How to Start a Limited Liability Partnership in Delaware | 2024 Guide

Start a Limited Liability Partnership in Delaware

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Delaware. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Delaware, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Delaware LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Delaware, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Delaware General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Delaware

To form a limited liability partnership in Delaware, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Certificate of Formation, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Delaware, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Delaware business registry. Ensure that your chosen name follows Delaware naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Delaware Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Delaware- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Delaware Secretary of State business name database and Delaware Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $75. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person, which costs around $25. In addition, the DBA’s validity in Delaware is Indefinite, which you can file in the Delaware Secretary of State.

You can check out how to file a DBA in Delaware for clearer understanding.

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Step 3: Designate a Registered Agent

In Delaware, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Delaware Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Delaware requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Delaware Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Delaware Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Delaware laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Delaware. The default laws in Delaware might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Delaware Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Delaware Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Delaware.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Delaware LLP. Additionally, obtain the necessary Delaware Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Delaware to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Delaware Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Delaware, and local levels.

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Advantages of Forming a Limited Liability Partnership in Delaware

While the specific advantages of forming an LLP in Delaware can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Delaware:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Delaware.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Delaware may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Delaware.

Cost of Forming an LLP in Delaware

The cost of forming an LLP in Delaware may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Delaware Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Delaware instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

Why should I choose Delaware for my limited liability partnership?
Delaware has a well-developed corporate law system and provides favorable tax laws for businesses.
What is a limited liability partnership?
A limited liability partnership is a partnership structure that shields the owners (or partners) from personal liability for business debts or lawsuits.
How many partners are needed to form a limited liability partnership in Delaware?
A limited liability partnership in Delaware can have as few as two partners.
What is required to form a limited liability partnership in Delaware?
You will need to file a Certificate of Limited Partnership with the Delaware Secretary of State and pay the filing fee.
What is the filing fee for forming a limited liability partnership in Delaware?
The filing fee is currently $200.
Can I form a limited liability partnership in Delaware online?
Yes, you can file the Certificate of Limited Partnership online through the Delaware Division of Corporations website.
Do I need to hire a registered agent for my limited liability partnership in Delaware?
Yes, your limited liability partnership in Delaware must have a registered agent with an address in Delaware.
What does a registered agent do for my limited liability partnership in Delaware?
A registered agent receives legal notices and service of process on behalf of your limited liability partnership in Delaware.
Can I act as my own registered agent for my limited liability partnership in Delaware?
Yes, you can act as your own registered agent if you have an address in Delaware.
What is the difference between a limited liability partnership and a limited partnership in Delaware?
In a limited partnership, there is one general partner who is personally liable for the business’s debts and obligations while limited partners aren’t. In a limited liability partnership, all partners have limited liability.
Can a limited liability partnership in Delaware be taxed as an S Corporation?
Yes, a limited liability partnership may elect S Corporation tax status.
Can any type of business form a limited liability partnership in Delaware?
No, licensed professionals, such as lawyers and doctors, typically form professional limited liability partnerships (PLLPs) in Delaware.
Can a foreign business form a limited liability partnership in Delaware?
Yes, a foreign business can form a limited liability partnership in Delaware, but it must have a registered agent with an address in the state.
Does Delaware have annual report requirements for limited liability partnerships?
Yes, your limited liability partnership must submit an annual report and pay a fee to the Delaware Secretary of State.
Can a limited liability partnership change its name in Delaware?
Yes, you can adopt a new name by filing a Certificate of Amendment with the Delaware Secretary of State.
Is there a requirement to hold annual meetings for my limited liability partnership in Delaware?
There is no requirement under Delaware law, but it’s good to hold annual meetings and record minutes for the meeting.
What is a Delaware Series LLC and how does it differ from a traditional limited liability partnership?
A Delaware Series LLC is a unique entity structure that offers more flexibility and protection for businesses with multiple lines of business or assets.
Is a partner in a limited liability partnership in Delaware personally responsible for the actions of other partners?
No, partners have limited liability for the debts and obligations of the business, unless they acted improperly or are personally liable under another area of law.
How is a limited liability partnership taxed in Delaware?
A limited liability partnership is typically taxed as a partnership, meaning profits and losses are passed through to individual partners and are reported on their tax returns.
What is the minimum age to be a partner in a limited liability partnership in Delaware?
There is no minimum age requirement.
Are there any restrictions on what the limited liability partnership can do?
The business can’t engage in illegal activities or activities outside the scope of its purpose specified in the Certificate of Limited Partnership.
Can I use a post office box instead of a physical address for my registered agent address in Delaware?
No, a post office box isn’t allowed for registered agent addresses in Delaware.
Can a limited liability partnership in Delaware issue stock?
No, the business can’t issue stock as a limited liability partnership.
Can a limited liability partnership in Delaware be converted into a corporation?
Yes, Delaware allows for the conversion of entities, including from a limited liability partnership to a corporation.
What is the process to unregister or dissolve a limited liability partnership in Delaware?
To dissolve the business in Delaware requires a filing with the Secretary of State. The filing must include tax clearance from the State of Delaware. An attorney would be best-suited to handle the process.
When do I need to make updates to the Certificate of Limited Partnership for my limited liability partnership in Delaware?
The Certificate of Limited Partnership should be updated after any important changes, such as adding or removing partners, changing the business’s name or address, or amending the business’s purpose or duration.
Are there any activity fees on income beyond conducting business in Delaware?
Yes,there is a Franchise Tax. Depending on Annual Revenue, it either charges a flat tax or a variable tax rate percentage on Annual Revenue.
Why should I choose to form an LLP in Delaware?
Delaware is known for having favorable laws for businesses, including partnerships. It has a well-established legal system and a business-friendly regulatory and tax environment.
What are the requirements for forming an LLP in Delaware?
To form an LLP in Delaware, you need to file a Certificate of Limited Liability Partnership with the Delaware Secretary of State, pay the required filing fee, and appoint a registered agent in the state.
What is a registered agent, and why do I need one for my LLP in Delaware?
A registered agent is a person or company designated to receive legal and official documents on behalf of a business entity. In Delaware, all LLPs are required to have a registered agent in the state.
How much does it cost to form an LLP in Delaware?
The cost to form an LLP in Delaware includes a filing fee which is currently $200 as well as the cost of hiring a registered agent.
Can I form an LLP in Delaware if I’m not a resident of the state?
Yes. Anyone can form an LLP in Delaware, regardless of where they live.
How many partners are needed to form an LLP in Delaware?
There is no minimum or maximum number of partners required to form an LLP in Delaware.
Can an LLP choose to be taxed as an S corporation in Delaware?
Yes. An LLP can choose to be taxed as an S corporation by filing Form 2553 with the IRS.
What types of businesses are well suited for forming an LLP in Delaware?
LLPs are well suited for professional firms, such as law firms, accounting firms, and consultancies.
What is the difference between an LLP and a limited partnership (LP)?
While both offer limited liability protection for partners, an LLP operates as a partnership, while an LP operates with general partners who manage the business and limited partners who invest but don’t participate in management.
Does Delaware have a requirement for minimum annual filing fees or taxes for LLPs?
Yes, Delaware imposes an annual LLC tax on LLPs operating in the state of $300.
How long does it take to form an LLP in Delaware?
The processing time for forming an LLP in Delaware can vary, but it often takes around two weeks for the state to complete the process.
What types of liability does an LLP protect me from?
An LLP offers protection against personal liability for all the actions of the partnership, including the negligence of other partners.
Is there a residency requirement for LLP partners in Delaware?
There is no residency requirement for partners in an LLP formed in Delaware.
Can an LLP partner participate in the management of the business while remaining a limited partner?
No, limited partner roles are restricted to non-active roles.
Can an LLP partner also be an employee of the business in Delaware?
Yes. An LLP partner can be both an employee of the business and a partner.
Will I need to register my LLP in other states if I conduct business outside of Delaware?
Yes. If your LLP conducts business in other states, you will need to file foreign registration under that state’s guidelines.
How long does an LLP exist in Delaware?
Unlike a general partnership in Delaware, an LLP is considered a separate legal entity that can exist perpetually.
Does Delaware maintain ownership requirements on partially foreign-owned LLPs?
No, Delaware does not keep any ownership requirements on partially foreign-owned LLPs.
Does Delaware require any statement of authority for an LLP management?
No, putting a statement of authority isn’t heavily enforced in Delaware. However, if one is put into practice, you must submit it to recrod with your Certificate of Authority.
Is there any grace period in Delaware to prepare minutes or director resolutions?
No, in Delaware there is no grace period to prepare resolutions or minutes. The LLP registration starts with the Certificate of Authority filing date.
Can LLPs formed in Delaware be managed by non-US citizens without green cards or visas?
Yes, of course. Partners in an LLP formed in Delaware are allowed to manage day-to-day business tasks even if they are not US citizens.
Can one partner in an LLP in Delaware sign agreements in its own name?
No. Every partnership agreement should be signed and approved by all general partners in the LLP.
What should I do if I want to change my LLP name in Delaware?
If you wish to change the name of your LLP, you have to file a certificate of amendment to change the current name.
What penalties shall apply if an LLP fails to file its Annual Report in Delaware?
If an LLP fails to submit its annual report, it will be considered void, which means it will not help provide the same protections related to the limited liability status.
After I form my LLP in Delaware, from where can I change its Registered Agent?
If you would like to appoint a new registered agent in Delaware, you have to file a statement of change with the Delaware Secretary of State.
Is it mandated to file a Delaware tax return for an LLP’s first year after formation?
Answer: Delaware LLPs still are requisite to file taxable income, regardless if it has no reportable income.
Is an unique Tax ID, assigned by the state of Delaware needed to obtain an open bank account?
In Delaware, any business will need to get a Federal Tax ID or Employer Identification Number (EIN) prior to opening accounts with almost all banking institutions.
Are Delaware registered entities forbidden from sending money between the domestic and foreign banks?
Answer: No, but everything would typically undertake rigorous fraud and compliance testing.

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Conclusion

Starting an LLP in Delaware may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Delaware.

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