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.
All of the paperwork and procedural steps to start a limited liability company can be done online using Nolo's Online LLC Formation service.
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: Any LLC conducting business in Delaware must obtain a Delaware business license from the Delaware Division of Revenue. The license can be obtained online using the Delaware One Stop Licensing and Registration Service; or by mailing the Combined Registration Application Form (Form CRA). Your LLC may also need a local business license from the town, city, or county in which it is located; see Business First Steps for more information.
No annual report: Unlike most states, Delaware does not require LLCs to file annual reports.
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. For more information on state LLC tax registration, see Nolo's article Delaware LLC Annual Filing Requirements.
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.