LLC Cost in Delaware | How Much Does It Cost to Start an LLC

LLC Costs in Delaware

Forming a Limited Liability Company (LLC) in Delaware is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in Delaware.

If you would like to know more about the Delaware LLC Cost, read the whole article until the end. Webinarcare Editorial Team will help you gain knowledge on how much an LLC Costs in Delaware. You must be guided by all the factors gathered in this article.

How to Start an LLC?

Before we dive into the LLC Cost in Delaware, you should know the step-by-step process of starting an LLC, including selecting a unique business name, appointing a Registered Agent, filing the necessary documents, and fulfilling any additional requirements, such as obtaining licenses or permits that are specific to your industry or location.

Here are the steps in starting an LLC in Delaware:

  • Step 1: Choose a Unique Business Name
    The first step in starting an LLC in Delaware is to select a unique business name for your company. The name should be distinguishable from any other registered businesses in the state. You can check the availability of your desired business name by searching the state’s business name database. Once you’ve found an available name, you may need to include “LLC” or “Limited Liability Company” at the end of the name to comply with state requirements.
  • Step 2: Appoint a Registered Agent
    A Registered Agent is someone who will receive official legal and tax documents on behalf of your LLC. The Registered Agent must have a physical address in Delaware and be available during normal business hours. You have the option to appoint yourself as the registered agent or hire a professional registered agent service.
  • Step 3: File the Certificate of Formation
    To officially form your LLC, you need to file the Certificate of Formation with the Delaware Secretary of State or the appropriate state agency. The Certificate of Formation typically requires basic information about your LLC, such as its name, address, Registered Agent details, and the name and address of the LLC’s members or managers.
  • Step 4: Create an Operating Agreement
    Once your LLC is formed, it’s highly recommended to create an operating agreement in Delaware. Although not required by Delaware law, an operating agreement is a crucial internal document that outlines the ownership, management, and operating procedures of your LLC. It helps establish clear guidelines and expectations among members, and it can be especially useful in the event of disputes or disagreements in the future. The operating agreement can be customized to fit the specific needs and goals of your LLC.
  • Step 5: Obtain Required Licenses and Permits
    Depending on the nature of your business, you may need to obtain specific licenses or permits at the federal, state, or local level. Research the licensing requirements in Delaware and apply for business licenses in Delaware related to your industry or activities. Common examples include professional licenses, health or safety permits, and sales tax permits.
  • Step 6: File for an Employer Identification Number (EIN)
    An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) that is used to identify your LLC for tax purposes. Even if you don’t have employees, obtaining an EIN is typically required if you plan to open a business bank account, hire contractors, or file certain tax forms. You can easily apply for an EIN in Delaware through the IRS website.
  • Step 7: Comply with Ongoing Requirements
    Once your LLC is established in Delaware, it’s important to stay in compliance with any ongoing requirements. This may include filing periodic reports, paying Annual Report fees, and renewing licenses or permits. Familiarize yourself with the specific obligations for maintaining your LLC’s good standing in Delaware.

Remember, starting an LLC in Delaware involves some specific steps and requirements that may differ from other states. It’s advisable to hire an LLC Services in Delaware that specializes in business formation to ensure that you follow all the necessary procedures accurately and efficiently. We reviewed the Best LLC Services for you to check out.

LLC Cost in Delaware

It is crucial to consider the costs associated with the formation and maintenance of your business. The costs of establishing and operating an LLC in Delaware can vary based on several factors, including the initial formation fees, ongoing compliance requirements, and optional expenses.

Initial LLC Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your Delaware business on a path to success. Some common initial costs associated with forming an LLC include Certificate of Formation filing fees, Registered Agent fees, and additional services, such as business name reservation fees.

Certificate of Formation Filing Fee

The first step in forming an LLC in Delaware is to file the Delaware Certificate of Formation with the Delaware Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Registered Agent.

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Registered Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Certificate of Formation online, by mail, or in person. A filing fee is associated with this process, which costs around $90. You can also file by mailing it to Delaware Secretary of State, which is located at Delaware Division of Corporations, 401 Federal Street, Suite 4 Dover, DE 19901.

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Registered Agent Fee

An LLC in Delaware must designate a Registered Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Registered Agent or appoint someone you know. Professional Registered Agent in Delaware typically charge an annual fee ranging from $50 – $300.

In Delaware, your Registered Agent must:

  • Be a resident of Delaware or a business entity authorized to do business in the state.
  • Have a physical address in Delaware (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business.

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Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Certificate of Formation, you can reserve the business name with the Delaware Secretary of State.

In Delaware, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

However, 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 the Delaware Secretary of State to keep the name.

The online name reservation fee is disclosed, while the mail name reservation fee is $75. 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 a DBA (doing business as). If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing Delaware DBA, you should know that you need to renew your DBA, which cost $25.

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Ongoing LLC Costs

After you know the initial costs of forming an LLC in Delaware, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Annual Report Filing Fee

To keep your LLC in good standing, you must file Annual Report with the Delaware Secretary of State. The Annual Report provides updated information about your LLC, such as changes in address, members, or Registered Agent.

In Delaware, the Annual Report fee costs $0 because it is not mandatory which can be paid every 1 year.

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Annual Report filing fee. Franchise tax, or annual tax, is a fee imposed by Delaware on businesses, including LLCs and Delaware Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the Delaware’s specific tax regulations.

Delaware LLC Taxes To Be Paid

The State of Delaware is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

  • Sales Tax: A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In Delaware, the sales tax rate is 0%; Delaware has no sales tax.
  • State Income Tax: Considering other taxes in Delaware, you should pay for the state income tax, with a rate of 8.70%.
  • LLC Federal Self-Employment Tax: Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.
  • Property Tax: The property tax is fixed at 0.56% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your Delaware business and the location of your operations, you may need to obtain permits and business licenses in Delaware. The costs of these licenses and permits will vary based on your specific business and location. In Delaware, the business license ranges from $50 – $300. However, research the requirements for your LLC in Delaware and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law, it is highly recommended that LLCs create an operating agreement in Delaware. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a business attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

Professional Services

You may hire professionals such as attorneys, accountants, or business consultants to help you establish and run your Delaware LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

You may check out the Best Business Attorney Services in Delaware that offer their professional services to form your business.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Certificate of Formation yourself. Delaware offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Registered Agent if permitted within Delaware. It allows the business owner to serve as the Registered Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What is the cost to form an LLC in Delaware?
The base filing fee to form an LLC in Delaware is $90.
Is forming an LLC in Delaware more expensive than other states?
Yes, Delaware typically charges a higher annual tax fee for LLCs compared to other states.
What is the annual tax fee for LLCs in Delaware?
LLCs in Delaware are subject to a minimum annual tax of $300.
How often do LLCs in Delaware need to file taxes?
LLCs in Delaware are required to file an Annual Franchise Tax Report each year.
What is included in the Annual Franchise Tax Report?
The Annual Franchise Tax Report requires LLCs to report the value of their assets and pay taxes based on that value.
Is the value of my LLC’s assets subject to public disclosure?
No, the value of your LLC’s assets is not publicly disclosed in Delaware.
Does Delaware require LLCs to file an application for doing business in the state?
Yes, LLCs that plan to do business in Delaware must file a Foreign Limited Liability Company Application.
How much does the Foreign Limited Liability Company Application cost?
The cost of the Foreign Limited Liability Company Application varies based on the specific circumstances of an LLC.
Can I form an LLC in Delaware if I don’t plan to do business there?
Yes, Delaware is known as a “friendly” state for LLC formation, even if business is conducted elsewhere.
Does Delaware impose any hidden costs for LLCs?
Delaware does not have any hidden fees or costs associated with forming and maintaining an LLC.
What are the primary benefits of forming an LLC in Delaware?
Delaware is known for its flexible regulations and business-friendly climate, which can be beneficial for LLC owners and members.
Are there any downsides to forming an LLC in Delaware?
LLCs in Delaware may face higher costs and administrative requirements compared to other states.
Can I hire a service to handle the LLC formation process for me?
Yes, there are many services available online that can help LLC owners and members file necessary paperwork and handle other administrative tasks.
Do I need to obtain any licenses or permits to operate my LLC in Delaware?
It depends on the nature and location of your LLC’s business operations. Verify requirements on a case-by-case basis.
Can I convert my LLC to a corporation in Delaware?
Yes, Delaware makes it easy for LLCs to convert to other business structures if desired.
How can I dissolve my LLC in Delaware?
LLCs in Delaware can dissolve by filing a Certificate of Dissolution with the Division of Corporations.
Is the process of dissolving an LLC in Delaware expensive?
The cost of dissolving an LLC in Delaware is primarily based on the cost of filing the necessary paperwork with the state.
Can LLC owners and members be held personally liable for the company’s debts?
LLCs in Delaware typically offer personal liability protection for their owners and members.
Does Delaware require LLCs to have a registered agent?
Yes, all LLCs in Delaware must have a registered agent with a physical address in the state.
Can I serve as the registered agent for my LLC in Delaware?
Yes, you can act as your own registered agent as long as you have a physical address in Delaware.
Can I use a registered agent service for my LLC in Delaware?
Yes, LLC owners and members often choose to hire a registered agent service to handle administrative tasks on their behalf.
Does my LLC need to have an operating agreement in Delaware?
Delaware does not require LLCs to have an operating agreement, but it is a recommended practice.
Are LLCs required to hold annual meetings in Delaware?
LLCs in Delaware are not required to hold regular meetings, but owners and members may choose to do so.
What is the cost of amending an LLC in Delaware?
The cost of amending an LLC in Delaware varies based on the specific changes being made to the company’s structure or operations.
Does Delaware charge any additional fees for out-of-state LLCs?
Out-of-state LLCs may be subject to higher fees and requirements in Delaware compared to in-state companies.
Can LLC owners and members represent themselves in legal matters in Delaware?
LLC owners and members can represent themselves in small claims court or pro se, but it is often recommended to seek legal counsel.
Will my LLC be treated as a separate legal entity in Delaware?
Yes, LLCs in Delaware are considered separate legal entities, which can help protect the individual assets of owners and members.
Are there any annual fees for maintaining a Delaware LLC?
Yes, the annual franchise tax for a Delaware LLC is a minimum of $300.
Can I form a Delaware LLC myself or do I need an attorney?
You can file the formation paperwork yourself, but it’s recommended to seek legal assistance.
How long does it take to form a Delaware LLC?
With expedited processing, it can take as little as one day to form a Delaware LLC.
Are there any publication requirements when forming a Delaware LLC?
No, Delaware does not have any publication requirements for LLCs.
Do I need a physical address in Delaware to form an LLC there?
No, you don’t need to have a physical location in Delaware to form an LLC there.
Can a non-US citizen form an LLC in Delaware?
Yes, non-US citizens can form an LLC in Delaware.
What is the annual report fee for a Delaware LLC?
Delaware LLCs don’t have to file an annual report, but they have to file an annual franchise tax report.
What is the franchise tax for a newly-formed Delaware LLC?
New Delaware LLCs have a minimum franchise tax of $300.
Do I have to pay franchise tax if my LLC has no profits?
Yes, you’ll still have to pay the minimum franchise tax of $300 per year even if your LLC has no profits.
Can I change the name of my Delaware LLC?
Yes, you can change the name of your Delaware LLC by filing an amendment with the Delaware Secretary of State.
Is there a fee for changing the name of a Delaware LLC?
Yes, there’s a $50 fee to file an amendment to change the name of a Delaware LLC.
Can I elect to have my Delaware LLC taxed as an S-corporation?
Yes, you can elect for your Delaware LLC to be taxed as an S-corporation with the IRS.
What is the process for closing a Delaware LLC?
To formally dissolve a Delaware LLC, you have to file a Certificate of Dissolution with the Delaware Secretary of State.
What happens if I don’t pay my Delaware LLC franchise taxes?
Failure to pay Delaware LLC franchise taxes can result in fines, penalties, and ultimately, the dissolution of your LLC.
Can I use a registered agent service to form my Delaware LLC?
Yes, registered agent services can handle the formation of your Delaware LLC.
How much does it cost to get a registered agent for my Delaware LLC?
Registered agent fees vary, but typically range from $50 to $300 per year.
Can I use a PO box as the registered address for my Delaware LLC?
No, PO boxes cannot be used as the registered address for a Delaware LLC.
Can I have a foreign LLC operate in Delaware?
Yes, foreign LLCs can register to do business in Delaware.
Is a Delaware LLC a good choice for a real estate investment business?
Yes, a Delaware LLC is a popular choice for real estate investment companies.
Can I convert my existing business to a Delaware LLC?
Yes, you can convert your existing business, such as a corporation or partnership, to a Delaware LLC.
Can I add members to my Delaware LLC after it’s formed?
Yes, you can add members to your Delaware LLC after it’s been formed.
How do I file for a fictitious name for my Delaware LLC?
To use a fictitious name, you have to file a Certificate of Assumed Name with the Delaware Secretary of State.
Can I dissolve my Delaware LLC if it has outstanding debts or liabilities?
Yes, you can still dissolve your LLC even if it has outstanding debts or liabilities.
Is there a way to be exempt from the Delaware Annual Franchise Tax?
There are some lower-tax or tax-credit options available in Delaware.
Is it possible to form a Delaware series LLC with one filing fee and one annual franchise tax?
Yes, you can form a series LLC in Delaware with one filing and annual franchise tax cost.
Can a federal government agency form a Delaware LLC or operate a business in Delaware?
Yes, even federal government agencies can form a Delaware LLC and operate business in Delaware.
What is the future effective designation in formation documents?
This is a configurable future effective date in case of desired hold back

Also Read

How to Save Money While Starting Your Business LLC in Delaware

First and foremost, it’s essential to do thorough research before making any financial commitments. This includes understanding the state-specific regulations and requirements for forming an LLC in Delaware. By familiarizing yourself with the necessary steps and paperwork involved, you can avoid costly mistakes that may set you back financially.

When it comes to choosing a registered agent for your LLC, it may be tempting to opt for a professional service. However, this can be quite costly, especially for a startup business. You may be able to save money by acting as your own registered agent or by enlisting the help of a trusted friend or family member. Just be sure that whoever you choose is reliable and able to fulfill the responsibilities of a registered agent.

Another way to save money when starting your business in Delaware is by shopping around for the best deals on essential services. This includes everything from legal counsel to accounting services. Don’t be afraid to negotiate prices or seek out cost-effective alternatives. Many professionals in these fields offer discounted rates for startups, so be sure to inquire about any available discounts.

Additionally, consider utilizing free or low-cost resources whenever possible. There are a multitude of online tools and resources available to entrepreneurs that can help streamline business operations and save money. From website builders to project management software, take advantage of these tools to avoid unnecessary expenses.

When it comes to office space, consider alternative options to traditional leases. Co-working spaces and virtual offices can be more cost-effective solutions for startups that don’t require a dedicated physical location. By minimizing overhead costs, you can allocate more funds towards growing your business and investing in its success.

One area where many startups overspend is in marketing and advertising. While it’s important to promote your brand and attract customers, there are ways to do so without breaking the bank. Utilize social media platforms and email marketing to reach your target audience without costly advertising campaigns. Consider forming partnerships with other businesses to co-promote each other’s products or services.

Lastly, don’t underestimate the power of networking. Building relationships with other business owners and entrepreneurs can open doors to valuable resources and opportunities. By attending networking events and joining industry-related groups, you may find support and guidance that can help propel your business forward.

In conclusion, starting a business LLC in Delaware doesn’t have to break the bank. By being mindful of your expenses, doing thorough research, and exploring cost-effective options, you can save money while laying the groundwork for a successful business venture. With careful planning and smart financial decisions, you can set yourself up for long-term success in the First State.

Conclusion

Forming and maintaining an LLC in Delaware involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in Delaware.

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