pay a worker) is $16,500; tax rates start at 0.3%, rising to 8.2%.
If you’re a new LLC employer, you’ll pay the state of Delaware a flat rate of 1.8%.
These are some of the other potential taxes you could pay and how Delaware handles them:
LLC owners in Delaware can also avoid paying other taxes common in other states, such as:
Congrats–your LLC formation is complete! But now what? Here are a few of the immediate next steps you should take:
Here are a few reasons to consider opening a business bank account:
There are 2 annual costs or fees associated with keeping a Delaware LLC in “good standing.”
It pays to hire a CPA (certified public accountant) to do your LLC taxes in the long run.
A CPA is a licensed professional approved by a territory or state to provide accounting services to the public. The typical cost of a CPA for small businesses ranges between $1,000 to $5,000.
To help with your finances, a CPA can:
Any LLC with a business location or property, or employees, or generating sales in Delaware must apply for a business license and register with the Delaware Division of Revenue.
Those LLCs with employees must also file “Workers’ Compensation and Unemployment Insurance” forms and register for a withholding account.
You can apply for the Delaware Business License online using the Delaware One-Stop Business Licensing and Registration Service, or by mail using the Combined Registration Application form.
The Delaware Business License filing fee is $75 and can take between 2–4 weeks to receive.
Any LLC owners unsure if their business requires a license, or any relevant permits, can contact the Division of Revenue at 302-577-8778.
No, you don’t need to live in Delaware to form an LLC. However, if you live outside the state, you must retain the services of a Delaware Registered Agent.
Yes, you can open a Delaware LLC online. To file online, use the Delaware Secretary of State LLC registration service. Or you can use an LLC formation service like Tailor Brands.
Yes, to form a Delaware LLC, you must first send a certificate of formation to the Delaware Division of Corporations. This can be done online or by mail. There is a filing fee of $90.
Yes, foreigners can open an LLC in Delaware. In fact, one of the benefits of the state is its friendly attitude towards foreign business owners.
Yes, any LLC with a business location, property, employees, or generating sales in Delaware must apply for a business license and register with the Delaware Division of Revenue.
Delaware has a corporate income tax rate of 8.70 percent. In addition the state also levies a gross receipts tax. There are no state or local sales taxes in Delaware.
Now that you know everything there is to know about how to form an LLC Delaware nothing is stopping you from starting yours today! Remember, it’s a great state for small business owners and entrepreneurs
But, if you’d like to learn more about how to start an LLC in seven steps or the different types of LLCs, check out some of the other posts on the blog. Good luck on your business journey!
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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