Last Updated on October 5, 2022 by Fair Punishment Team
Starting an LLC in Delaware is simple. The state has streamlined the process to make it easier for entrepreneurs to incorporate their businesses. In addition to being a great place to incorporate, Delaware offers other benefits, such as no franchise tax or corporate income tax.
Delaware was the first state to offer limited liability companies (LLCs) in 1958. Since then, it has become the home of over half of all U.S. corporations. Today, Delaware is also known for its financial services sector.
Delaware is the only state where you don’t need to pay taxes on profits from your company until they reach $50,000. This means that starting an LLC in Delaware can save you thousands of dollars in taxes.
The minimum amount of capital needed to incorporate in Delaware is $100 and filing fees are relatively low as well. For example, the annual fee is just $300. There are no franchise taxes or personal property taxes in Delaware.
Incorporating an LLC in Delaware takes about two weeks. If you want to do it yourself, you can open an account with a service like LegalZoom. Otherwise, you can hire a lawyer to help you complete the paperwork.
If you’re looking to incorporate in Delaware, here’s what you should know:
- You must be at least 18 years old.
- Your business activities must not violate any federal law or regulation.
- You must have a physical address in Delaware.
- You may not operate more than one business out of your home.
- You cannot own real estate outside of Delaware unless it’s held through a corporation.
- You must file a statement of information within 10 days after incorporation.
- You must appoint a registered agent within 30 days of incorporation.
- You must select between having an official name or using your middle initial when registering your trade name.
- You must use the same legal form every time you register a new entity.
- You must file an annual report within 60 days of the end of each year.
- You must pay a $300 annual renewal fee if you haven’t filed an annual report before.
- You must renew your registration every five years.
- You can change the name of your company by filing a certificate of amendment.
- You must notify the Division of Corporations and Commercial Code within 15 days of changing your principal office location.
- You must update your registration annually to reflect changes in your principal office location. You can request a copy of your current registration at www.delaware.gov/corp/.
- You must file an annual report if you have been doing business in Delaware for at least 12 months.
- You must keep records for three years after the date of dissolution.
- You must dissolve your company by filing a Certificate of Dissolution.
- You must send notice of dissolution to the Department of State within six months of dissolution.
Delaware is known as the state of incorporation for many businesses. This means that if you’re starting a new company, you’ll most likely incorporate in Delaware. You may also be interested in registering your business in other states, such as California.
What Is An LLC?
An LLC protects your personal assets from lawsuits or creditors. Double taxation is avoided by using an LLC. Compared to sole ownership, the other common entity used for a one-person business, an LLC does provide more tax benefits than a sole proprietorship.
Naming Your Delaware LLC
Delaware LLC names must typically end with one of the following. “Limited Liability Company”, “L.L.C”, or “LLC”. You cannot really utilize the words “bank” or any kind of variation of it. In other words, most of the time is authorized.
Your personal business name actually can include the names of any managers, members, or owners of your great LLC.
To make sure your business name isn’t already used in Delaware itself, you may check if it’s available using the exact Division of Corporations’ name availability accurate search tool.
If it so happens that your name is unavailable, you can reserve it online for around 120-days. Faxing or mailing a name reservation style form costs $75.
A name style reservation is not necessary to form a business or LLC, however, it guarantees that your own name will be exactly reserved for those 120 days.
Your name must comply with the main federal and main state trademark laws. You should also check if your LLC name exactly complies with the state or federal trademark law.
A DBA is when someone uses a trading name instead of their real name. In order to use the DBA in Delaware, you need to register your name with the appropriate court. This costs $25 and requires a notary signature.
Once registered, you can use the trade name for any business you run.
You can use any name you want as long as it complies with Delaware law. You must use a different business name than what you’re using now. You need to get a license. Your business name cannot include any restricted words.
You should definitely buy your domain name before choosing an LLC name. Even if you think you won’t need a website, you probably will. You should also consider reserving your name if you’re concerned another company will use it first.
You can pay the fee and submit the proper forms to the state authority in Oklahoma to reserve your name for up to 120 days.
Choose A Registered Agent
Your registered agent should be someone who lives in Delaware but isn’t necessarily a resident. He/she will accept legal and officially accurate mail on behalf of your LLC. A corporation can act as its own agent if it is located in the State.
An LLC can also act as its own personal agent. However, an LLC must appoint someone as its registered agent. In addition, an LLC may appoint any person who resides in the state as its registered agent.
Oklahoma requires you to appoint a Registered Agent for your LLC. A Registered Agent is a person or entity who is authorized to receive service of process and other official legal documents on behalf of your LLC. You should choose a good Registered Agent that meets the following criteria:
- Entities (or companies) must offer registered agent services,
- The agent must have an address located in Delaware, and the agent must be willing to accept the service of process on your behalf.
- The agent must be on-site during normal business hours.
Here’s a breakdown of the Delaware Registered Agent options for your business if you want more detail.
File The Articles Of Incorporation
Once you’ve created a new company, you’ll need to file a registration statement with the Secretary of State. You’ll also need to register your company name with the Delaware Corporation Commission.
In order to do this, you’ll need to provide them with a copy of your Articles of Organization and other documents needed to establish ownership of the company. The cost of registering your company name with the Corporation Commission is $10.00.
When you utilize the major “one-stop” process, you’ll be given a short and temporary license that’s valid for roughly 60 days. Permeant licenses are usually sent within a ten-day period.
At the state-based level, some members of certain regulated professions must also ensure to obtain and collect a certified license directly from the main Delaware Division Of Professional Regulations.
A certificate of the main information is an official document that lays out the details of your company. It is used to register your company in Delaware. It’s a relatively easy process but requires some paperwork.
The articles of the organization should include the name of the company, address, date formed, type of business, number of shareholders, and a statement of purpose. Your LLC name should be something easy to remember, such as “Tony’s Mob”.
The address of your LLC’s registered agent should be your home address. This helps if problems arise with your LLC. The street address of your LLC’s principal place of business should be your office location. Finally, the signature of an authorized person should be yours.
Creating An Operating Agreement
A Delaware LLC does not require an operating agreement, but it’s a great idea to have one. An operating agreement outlines the ownership and operating procedures for your LLC.
Having a comprehensive operating agreement helps ensure that you’re all on the same page. You can download a free template or use tools to create your own.
Operating agreements are useful tools for protecting your LLC. In addition, having one available makes it easier to settle disputes or resolve legal matters. Operating agreements specify how an LLC operates. An LLC should have a duration of 1 year or more.
The LLC should have a registered agent who can receive the service of the process. The articles of organization should state the purpose of the company.
A list of members should be included. Each member should contribute money to the LLC. The members should decide how the profits and the main losses will be split. Procedures for adding and removing members should also be stated. Liability clauses should be included.
Get An EIN Number
A nine-digit number is assigned by the IRS to help identify businesses for taxes. This number helps us identify businesses for tax purposes, but we also use this number to file our taxes.
What is an EIN? An employer identification number is a 9-digit number assigned by the IRS to help identify businesses for taxation purposes. It’s also called a social security number for a business.
A federal employer identification number is usually referred to as a fine or a federal tax identification number.
Your LLC must be registered as a corporation before you can open a bank account. The EIN number is used to identify your company for tax purposes. You can get an EIN by mail or by visiting the IRS website.
Frequently Asked Questions
Do I Need A Business License?
Business insurance helps protect your business from lawsuits, accidents, and illness. You need general liability insurance, but also professional liability insurance and workers’ compensation insurance.
What Are The Tax Requirements?
Depending on the nature of your businesses, you may need to register for one or several types of state taxes.
Delaware doesn’t charge sales taxes on most purchases. But there are exceptions. Some businesses may be subject to the state’s gross receipts tax.
You should register your business on the state unemployment site if you employ people in Delaware.
The Gross Receipts Tax (GST) is a consumption-based tax levied on goods and services sold within a given jurisdiction. The GST is collected by the government and then distributed back to the local community as part of the general fund.
Delaware franchise tax is an annual charge imposed by the State of Delaware on any limited liability company that does business within the state. The amount of the fee depends on the company’s net taxable income.
Companies that earn more than $100,000 annually pay a flat rate of 2 percent of their total net taxable income. Companies earning less than $100,000 per year pay a lower rate, based on their net taxable income.
Federal LLC Tax Requirements
Most LLCs will need to file a partnership return (Form 1065) and a separate Schedule C for each member. Each partner must file a personal tax return if he/she earns $600 or more.
Delaware requires LLCs to file and pay an Annual Franchise Tax. The fee is free. There is a late filing penalty of $200 and 1.5% interest each month if you do not pay by the end of the year.
Delaware requires most multi-member limited liability companies (LLCs) to file an informational tax report on Delaware form 300-1. The Division of Revenue accepts this filing by mail.
How Did The State of Delaware Become A Capital Incorporation?
Delaware is a great place to start a business. Many big companies choose Delaware as their headquarters, and many other companies incorporate it there.
Delaware is also known for being friendly towards business. Delaware is ranked number eleven in the world when it comes to business friendliness.
Is An LLC The Correct Choice For A Startup?
A C-Corporation is better than an LLC because it gives more flexibility and protects your personal assets from creditors. An S Corporation limits you to 100 shareholders.
If you’re looking to incorporate your business, you’ve come to the right place! We have everything you’ll need to know about starting an LLC in Delaware.
LLCs are great for people starting up a new business idea or wanting to get more experience in the business and corporation world.
We hope you found this article helpful. Starting a limited liability Company has never been more simplified, so why not dive into the world of Business and start your own today!
You won’t regret it, and this article is here to provide you with all the information you could ever need to know, and you can confide in us to reassure your decision of starting an LLC!