Forming an LLC in Delaware
Known as “The First State,” Delaware is a good place to start your business. Although it’s the second-smallest state in the U.S., its combination of a great location, lots of travel hubs, a business-friendly environment, zero sales tax and plenty of residents make it an excellent choice.
Delaware businesses are leaders in many sectors, including banking, pharmaceuticals, technology, healthcare, farming, retail and more. In fact, more than half of all U.S. publicly traded companies and 63 percent of the Fortune 500 are incorporated in Delaware. The state has long been a favored place for large businesses to incorporate because legal precedents in Delaware strongly protect them.
For most business owners, the fastest and easiest way to start a business in Delaware is by creating a Delaware LLC. A Limited Liability Company (LLC) is a type of business entity that’s ideal for startups and small- to medium-sized businesses. You get the advantages and protections of larger Delaware corporations but with much simpler rules and regulations.
Briefly, the benefits of starting a Delaware LLC include:
- Separating and limiting your personal liability from your business liability and debts
- Quick and simple filing, management, compliance, regulations and administration of your Delaware LLC
- Easy tax filing and potential advantages for tax treatment
Learn more about the benefits of the LLC business structure here.
Although these advantages may protect large national corporations, they do not necessarily extend to small businesses and LLCs who do not operate in Delaware — they must still qualify and be able to do business in their home state to be officially recognized. Under most circumstances, we recommend that small businesses that operate in a single state incorporate there. Of course, if you already live in Delaware, that makes it an ideal choice.
In Delaware, the Division of Corporations is responsible for forming businesses, rather than the Delaware Secretary of State directly.
Six Quick Steps to Delaware LLC Formation
We’ve got lots of useful information on starting a business in DE. On this page you’ll find the basic steps of how to form a Delaware LLC, with more in-depth content throughout the rest of our guide.
STEP 1: Gather Information for Your Members
First, you need to gather basic information about your LLC, including the names and addresses of the managers or members. The LLC members are typically the people who own and run the business. They are also the ones who can take profits out of the business to pay themselves.
STEP 2: Search for and Choose a Unique Business Name for Your Delaware LLC
You will need a distinctive and original name for your Delaware LLC that’s not used by any other business in DE. To find out if another company is using your chosen business name, carry out a Delaware business entity name search on the DE Division of Corporations website.
There are a few rules you’ll need to follow when choosing an LLC name. You can find out more in our guide to searching for and naming your Delaware LLC.
Learn about Delaware LLC business naming rules.
STEP 3: Provide an Official Address for your DE LLC
Every Delaware LLC must have a designated street address. That could be your home address (if you’re running the company from your residence), your company’s office building or any physical address of your preference. The address can be outside the state of Delaware and can be a P.O. Box.
STEP 4: Assign a Registered Agent for Your Delaware LLC
Every DE LLC must have a “Registered Agent” when it is formed. This is an official position; the Registered Agent is someone who receives official legal and tax correspondence and has responsibility for filing reports with the Delaware Division of Corporations.
This position can be filled by you, another manager in the business or a dedicated Registered Agent service. Your DE Registered Agent must have a physical street address in Delaware and must be present to receive important documents for your company during business hours.
At Incfile, all of our packages include a Registered Agent service that is free for the first year and just $119 per year afterward. We also have a dashboard where you can log in and easily view any document your Registered Agent has received on your behalf.
Learn more about Delaware Registered Agents.
STEP 5: Get an Employee Identification Number (EIN) From the Internal Revenue Service
You will need an EIN to identify your business to the IRS. You use this number when filing and paying taxes or when submitting payroll information and payments for your employees. You can obtain one directly from the IRS, or we can get one for you as part of the Delaware LLC business formation process.
STEP 6: File a Certificate of Formation With the Delaware Division of Corporations
Once you've gathered all the information together for your Delaware LLC, you’ll need to file a formal document with the DE Division of Corporations. This document is known as your “Certificate of Formation,” and filing the document creates your Delaware LLC. Here’s what is typically included:
- Your business name and address
- Details of your Registered Agent
- Name of the incorporator
You can file your Delaware LLC Certificate of Formation online, mail in a form or have Incfile do it on your behalf. There is a fee to file and start an LLC in Delaware. You only need to file your Certificate of Formation once.
Form Your LLC Now
Review Information From the Delaware Division of Corporations
The DE Division of Corporations has plenty of additional information on forming and running a business in Delaware.
Special Types of Delaware LLCs
A regular Delaware LLC is suitable for most business needs, but you also have a few other options to incorporate a special type of LLC.
Form a Delaware Series LLC
In Delaware, you also have the option to set up a “Series LLC” — these are specialized LLCs designed to allow you to manage multiple separate LLCs under one master, umbrella LLC. These can be very useful if you don’t want to set up a separate Delaware LLC for every individual business you run.
Decide if a Delaware Series LLC is right for your new business.
Form a Foreign LLC in Delaware
Detailed Information for Your Delaware LLC
You’ll find plenty more insight and guidance on the other pages of this guide, including:
How to search the Delaware business registry of the DE Division of Corporations and find the right name. Includes information on naming rules, fictitious names, reserving a Delaware LLC name and more.
How to appoint a Delaware Registered Agent to your new LLC or change to a different Registered Agent. Includes information on Registered Agent rules and searching for Delaware Registered Agents.
How to understand the various fees you’ll need to pay and the requirements you’ll need to meet for both federal and Delaware rules. Includes details of Employee Identification Numbers (EINs), Delaware and federal business licenses, Delaware annual reports and more.
How to understand the various taxes you will need to pay to the federal and Delaware government. Includes details of federal taxes like income and self-employment and Delaware taxes like state income tax.