How to Form an LLC in Delaware

Co-authored by Clinton M. Sandvick, JD, PhD

Last Updated: January 31, 2023 References

An LLC is a common business model, well-suited to a variety of new companies. If you currently live in Delaware, or if you are looking to relocate to the state to start your business, you will need to follow state guidelines to establish your LLC. To form an LLC in the state of Delaware, complete the necessary paperwork and file your tax forms with the appropriate state department.

Part 1

Part 1 of 2:

Completing Necessary Paperwork

1
Check name availability. An LLC must, by law, contain the words "Limited Liability Company" or the abbreviation "L.L.C." or "LLC." Your name must be unique, and not easily confused with any existing corporation, business, or individual person unaffiliated with your business.^{[1]
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- You should do an online name search to confirm that no other business group already uses the name you have in mind.
- You can reserve your LLC name online at the Division of Corporations website. There is a fee of $75 for this service. This step is not required, but it is recommended. The reservation is only good for 120 days.
- If you reserve your name online, print out your confirmation.
2
Appoint a registered agent. Delaware law requires that all business entities have and maintain a registered agent. This person must be either an individual resident or a business that is authorized to do business in the state. The agent must have a physical address in Delaware.^{[2]
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- If your business is physically located in Delaware, it can serve as its own registered agent.
- If you plan to use another agent as your registered agent, you must contact the individual or business.
3
File Delaware Certificate of Formation. This form may be downloaded from the Delaware Division of Corporations, or requested by phone at (302) 739-3073. There is a $90 fee for filing the certificate.^{[3]
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- Write your check to Delaware Secretary of State.
- You'll receive a stamped, filed copy of your document. If you'd like this copy to be certified, there is an additional $50 fee.
- You can either mail in your request or send it by fax. The fax number is (302)739-3812
- Include a cover letter with your name, mailing address, and telephone/fax number so that the Division can contact you with any questions they may have regarding your application.
- Your Certificate of Formation should be signed by the registered agent.
4
Create the operating agreement. An operating agreement is recommended, though not required, in Delaware. It does not need to be filed with the Certificate of Formation. Draft an Operating Agreement that suits the unique needs of your business.^{[4]
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- The operating agreement exists to ensure that the state understands and respects your limited personal liability.
- Your operating agreement should spell out what should happen to the businesses assets and liabilities in the case of business dissolution.
5
Establish company records. The filed Certificate of Formation is one of the first of many records your LLC will need to keep in a safe, easily accessible location. Other records will include your meeting minutes, operating agreement, and your EIN.^{[5]
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- Electronic records can be kept as well as paper records. Consider investing in software to help you more easily establish and maintain your records.
- Being able to access your records easily will save you time and money as your business grows.
6
Hold the organizational meeting. Once you have your filed Certificate of Formation, your operating agreement, and an registered agent, schedule an organizational meeting for all members of the LLC. The goals of this initial meeting will be to discuss and agree upon all items necessary to initiating the business. You'll want to have a secretary for the meeting who can keep accurate notes of all decisions for your company records.^{[6]
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- Record all members present for every meeting of your LLC.
- Review, approve, ratify, and adopt the existing documents of your LLC at this meeting. This is the process you'll continue to use as your company grows, and future items are presented.
- Discuss salaries, wages, bank accounts (existing or future) and all other matters necessary to start.
- Have all members review and sign the meeting's minutes, affirming their agreement with what has been recorded.
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Part 2

Part 2 of 2:

Filing Tax Forms

1
Get a federal ID number (EIN). If your LLC has more than one member, or if you plan to hire employees, you are required by law to file for a federal ID number (EIN). If you are opening a business bank account, you may also be required to have an EIN. Contact the Internal Revenue Service (IRS) to request this number.^{[7]
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- There is no fee for an EIN.
- Online application is recommended, but you can also request this number by mail, phone, or fax.
- Single member LLCs may file using a social security number if they don't want to apply for an EIN. All other LLCs are required to have this number.
2
Get Delaware state business license. Filing Delaware state taxes requires a tax number, found with your business license. You'll need to complete a Form CRA, the combined registration application for the state of Delaware business license and/or withholding agent.^{[8]
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- There is a $75 fee for your business license.
- Delaware's business license is consolidated to include Division of Revenue, the Division of Unemployment Insurance and the Office of Workers Compensation. There is no need for additional filing with these state divisions once you've filed your business license.
3
Consider your IRS filing method. An LLC may elect to be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp. Most LLCs are best filed as either a sole or partnership, but if your profits will be over $75,000, it will be more beneficial to file as an S-Corp. The distinction is only for tax purposes and will not affect your overall LLC operation.^{[9]
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- You'll need to file File Form 2553 Election by a Small Business Corporation with the IRS.
- C-Corp filing is intended for very large LLCs. Most LLCs do not start with C-Corp filing, but if you feel your LLC might be best served by C-Corp election, talk with your lawyer or tax professional.
4
Obtain business licenses and permits. Most businesses require permits to operate, but these permits vary state to state, and city to city. Check with your local small business association to confirm what permits are necessary to operate your business legally. In addition, permits are required to operate certain businesses which impact the health and/or safety of consumers.^{[10]
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- Some businesses, such as doctors, lawyers, accountants, barbers, real estate agents, etc., require specialized training, and therefore require licenses.
- Bars and restaurants will require special licenses in the state of Delaware.
- Most retail establishments will require a sales license.
- Most businesses will require a general business license.
- You may need to apply for permits from the county health department if you are dealing in food preparation. Sign permits may be required to maintain appearance requirements. Fire department permits ensure public safety.
5
Comply with tax and regulatory requirements. Delaware LLCs are not required to file an annual report. However, they must pay an annual LLC tax.^{[11]
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- The annual franchise tax statement for an LLC in the state of Delaware is $300.
- Taxes are to be paid by June 1 of each calendar year.
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