Start Your Own Business in Delaware: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Delaware.



Here’s an overview of the key steps you’ll need to take to start your own business in Delaware.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Delaware Division of Corporations (DOC). You can check for available names by doing a  business name search  on the DOC website. You can reserve an available name for 120 days by filing a  Name Reservation Application  either online or on paper. You can also renew (re-reserve) a name reservation after first applying for one. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See  How to Form an LLC in Delaware  andHow to Form a Corporation in Delaware  for more information.

Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a  trade name certificate  with the county where your business is located. File with the Prothonotary’s office located in the county’s Superior Court.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Delaware, you don’t need to file any organizational documents with the state. You do, however, need to obtain a Delaware business license. For more information, see  How to Establish a Sole Proprietorship in Delaware.
  • Partnership:  To create a general partnership in Delaware, you don’t need to file any organizational documents with the state. You do, however, need to obtain a Delaware business license. In addition, although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Delaware.  To form a  limited liability partnership  (often used by professionals), you must file a Statement of Qualification with the Delaware DOC. For more information, see  How to Form a Limited Liability Partnership in Delaware.
  • LLCs:  To create an LLC in Delaware, you must file a  Certificate of Formation  with the Delaware DOC. You will also need to appoint a  registered agent  in Delaware for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Delaware  and  How to Form a Professional LLC in Delaware  (for professionals).
  • Corporations:  To create a corporation in Delaware, you must file a  Certificate of Incorporation  with the Delaware DOC. You will also need to appoint a  registered agent  in Delaware for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Delaware.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Delaware, you must register with the Division of Revenue (DOR) and, if liable, pay the state’s  gross receipts tax. If your businesses will have employees, you must register with the Division of Revenue (DOR) for employer withholding taxes. You can register for both kinds of taxes online using Delaware’s  One Stop  Business Registration and Licensing System. You can also register on paper using  Form CRA,Combined Registration Application.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

State business license.  Every Delaware business is required to get an annual state business license. The license is issued by the Division of Revenue. You can register for the license online at the  One Stop Business Licensing and Registration Service. Depending on your specific type of business you may also need other licenses or permits issued by specific state agencies, such as the Division of Public Health within Delaware Health and Social Services. In addition, some required licenses are issued locally, so be sure to check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. The  Division of Professional Regulation  (DPR) oversees the state’s many professional regulatory boards. The homepage of the DPR website lists virtually all of the regulated professions.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Delaware taxes every kind of business. This includes a special state tax that applies to LLCs and most partnerships. See  Delaware State Business Income Tax  for more information on state business taxes in Delaware.

Sole proprietorships.  Pay state taxes on business income as part of their personal state income tax returns (Form 200-01).

Partnerships.  Partners pay state taxes on partnership income on personal tax returns. In addition, Delaware partnerships also must file  Form 300,  Partnership Return.

LLCs.  Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Unlike most states, Delaware does not require LLCs to file annual reports. However, the state does require LLCs to pay an  annual tax. See  Delaware LLC Annual Filing Requirements  for more information.

Corporations.  Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Delaware  corporation taxes. And, finally, corporations must file an  annual report  with the Delaware DOC (which is associated with payment of the state’s franchise tax).

If you have employees, you must also deal with state  employer taxes.

And, apart from Delaware taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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