Delaware LLC: How to Form an LLC in Delaware

Delaware LLC

Going to set up your business in Delaware? Before getting your business up and running, you should form an LLC. A limited liability company will make sure that no matter what happens in your business world, your personal world doesn’t fall to dust because of it!

Want to learn more? In this comprehensive guide, we will tell you all you need to know to form a Delaware LLC.

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Don’t have time to go through the comprehensive review and want to know how to quickly form an LLC in Delaware? We are here with quick highlights to let you know what you need to do!

To form an LLC in Delaware, you have to follow these 5 quick steps:

  • Choosing your LLC name
  • Hiring a Registered Agent
  • Filing the Articles of Organization
  • Creating a Business Operating Agreement
  • Getting an EIN 

You can certainly form an LLC via the DIY route, but it will consume a lot of your time and energy. As an entrepreneur, it is not a sensible thing to focus on legal paperwork instead of growing your business. 

Therefore, we recommend that you hire a professional LLC formation service to take care of your legal needs so that you solely focus on making your business a success.

  • ZenBusiness is the perfect choice for entrepreneurs who are searching for affordable services that are backed by stellar customer reviews. With their various features and packages, they will take care of all your LLC formation needs.
  • IncFile is the go-to option for those new business owners who have tightened their purse strings and can’t afford expensive professional services. With their free business formation package, you can become a proud owner of an LLC in no time!

What is an LLC?

It is very likely that some of you don’t know what an LLC is and what are the benefits of forming an LLC. Well, we are here to help you! An LLC stands for Limited Liability Company and it is a type of business structure. 

An LLC combines the flexibility of a sole proprietorship with the liability protection of a corporation to make sure that no matter what your business’s financial condition is, your personal possessions stay safe and protected.

Advantages of Forming an LLC in Delaware

Thinking of forming an LLC in Delaware? There are various advantages of forming your LLC in Delaware, foremost of which is privacy, protection, and security. Let’s take a comprehensive look at the various features offered by the state of Delaware.

Two-way Business Protection

When you form an LLC in any state, you get limited liability protection. This means that in case your business gets sued or your LLC defaults on a loan, your personal assets such as house, car, etc. will remain safe and only your business assets will be in trouble.

The state of Delaware not only offers you this protection, but it also provides an additional layer of security. The “changing order” is the only remedy that the creditors have. This means that the creditors will not be able to take over the company, liquidate the LLC, or get a controlling interest in the LLC. 

They will only get an economic interest in the LLC profit distributions. This is the best protection that any LLC can ask for. The corporate shield offered by the Delaware LLC Act is better than the protection offered by any other US state.

Secure & Simple

From all the states in the USA, Delaware makes it super easy for you to form your LLC. The state doesn’t require a lot of information from you when you are filing the articles of the organization. This minimal amount of information not only keeps the procedure simple but also helps to keep your personal information off the public records.

If you form an LLC in Delaware, you will get to have a flexible ownership and management structure. A single person can act as the manager as well as the owner of the LLC.

Moreover, if you hire a professional registered agent for your LLC, only your Delaware business address will be present on the formation documents. Moreover, since you don’t have to file an annual report with the state of Delaware, your information will be off the records even after the formation of your LLC.

Tax Exemptions

We all hate when most of our hard-earned money goes right out of our pockets in the form of taxes. You will be happy to know that Delaware is one of the most business-friendly states in the US and is even referred to as a tax haven.

Delaware actively maintains a healthy and friendly business atmosphere and offers various benefits that other states don’t. Intangible income – patent and trademark leases, etc. – are not taxed by the state of Delaware. 

Moreover, if you form an LLC in Delaware, but your business is located somewhere else, you will not have to pay the state income tax. Moreover, you have flexible taxation options on your hands. You can choose your Delaware LLC to be taxed as an S-corp, a C-corp, or as a pass-through entity. 

By default, Delaware LLCs are taxed as pass-through LLCs which allow you to file all the profits/losses on your personal tax returns.

Good Business Laws

One of the amazing benefits of starting a Delaware LLC is the attractive business laws that the state offers. Since Delaware has a long history as a national leader in business law, its legal statutes and codes are studied in law schools all over the country.

Delaware has it’s a specific court designed to handle business-related issues – the Court of Chancery. In this court, all the cases are argued in front of professional judges instead of a jury. This will ensure that you will get a verdict from people who are well-versed in business law.

Annual Reports

You will be happy to hear that unlike many other states, the state of Delaware doesn’t require you to submit annual reports for your LLC. This means less paperwork and absolutely no tension about missing deadlines!

Moreover, the process of LLC formation is fast and quick. The Secretary of State’s office in Delaware keeps extended hours to assist with filing requests. Moreover, you can go for an expedited filing process that will help you form your LLC in a matter of hours!

Business Licenses

Moreover, you will be happy to learn that if you are a foreign LLC owner, and are not doing business in Delaware, you will not need to get a business license. Furthermore, there is no need to register your LLC with the Dept. of Revenue or pay the Gross Receipts Tax in Delaware. 

With a lot fewer formalities and paperwork, Delaware LLCs can focus on doing effective business instead of fulfilling various state requirements all the time!

How to Form an LLC in Delaware

The state where you form your LLC in the state of formation. The basic steps for the formation of an LLC in each state are the same, such as filing the paperwork, designating a registered agent, etc. Firstly, you have to file your certificate of formation with the Department of State in Delaware. 

The Certificate of Formation is the official document that legally forms your LLC in Delaware. The state filing fee for this certificate is $90. You can file the document in person or can send it via mail. The costs, rules, and regulations for LLC names, taxes, etc., differ from one state to the other.

Let’s see in detail what you need to do to form your LLC in Delaware.

Choosing the Name of Your LLC

The first thing that you need to do before everything else is choosing a name for your LLC. Your name is your identity, it is your brand. It is the first impression of your company on your potential clients and investors.

You need to give it a lot of thought. After all, your LLC’s name is what is going to be displayed outside your store, on your website, in advertisements – In short, it is going to be everywhere and you have to make sure it is unique, enticing, and memorable!

Once you have selected the name for your LLC, you have to make sure that some other entity is not using it already in the State of Delaware. There will be a state database of all the existing LLCs. Go check it out on the state’s official website and check if the name you selected is up for the grabs or not.

LLC Name Reservation

What if the name you chose is available but you don’t have your paperwork ready? Well, you can’t wait since anybody can choose the name you so carefully and passionately selected for your LLC. To avoid this, you can get your LLC name reserved by paying a small reservation fee to the state. 

This will make sure that even if you haven’t filed the paperwork as yet, your LLC name is there for you when you do! You can reserve an LLC name by paying a $75 reservation fee. Your name will be reserved for 120 days.

You can send in an online reservation application or can print out the application form and mail it to the State.

LLC Name Rules and Regulation

Every state has a few rules and regulations about the words that can and cannot be present in an LLC’s name. Under Delaware law, the LLC name should contain the words ‘LLC’, ‘L.L.C’, or ‘Limited Liability Company’.

Moreover, the name can have words such as ‘Fund’, ‘Foundation’, ‘Club’, ‘Society’, ‘Institute’, ‘Union’, ‘Trust’, ‘Syndicate’, etc. Moreover, the name of the owners can also be used. Your LLC’s name cannot be similar to the names of the LLCs already registered with the State.

Your name cannot include words such as Treasury, State Department, etc. to ensure that your LLC doesn’t get confused with a governmental agency.

Fictitious Business Name

If you don’t want to do business using your official legal name, you can use a fictitious business name as well. This is known as a DBA (Doing Business As) name and you have to register the fictitious name with the county where you will be doing the business. The filing fee for a fictitious name is $25.

We live in a digital world, and especially in tiring times like these, we have realized how important digital marketing and communication are. Therefore, while you are selecting a name for your LLC, we recommend that you check whether it is available as a web domain or not. 

It is better that you hire the services of an LLC incorporation service since they will not only search the state database for you but will also make sure that your LLC name follows all the guidelines set forth by the state of Delaware.

Appointing a Registered Agent for Your LLC

Once you are done choosing your LLC’s name, the next thing you have to do is designate a professional registered agent for your company. Are you wondering what a registered agent is? Well, the state of Delaware needs to be able to communicate with your LLC in a credible, reliable, and trust-worthy way.

The person who receives all the important documentation from the state on your behalf is your registered agent. When it comes to selecting a registered agent, you have three options.

  • Becoming your own registered agent
  • Selecting a friend or family member to act as your registered agent
  • Hiring a professional registered agent

You can become your own registered agent.  You will need to have a physical address in Delaware for you to do that. Moreover, you will be legally obligated to present in your office within normal working hours to ensure that if the state wants to get in touch with the LLC, they can do so promptly.

However, we don’t recommend this for a couple of reasons. Firstly, your address will become a part of the public records and you can say goodbye to your privacy. Moreover, you will not be able to take a day off or go on a holiday because you are required by the state to be available. 

Furthermore, we are all humans and it is very likely that you will forget some important document or miss an important deadline. This will have a negative impact on your LLC’s standing with the state.

You will have the same issues if you appoint a friend or a family member as the registered agent. What is the best option here is to appoint a professional registered agent to take care of all the things for you. 

Not only do you keep your privacy intact, but you also will not have to worry about missing important documents or deadlines. Northwest registered agent is a professional service with impeccable customer service. 

They are the best choice in the market when it comes to hiring professional registered agents. Even though their rates are a bit high, you will be satisfied with the service that you get!

Filing Certificate of Formation

The next step is to file the certificate of formation. Certificate of Formation is the legal document that lets the state of Delaware know the details of your tentative LLC. You can file these documents via mail or fax them to the state of Delaware. 

Moreover, you can apply online as well as go in person. You will have to pay a filing fee of $90. Your certificate of formation must include the following things:

  • Your LLC’s name
  • The name of your registered agent
  • The address of your registered agent
  • Signature of the organizer

Preparing a Business Operating Agreement

Even though you are not legally required to file a business operating agreement in the State of Delaware, it is highly recommended that you get one. A business operating document is an internal document that clearly establishes the hierarchical structure of your LLC.

It lays down the various rules and regulations under which the LLC will be run. Moreover, it details the responsibilities and the rights of all the members, managers, etc. If you don’t create a business operating agreement, Delaware LLC law will by default govern the running of your LLC.

Getting an EIN

We all have social security numbers so that we can file our taxes, and do various other things. Similarly, an LLC needs a federal tax ID which is known as EIN (Employer ID Number). You will need an EIN for various purposes such as filing federal and state taxes, hiring employees, open bank accounts for your LLC, etc.

You can get an EIN by applying for one on the IRS website. However, this is a technical procedure and we recommend that you should get a professional LLC formation company such as ZenBusiness to help you with this.

LLC in Delaware – Final Word

To ensure that your personal assets remain safe regardless of the financial situation of your business, you have to form an LLC. If you are searching for a state that offers the best facilities to its LLC owners, you should look no further than Delaware.

With great business laws, privacy protection, and tax exemptions, Delaware is the perfect state to form your LLC in. Instead of forming an LLC on your own, you should get the help of professionals who can ensure that your LLC is formed error-free, efficiently, and quickly!

  • ZenBusiness is a great option for those business owners who want to form their LLC quickly, efficiently, and at highly affordable rates. With competitive staff and raving customer reviews, ZenBusiness is a great choice.
  • IncFile is the only option for entrepreneurs who are searching for free professional LLC formation services. Not only will they form your LLC for free, but will also act as your registered agent for the first year without asking for a fee!

Here’s to you having a successful LLC in Delaware, folks!

LLC in Delaware – Frequently Asked Questions

The major expense when it comes to forming a Delaware LLC is the $90 filing fee that you have to pay while filing your articles of organization. It usually takes 1 to 3 business days to get the paperwork through. 

However, if you want to form your LLC the same day, you can pay a $50 expedite filing fee and you will get your LLC formed in one business day!

Yes, you absolutely can. For a person to start an LLC in Delaware, they don’t have the legal obligation to be a resident of the state as well. If you have a registered agent with a physical address in Delaware, you are good to go. 

As a non-resident, you will get the following benefits if you form your LLC in Delaware.

  • No sales tax. In Delaware, you don’t have to pay sales tax on services and goods.
  • No state income tax. Moreover, if your LLC is not doing business in Delaware you don’t have to pay state income tax. 
  • No ad valorem tax. You don’t have to pay an intangible personal property tax if you form an LLC in Delaware.

Yes, you can certainly form an LLC on your own. Follow the steps that we have mentioned above and you will get your LLC up and running in Delaware. However, the formation of an LLC is a technical and time-consuming process.

As new business owners, it is better that you focus on making your business a success instead of getting lost in piles of paperwork. Therefore, it is recommended that you hire a professional LLC incorporation service that will help you form your Delaware LLC quickly and efficiently.

Cite/Link to This Article

  • Stewart, Suzy. "Delaware LLC: How to Form an LLC in Delaware". One Brick Court. Accessed on March 6, 2021. https://onebrickcourt.com/delaware-llc/.

  • Stewart, Suzy. "Delaware LLC: How to Form an LLC in Delaware". One Brick Court, https://onebrickcourt.com/delaware-llc/. Accessed 6 March, 2021.

  • Stewart, Suzy. Delaware LLC: How to Form an LLC in Delaware. One Brick Court. Retrieved from https://onebrickcourt.com/delaware-llc/.