Frequently asked questions about starting and running an LLC, or limited liability company.
A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in Delaware. For more information on how to form an LLC in any state, see Nolo's article How to Form an 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.
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.
A Delaware LLC is created by filing by mail or fax a Certificate of Formation of Limited Liability Company with the Delaware Division of Corporations.
The certificate must include:
The filing fee is $90.
An LLC operating agreement is not required in Delaware, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
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.
Unlike most states, Delaware does not require LLCs to file annual reports.
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.