How to Start an LLC in Delaware | 2024 Guide

Start a LLC in Delaware

How to Start an LLC in Delaware: If you’re looking to launch a business in Delaware, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Delaware. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Delaware, an LLC must have a unique name and file Certificate of Formation with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Delaware

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Registered Agent, filing your Certificate of Formation, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Delaware

After you have decided on the idea to form an LLC in Delaware, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Delaware, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application in Delaware Secretary of State to keep the name.

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You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Delaware DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing a DBA, you should know that you need to renew your DBA from up to Indefinite, which costs around $25.

Step 2: Hire a Registered Agent in Delaware

Hiring a Registered Agent in Delaware is a must since a Registered Agent is a person or business entity responsible for receiving important legal documents on behalf of your Delaware LLC. Most states require you to designate a Registered Agent when forming your LLC.

The qualifications of a Registered Agent vary depending on the jurisdiction. Still, generally, a Registered Agent must meet the following criteria:

  • Availability: A Registered Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Registered Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Registered Agent, they must be residents of the Delaware where the LLC was formed. A business entity acting as a Registered Agent must be authorized to do business within that state.
  • Age: A Registered Agent must be at least 18 years old.
  • Good standing: A Registered Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Registered Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Delaware Registered Agent Services.

Step 3: File your Certificate of Formation in Delaware

The Certificate of Formation for an LLC is an important document to start your limited liability company (LLC). Delaware Certificate of Formation is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Certificate of Formation in Delaware.

1. Obtain the Necessary Forms: Visit the Delaware’s business filing office website, usually the Delaware Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Delaware Division of Corporations, 401 Federal Street, Suite 4 Dover, DE 19901.

4. Pay the Filing Fee: When you submit your Certificate of Formation, you’ll need to pay a filing fee of $90. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Certificate of Formation have been filed and processed, you’ll receive a confirmation from Delaware, typically a stamped and approved copy of the document or a Certificate of Formation.

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Once you have successfully filed your Certificate of Formation and it has been approved, your Delaware LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Delaware Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Delaware.

Recommended: Get oprating agreement drafts ready on your table with a help of a professional service. We recommend using –

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Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Delaware. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Delaware 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

ZenBusiness($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Delaware might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Delaware LLC.

Opening a bank account is necessary for Delaware business. If you are still wondering where to open an account in your Delaware, you should check the Best Bank for Small Business in Delaware.

Step 7: Get a Business and License Permit

You must get a business license in Delaware before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Delaware ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Delaware Secretary of State.

Cost to Form an LLC in Delaware

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Delaware. Certificate of Formation costs around $90. The initial filing fee is $90, and the annual fee is $0 because it is not mandatory.

If you forget to pay the annual fee for your Delaware LLC, you will have a penalty of $0 (not required). However, you can check the Delaware LLC Cost for additional information.

Advantages of Creating Delaware LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Delaware. Important benefits will help you set up an LLC in Delaware.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Delaware apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Delaware with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Delaware can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Delaware will protect its assets.

FAQs

Why would I choose to start an LLC in Delaware?
Delaware has business-friendly laws and low taxes, making it a popular choice for business owners.
What is the process to start an LLC in Delaware?
You’ll need to file a Certificate of Formation with the Delaware Division of Corporations and pay the required fee.
Can I form an LLC in Delaware if I don’t live in the state?
Yes, you can form an LLC in Delaware even if you don’t live in the state.
Do I need to hire a registered agent for my Delaware LLC?
Yes, every Delaware LLC is required to have a registered agent located in the state.
How much does it cost to form an LLC in Delaware?
You’ll need to pay a fee of $90 to file the Certificate of Formation for your Delaware LLC.
Is there a specific name format I need to follow when naming my Delaware LLC?
Yes, you must include the words “Limited Liability Company” or an abbreviation like “LLC” in your LLC’s name.
How long does it take to form an LLC in Delaware?
The processing time for a Delaware LLC application is 1-2 business days.
Does my Delaware LLC need to have an operating agreement?
An operating agreement is not legally required for LLCs in Delaware, but it’s strongly recommended to have one.
Can I register my Delaware LLC with other states?
Yes, you can register your Delaware LLC in other states as a foreign LLC.
What are the advantages of forming a Delaware LLC?
Delaware offers favorable tax laws, flexible management structures, and strong privacy protections for LLC owners.
Will I need a business license to operate my Delaware LLC?
Yes, you’ll need to obtain any required state or local business licenses to operate your Delaware LLC.
Do I need to file annual reports for my Delaware LLC?
Yes, you’ll need to file an annual report and pay the required fee each year to maintain your Delaware LLC’s good standing.
Can I change the name of my Delaware LLC?
Yes, you can change the name of your Delaware LLC by filing a Certificate of Amendment with the Delaware Division of Corporations.
How many members can an LLC have in Delaware?
A Delaware LLC can have any number of members.
What are the tax implications of forming a LLC in Delaware?
Delaware does not charge state-level business taxes on LLCs, but you will be subject to federal and local taxes.
Can I be my own registered agent for my Delaware LLC?
You can serve as your Delaware LLC’s registered agent if you have a physical address in the state.
Do I need to register my Delaware LLC for a sales tax permit?
You should register your Delaware LLC for a sales tax permit if you plan to sell goods or services that are subject to state sales tax.
What documents do I need to file to form a Delaware LLC?
You’ll need to file a Certificate of Formation and pay the required fee to form a Delaware LLC.
What is the annual franchise tax for Delaware LLCs?
The annual franchise tax for Delaware LLCs depends on the number of authorized shares of stock.
Is Delaware a good state for asset protection?
Delaware’s business-friendly laws make it a popular choice for LLC owners interested in asset protection.
Can I choose a name for my Delaware LLC that has already been taken by another business?
No, you’ll need to choose a unique name for your Delaware LLC that’s not already in use.
What is the statute of limitations for legal actions against a Delaware LLC?
The statute of limitations for legal actions against a Delaware LLC is three years.
Can I start a Delaware LLC with just one member?
Yes, you can start a Delaware LLC with just one member.
Are LLC formation fees in Delaware tax deductible?
Yes, the fees you pay to form your Delaware LLC may be tax deductible.
What type of business entities can a Delaware LLC own?
A Delaware LLC can own any type of business entity, including other LLCs, corporations, and partnerships.
Do I need to file a report with the IRS for my Delaware LLC?
You’ll need to file a federal tax return for your Delaware LLC, but you do not need to file a separate report with the IRS.
How do I obtain an Employer Identification Number (EIN) for my Delaware LLC?
You can apply for an EIN online through the IRS website.
Can I convert my LLC into a corporation in Delaware?
Yes, you can convert your Delaware LLC into a corporation if you choose to do so.
What is an LLC?
LLC stands for Limited Liability Company, which is a legal entity structure that combines the liability protection of a corporation with the tax flexibility of a partnership.
Why form an LLC in Delaware?
Delaware is often considered the best state in which to form an LLC due to its friendly business laws, low franchise taxes, and flexible LLC laws.
What are the benefits of forming an LLC in Delaware?
Benefits include a flexible operating structure, low fees and taxes, limited liability protection, and the state’s reputation as a business -friendly state.
How do I start an LLC in Delaware?
You can start an LLC in Delaware by selecting a unique business name, filing a Certificate of Formation and paying a fee.
What is a Certificate of Formation?
A Certificate of Formation is a legal document that outlines the formation of your LLC in Delaware, including the name, address, and purpose of the business, as well as the name and addresses of the business owners and members.
How long does it take to file an LLC in Delaware?
It can take approximately 5-10 business days to complete the filing process to start an LLC in Delaware.
How much does it cost to start an LLC in Delaware?
The current filing fee to start an LLC in Delaware is $90.
Can I form an LLC in Delaware if I don’t live there?
Yes, Delaware has no residency requirements for forming an LLC, so you can be based anywhere in the U.S. or outside of the country.
Can a corporation be an LLC in Delaware?
Yes, a corporation can be designated as the owner and member of an LLC in Delaware.
Do I need a registered agent to form an LLC in Delaware?
Yes, every LLC in Delaware is legally required to have a registered agent, who is responsible for accepting legal documents on behalf of the business.
Can I be my own registered agent in Delaware?
Yes, you can be your own registered agent if you have a physical address in Delaware, as long as you are available during business hours to receive deliveries.
What are Delaware’s taxes and fees for LLCs?
Delaware has a low franchise tax, and small LLCs may be subject to minimal annual fees.
What are the annual fees for LLCs in Delaware?
The annual filing fee for LLCs in Delaware is considerably cheaper than for corporations, at $300.
How do I choose a name for my LLC in Delaware?
Your LLC name must not already be taken or too similar to another business name in Delaware. You can use Delaware’s online business name search tool to research available names.
Do I need an operating agreement for my Delaware LLC?
An operating agreement is not required by law in Delaware LLCs although recommended. Although it is generally strongly recommended as it sets out rules and procedures private to the LLC not in state statute.
What do I need to include in my LLC operating agreement in Delaware?
You will want to include your LLC’s business purpose, management structure, ownership structure, voting arrangements, and member exit strategies.
Can my LLC have members and managers in Delaware?
Yes, LLCs in Delaware can be managed by members, managers, or a combination of both.
Does Delaware allow single-member LLCs?
Yes, Delaware allows single-member LLCs.
Can my LLC be taxed as an S Corporation in Delaware?
Yes, you may elect to have your LLC taxed as an S Corporation by obtaining status as an IRS S-corporation.
What is a Series LLC?
A Series LLC is an LLC structure that provides liability protection and flexibility for multiple businesses within one structure.
Does Delaware recognize Series LLCs?
Yes, in fact it was Delaware in 1996 which approved the first creation of series LLCs. Making Delaware a startup law for a series LLC.
How do I convert my current business into an LLC in Delaware?
You can convert a sole proprietorship, partnership, or corporation that has been doing business in Delaware into an LLC through a simple filing process with Delaware’s Business Division.
Does my Delaware LLC need a business license?
All LLCs in Delaware must keep a Delaware Business License. You need to get your Business License Tax Receipt (BLTR) within a hundred and twenty days of your LLC-formation.
Is my information kept private in Delaware’s public databases?
No, Delaware law requires that certain records be kept on file and available to the public. Some of this information includes the corporate name, registered agent name, legal structure, and certificate of formation.
What type of insurance does my Delaware LLC need?
The type of insurance your LLC should have depends on your industry. Common forms of coverage for LLC’s opt such as general liability insurance, commercial package policy, professional liability insurance, product liability insurance.
Can I dissolve my Delaware LLC?
Yes, you will need to file Articles of Dissolution with the Delaware Division of Corporations in order to dissolve your LLC in Delaware.
Do LLCs file for a DBA in Delaware?
No, there is no legal requirement to file or acquire any fictitious names when doing business under its umbrella.
Can I change my Delaware LLC’s name?
Yes, you can change your LLC’s name by filing an Certificate of Amendment with the Delaware Division Amendments to your LLC’s name and will cost you 20$.
Can I change the management structure of my LLC in Delaware?
Yes, your operating agreement can and should outline your structure and this important document outlines decisions relevant to management and may be easily be changed as members require.
How do I obtain an EIN for my Delaware LLC?
You can apply for an Employer Identification Number (EIN) online via the IRS website.

Also Read

How Fast Can I Form an LLC in Delaware

One question that is often asked by those looking to form an LLC in Delaware is, “How fast can I do it?” Fortunately, the answer is quite straightforward – forming an LLC in Delaware can be a relatively quick and straightforward process, especially compared to other states.

One of the main reasons why forming an LLC in Delaware is a popular choice is because the state has a well-established process in place for registering new businesses. The Delaware Division of Corporations, the state agency responsible for overseeing business formation, has streamlined the process to make it as quick and efficient as possible.

To start the process of forming an LLC in Delaware, all that is required is to file a Certificate of Formation with the Division of Corporations. This form includes basic information about the company, such as its name, address, and the names and addresses of its members. Once the form is submitted and the filing fees are paid, the LLC is officially formed.

In Delaware, LLC formation can typically be completed in as little as a few days. The state has a reputation for processing business filings quickly and efficiently, which is great news for entrepreneurs who are eager to get their new venture up and running.

Another benefit of forming an LLC in Delaware is that the state offers expedited processing for those who need their business formation documents processed even faster. For an additional fee, entrepreneurs can choose to have their LLC formation processed on an expedited basis, which can significantly shorten the turnaround time.

It is important to note that while forming an LLC in Delaware is generally a quick process, there are still certain steps that must be followed and requirements that must be met. This includes choosing a unique name for the LLC, designating a registered agent, and ensuring that all necessary paperwork is filled out accurately and completely.

Overall, forming an LLC in Delaware is a relatively quick and straightforward process that can be completed in just a few days. The state’s efficient business registration system and favorable tax environment make it an attractive choice for entrepreneurs looking to start a new business.

In conclusion, the ease and speed of forming an LLC in Delaware are just a few of the many reasons why the state has become a popular destination for businesses of all sizes. The streamlined process, expedited options, and efficient processing make it an ideal choice for entrepreneurs looking to start their new venture quickly and with minimal hassle.

Conclusion

In conclusion, starting an LLC in Delaware is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Certificate of Formation, appointing a Registered Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. We recommend using ZenBusiness as they offer LLC formation at $0.

This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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