Rehoboth beach. Scrapple. Forest hikes and state parks. Delaware is known for many things including the stunning Grand Opera House.
You’ve decided to go for it, and now you want to know how to set up an LLC in Delaware. But what should we do now? How much is it going to cost? Below, you’ll find a list of all the steps you’ll need to take, as well as the prices and paperwork that Delaware businesses need.
Small firms may benefit from liability protection and tax advantages with an LLC. Follow these easy steps to get your Delaware limited liability company up and going after you’ve determined that an LLC is the most appropriate form of business for your requirements.
Delaware’s well-established business regulations and legislation have earned the state a strong reputation. In fact, Delaware’s business community is served by a specialized court known as the Court of Chancery.
In this court, matters are debated in front of judges, rather than juries, and the median time it takes to conclude a case is far less than in other states. Note that you have the option of forming the LLC yourself, or you may hire a professional incorporation service to do all of the legwork on your behalf.
1. Give Your Delaware LLC a Catchy Name
When choosing a name for a limited liability company (LLC) in the state of Delaware, there are two primary rules that must be followed:
- Your limited liability company’s name must be able to be differentiated from the names of other businesses already registered with the Delaware Division of Corporations.
- The phrase “Limited Liability Company” or one of its acronyms, “L.L.C.” or “LLC,” must be included in the name of your limited liability company (LLC).
Make a name reservation for your LLC with the Sec. of State
When you have decided on a name for your limited liability company (LLC), you can then reserve that name with the Delaware Division of Corporations. Conduct a search in the company name database maintained by the Delaware Division of Corporations to see whether or not the name you have selected for your LLC is available.
You are able to place a reservation for the online handle for up to one hundred and twenty days if it is available for usage. The charge to submit paperwork is $75.
You also have the option of printing off an Application for Reservation of LLC Name, filling it out, and then sending it to the Division of Corporations by regular mail.
2. Assign your Delaware Registered Agent
A registered agent in Delaware is required of every limited liability company operating in the state. If the limited liability company (LLC) is taken to court, this refers to a person or company that has agreed to accept service of process on its behalf.
The Registered Agent might either be a resident of the state of Delaware or a business entity that is permitted to conduct operations in that state. It is required that the Registered Agent have a real, physical address in the state of Delaware.
What do Registered Agents do?
A Registered Agent receives tax forms, legal paperwork, lawsuit notices, and government communication on your business’s behalf. Consider the role of your registered agent as that of the point of contact for your company with the state.
Who can be a Registered Agent?
A Registered Agent must either be an individual who lives in Delaware on a permanent basis or a company that is permitted to operate inside the state of Delaware and act in the capacity of a Registered Agent service. You have the option of selecting anybody who works for the organization, including yourself.
3. Submit an application for the Certificate of Formation
The cert is a document that puts down fundamental information about your limited liability company and is responsible for formally establishing your LLC. Because this form serves as the legal registration for your company with the state, it is essential that all of the details be accurate.
What info should be included on a Certificate of Formation?
When completing the Certificate of Formation for your Delaware LLC, you are required to give the following information:
- LLC’s name
- If the term of the LLC is permanent or restricted.
- Address of the main office of the limited liability company the name and location of the registered agent for the limited liability company
- Location where the State Secretary should send notifications to the limited liability company (LLC) through mail.
- How the Limited Liability Company (LLC) will be run: by its members or by its managers
- Whether or whether the limited liability company will offer professional services
- Name and address of each person who organized the limited liability company, as well as the name and address of at minimum one member or management who has direct knowledge of the activities of the limited liability company.
Putting in an Application for Your Certificate of Formation
In order to establish a limited liability company (LLC) in the state of Delaware, you are required to file a Certificate of Formation with the Delaware Division of Corporations. The filing cost is ninety dollars. You have the option of uploading the document to an online service or mailing it.
If you are a foreign (out-of-state) entity that wishes to register to do business in Delaware, you will instead be required to fill out a Certificate of Registration and pay a registration fee of $200.
A Certificate of Existence issued by the state or place where the LLC was created must also be provided by foreign LLC’s. This document cannot be more than six months older than the registration form that has been completely filled out.
4. Obtain your LLC existence certificate
After the formation paperwork of the LLC has been submitted and authorized, the state will send you a certificate that proves the LLC’s official existence in response to a written request for a copy together with the appropriate amount of postage.
With this certificate, the limited liability company will be able to get an Employer Identification Number (EIN), as well as business permits and a bank account for the firm.
5. Draw up a Contract for Business Operations
Delaware is among the five states in the United States that mandates all members of a limited liability company (LLC) to sign an operating agreement. Nonetheless, the legislation does not define the precise time when you are required to engage into the agreement; however, it is recommended that you do it as soon as possible after submitting the certificate of formation.
It is possible to have a verbal agreement, but it is strongly recommended that you create a formal, documented operating agreement.
Typical LLC operating agreement features include:
- Categories of interests: Various types of members may be granted varying rights with regard to the business activities of the limited liability company (LLC) (voting rights, etc.)
- Management: Please specify who manages the limited liability company (LLC), such as a board of directors, a single member, numerous members, an assigned manager, etc.
- Fiduciary obligations: If you do not mention any adjustments or limits, default key responsibilities may be imposed.
- Profits and distributions: The method through which profits and losses are divided among the members, as well as any other pertinent information
- Transfer of interest: You could decide to lay down the guidelines and requirements that need to be met by members who want to shift their interest (or completely withdraw) in the limited liability company.
- Bringing in new members and bringing in new funds: This would outline the process by which the LLC would bring in new members and bring in new finances.
- The circumstances that might lead to the dissolution of the limited liability company (LLC), as well as the steps involved in doing so.
6. Obtain your tax identification no.
A federal employer identification number, commonly known as a tax ID number, will be required of many limited liability companies (LLCs). An Employer Identification Number (EIN) is a nine-digit number that identifies your company to the Internal Revenue Service (IRS).
On the IRS site, which is accessible without charge, you may check to see whether you require an EIN and submit an application for one online.
Single-member limited liability companies, which are an exemption to the rule that most firms are required to acquire an EIN, may instead use the owner’s Social Security number.
Delaware has stringent standards for business licenses, in contrast to the rules of many other states, which do not need a general operating license.
In order to legally do business in the state of Delaware, it is necessary for each and every company to first get a state business license from the Delaware Department of Revenue.
You may receive a business license in Delaware by registering for a “One Stop” account and completing the whole of the application procedure online. The application price for your license might be anywhere from $50 to $450, depending on the kind of company that you own and operate. This charge is required by law.
You will be given an interim license that is good for a period of one month if you choose to go through the “One Stop” procedure. The sending of permanent permits normally takes no more than ten days.
Additionally, in addition to the state business license, you may also be required to get a license from the city or county in which your firm is located in Delaware. You may get further information about whether or not you need extra licenses to run your limited liability company by contacting the relevant agency in your community.
Members of some regulated professions are required to get a license first from Delaware’s Division of Professional Regulations in order to practice in the state of Delaware. The following is a list of occupations that fall within this agency’s purview of regulation:
Businesses run by qualified professionals have the option of forming either a specialist corporation or a standard limited liability company. Delaware is unique among states because it does not permit professional limited liability companies.
7. Reports on a Yearly Basis
LLCs in Delaware, in contrast to most other jurisdictions, are not required to submit an annual report, nor are they subject to an annual franchise tax, as is the case with corporations in Delaware. However, you shouldn’t rejoice just yet. LLCs are subject to a one-time, flat yearly tax payment of $300.
On or prior to June 1st, you are responsible for paying the yearly tax for the previous year. If you do not pay the yearly taxes when they are due, you will be subject to a penalty of $200.00 in addition to 1.5% interest each month on both the tax and the penalty.
Costs and further actions
To submit the Certificate of Formation with the Delaware Division of Corporations, a fee of $90 is required. The Delaware Division of Corporations will charge you $75 to reserve the name of your limited liability company.
The following additional fees may also be incurred with your LLC setup:
- Reserving a Name for an LLC
- Copy of certified documents with the DBA (Doing Business As) name
- Receiving Your Certificate of Existence
When you register a limited liability company (LLC), you establish a legal basis upon which to operate your firm. Companies should make it a priority to maintain their limited liability company in compliance with state regulations and in an active position on the state’s website.
In addition, having a registered limited liability company enables you to perform the following:
- Obtain any permissions or licenses required to run your company, such as those issued by the health department, the zoning department, the department of home occupations, the department of professional licensing, and others. Some states need a seller’s permission to conduct sales
- Register your company with the department of revenue in your state.
- Create a bank account for your company.
- Create a credit card account for your company.
- Invest in insurance coverage for your company.
- Create a trademark to protect both your company’s name and its logo.
LLC setup myself or hiring an incorporation service
To establish a limited liability company (LLC), you are not required by law to consult a lawyer. The majority of states enable the establishment of LLCs via the process of registering the business entity on the website of the secretary of state and with the Internal Revenue Service (IRS).
If you are not acquainted with the process of forming an LLC, your best bet may be to use a LLC incorporation provider so that you can be certain that the creation will go smoothly and quickly.
When entrepreneurs start a new firm, they may save startup costs and save valuable time by using a professional agency that specializes in company forms. They can take care of the things that you may not have time to think about for a price ranging from $50 to over $500, and some examples of such things are as follows:
- Developing an operating agreement for an LLC that details your company’s who, what, when, where, why, and how, and putting it into writing (required in some states)
- Creating a Certificate of Formation that includes information on the registered agent, management, and the formation date of the LLC
- Taking up the role of registered agent for your firm
- Keeping meticulous records in the event of legal action or official investigations.
- Payment of filing fees and registration with the appropriate parties
- The process of registering the name of your firm and ensuring that it is eligible for use as an LLC
- Preparing and submitting all of the necessary formation and legal papers
How much does it cost to set up an LLC in Delaware?
The filing of the Certificate of Formation to establish a limited liability company in Delaware costs $90, and it costs $75 to reserve your LLC’s name with the Delaware Division of Corporations.
Do Delaware LLC pay taxes?
Pass-through Delaware LLCs don’t pay federal or state income tax. However, limited liability companies are subject to a one-time yearly tax payment to the state in the amount of $300.
What are the steps I need to take to form an LLC in Delaware?
To start an LLC in Delaware, you’ll need a registration fee, name, Registered Agent, Certificate of Formation, Operating Agreement, and IRS EIN.
Tom is the founder of Gottagrow.io. He reads the offers, deciphers the details including features, pricing, included services and more to find you the best products and services.