How to Form an LLC in Delaware
To form an LLC in Delaware, here's everything you need to know.
1. Choose a Name for Your LLC
Under Delaware law, an LLC name must contain the words "Limited Liability Company" or the abbreviation "L.L.C." or "LLC." In addition, the name can contain the names of members, or the words "Club," "Foundation," "Fund," "Institute," "Society," "Union," "Syndicate," or "Trust."
Your LLC’s name must not be deceptively similiar to the names of other business entities already on file with the Delaware Secretary of State. Names may be checked for availability by searching the Department of State: Division of Corporations business name database.
An available name may be reserved for 120 days by paying a $75 fee. Reservations are made online on the Delaware Division of Corporations website, you may also print out the Application for Reservation of Limited Liability Company Name and file by postal mail.
2. File a Certificate of Formation
An Delaware LLC is created by filing by mail or fax a Certificate of Formation of Limited Liability with the Delaware Division of Corporations.
The certificate must include the LLC's name and the name and address of the LLC’s registered agent.
The filing fee is $90.
3. Appoint a Registered Agent
Every Delaware LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. If the LLC is physically located in Delaware, it may act as its own registered agent. A registered agent may be either an individual resident or business entity that is authorized to do business in Delaware. The registered agent must have a physical street address in Delaware. A list of Delaware registered agents is available at the secretary of state's website.
All of the paperwork and procedural steps to start a limited liability company in Delaware can be done online using Nolo's Delaware Online LLC Formation application.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in Delaware, but is highly advisable. For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it need not be filed with the Certificate of Formation.
5. Publication Requirements
6. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses.
No annual report: Unlike most states, Delaware does not require LLCs to file annual reports.
7. Pay Your State Tax Obligations
All LLCs and foreign LLCs must pay an annual $300 Alternative Entity Tax by June 1 of each year. The tax is paid to the Delaware Division of Corporations Franchise Tax Section. In some cases, for example if you will be selling goods and paying Delaware’s gross receipts tax or if you have employees, you’ll need to register with the Delaware Division of Revenue. Registration involves different steps for different taxes.
8. Foreign LLCs Doing Business in Delaware
All LLCs organized outside of Delaware must register with the Delaware Secretary of State to do business in Delaware. Foreign LLCs must appoint a registered agent for service of process physically located in Delaware. To register, file a Certificate of Registration of Foreign Limited Liability Company. The completed registration certificate must be accompanied by a Certificate of Existence, dated within 6 months prior to the filing of the certificate, from the foreign LLC’s home state.
The filing fee is $200.
Before filing, make sure the LLC’s name is available in Delaware by checking the Delaware Secretary of State’s business name database. If the name is not available, the foreign LLC may use a designated name to transact business in Delaware.