Filling a Limited Liability Company (LLC) in Delaware is a great business structure to choose if you’d like to protect your personal assets from any business losses. An LLC gives you the protection of a corporation with the flexibility of a sole proprietorship. Essentially, you can run your business, no matter the size, as a small business but knowing you are legally protected.
You can file your LLC for under $90 and entirely online, making it a quick and affordable option to legitimize your company.
To file an LLC in Delaware, all you need to do is follow these 5 steps:
How to Form an LLC in Delaware – A Step by Step Guide
You can apply for your LLC on your own or through a professional service. While filing on your own isn’t complicated and doesn’t take too much time, you’ll still want to make sure you complete each step as outlined below, ensuring your LLC is set up correctly the first time around.
If you’d rather not handle your business’s legal side, we suggest hiring experts to file all your business paperwork for you (a more worry-free approach).
Otherwise, if you’re a do-it-yourself kind of person, follow these 5 initial steps:
1. Name your Delaware LLC
To form an LLC in Delaware, you need to follow specific name requirements set by state law. Your business name needs to be unique, meaning no other company has a similar name.
Before checking to see if the business name you’d like is available, to abide by Delaware LLC law, make sure the name of your company contains one of the following:
- Limited Liability Company
Your LLC name can be your business name, like Plumbing King L.L.C, or the name of one of your LLC’s members, such as Joe Smith LLC. You can also use the following list of words (as long as LLC is still somewhere in the title):
You can’t use anything with the word corporation in it, including abbreviations like ‘corp.’ or ‘inc.’
Check Name Availability
Once you’ve decided on your name, you need to check to see if it’s available, and there’s no other company in Delaware using it. The quick and easy way to do this is through a quick google search using your desired name.
If you don’t find any competing companies, you can move onto the next step – checking your business’s potential name through the Delaware business name search.
If you find a name you like but you’re not ready to file an LLC application, you can request a name reservation through the Delaware Division of Corporations. It costs $75, and as long as the name is available, it’s yours for 120 days. You can apply for a name reservation online or by mailing in your application.
Using a Fictitious Name
If you don’t want to use LLC in your business name, you can add a fictitious name once your business is registered. Also known as DBA (“doing business as”) or a trade name, a fictitious name allows you to run your business under a name that’s not the legal LLC registered name.
You can also use a fictitious name if you plan on running several different businesses under your LLC formation.
In Delaware, if you don’t want to use your LLC’s legal name, and you’d prefer doing business under a fictitious name, all you need to do is register that name with the Delaware state. Before you register your desired name, make sure it’s available using the name search mentioned above.
It’s your responsibility to determine if another business is already using that name, not the States. Once you’ve confirmed your name isn’t being used, it costs $25 to register a fictitious name. You can complete the registration online or by printing out the form and mailing it to the state.
Once you’ve figured out what your business name is and you’ve made sure it’s still available, the next step is to choose a registered agent, wha will help you with the legal side of your business.
2. Choose a Delaware Registered Agent
A registered agent is anyone who receives and sends legal documents on behalf of your company. They are the main point of contact between your company and the Secretary of State.
In Delaware, an LLC must have a registered agent who lives in Delaware and has a valid street address (not a P.O. box).
An LLC registered agent can be:
- A family member or friend
- A Commercial Registered Agent
Why you should use a registered agent
While the easier route seems to have yourself, or one of your LLC’s members, act as the registered agent, there are some benefits in hiring a professional. A registered agent will ensure your business is always in good standing with the state, helping you stay organized and up-to-date. It also adds a layer of protection since they’ll help you in the case of a lawsuit or any penalties/fines.
Once you’ve decided who’s the best person to be your registered agent the next step is to submit your LLC application.
3. File a Delaware LLC Certificate of Formation
To register an LLC in Delaware, you need to complete the Certificate of Formation application and submit it to the Delaware Secretary of State. Be prepared to fill out the following information:
- the LLC’s name
- the effective date of formation (either the day you’re applying or a future date).
- the name and address of the LLC’s registered agent
- the LLC’s initial principal office address,
- signatures of one of the LLC members
If you fill out the form with inaccurate information, your writing is illegible or you skip a section, your application will be refused. Always double-check your information before submitting it.
It costs $90 to file your LLC in Delaware. You can register your business online or by mail, and it takes 7-10 business days for the state to process and approve your application.
Once you get approval, you can move onto step 4 – creating an LLC Operating Agreement. If you’re operating your LLC by yourself skip to step 5.
4. Create a Delaware LLC Operating Agreement
If your LLC has two or more members, it should have an operating agreement. Although it’s not required in Delaware, we suggest creating one to outline how the business is structured and how it will operate among its members (and/or managers).
Some of the sections you’ll typically find covered in an operating agreement include:
- Capital distributions
Again, while this is not a necessary step, as you don’t have to mail it to the secretary of state, it is recommended if your LLC has more than 2 members. It helps clarify the rules of your LLC and makes sure they are legally documented.
After you’ve agreed and created an LLC Operating Agreement, the next step is to create your unique employer identification number.
5. Apply for your Delaware LLC Employer Identification Number (EIN)
Once your LLC is approved, you’ll need to get an employer identification number (EIN).
An EIN is a federal tax ID number that registers you with the Internal Revenue Service (IRS). This number identifies your company when filing taxes
How to register for an EIN:
– Apply online or,
– fill out the Employer Identification Number form and fax it to 855-641-6935, or mail it to:
Internal Revenue Service,
Attn: EIN Operation,
If you apply online, you’ll get instant approval. If you apply by fax, it takes up to 4 business days, whereas mailing can take up to 4 weeks. Applying for your EIN is completely free!
Delaware LLC Registration – Final Checklist & Summary
Ready to get started? Use this simple checklist to make sure you’ve dotted your i’s and crossed your t’s!
- Name your LLC – Your business name has to include Limited Liability Company, L.L.C, LLC, or Ltd. To check that no other business is using your name you need to see if it’s still available by searching through Delaware’s business name search.
- Choose a Registered Office – A registered agent is a person who receives and sends legal documents on behalf of your company. It can be you, a friend or family member, or a commercial registered agent.
- File a Delaware LLC Certificate of Formation – To file an LLC in Delaware, you need to fill out and submit a Certificate of Formation form. It costs $90 to register your LLC, and you can expect approval within 7-10 business days.
- Apply for your Delaware LLC Employer Identification Number (EIN) & File your Tax Registration Form – Once you get approval for your LLC, you need to apply for an employer identification number (EIN) through the IRS. This number identities your company when filing taxes. You can apply online for free, and approval is instant.
- Create Delaware LLC Operating Agreement – If your LLC has two or more members, you should create an LLC operating agreement that outlines how the business is structured, who is responsible for what, and how much of the LLC each person owns. You don’t have to send your operating agreement to the Delaware state, but you should have one, so everything is documented and signed by all members.
Always double-check your LLC information is correct before submitting any paperwork. You want to avoid simple mistakes and ensure your business is set up correctly from the get-go. If it’s within your budget, we recommend using a formation service to help form your LLC. They can act as your registered agent and make sure your company is always in good standing. Just make sure you do your homework and choose one of the best LLC services for your business.
Our first recommendation is to go with ZenBusiness, an LLC creation service that holds your hand from start to finish. Packages start as low as $49.
How To Apply for a Delaware LLC Online
Now that you know the exact steps on what’s needed to form your LLC, it’s time to start the application process. There are two ways of going about this:
1. Do it Yourself
Taking the DIY route is a good option if your budget is tight or you’ve previously opened an LLC and understand how it works.
2. Use an Online Formation Company
Using an online formation company is a better option if it’s your first time opening up an LLC and if it’s within your budget (formation services cost anywhere between $49 – $199). This is typically a better choice if you want to avoid headaches and have peace of mind knowing professionals handle everything for you.
If using a professional service is more up your alley, here are our top 3 recommendations:
ZenBusiness built its platform to meet the needs of your business throughout its lifetime. When you pay for their services, you’ll receive a personalized dashboard for your business to store documents, receive alerts, and manage your website.
ZenBusiness charges work on a tier system. There are three different tiers with pricing as follows:
- The Starter = $49 annually
- The Pro = $199 annually
- The Premium = $299 annually
IncFile provides you with a full suite offering startup services to best support your business formation.
Their pricing model also depends on the state you are filling. You can generate a personalized quote on their website by entering the necessary information about your business.
LegalZoom is an online legal service provider that helps you to be able to create legal documents without having to pay the expensive lawyer fees. Some of the services they provide assistance to includes business formation, copyrights, and trademarks.
LegalZoom has many different pricing options available. For their LLC service, pricing begins at $79 + the allotted state fee.
After Starting Your Delaware LLC
You’re approved – now what? The journey doesn’t stop here – there’s still a handful of things you need to do to get your business off the ground. We recommend ticking off the following items to make sure your LLC gets off on the right foot.
Purchase A Domain For Your Business
Having an online presence, even if your business is local, is essential in creating trust, professionalism, and a way for people to find you. If you haven’t already thought about getting a website, now’s the time. In a tech-saturated world, you need a domain to not only attract new customers but help create a good first visual impression of what your business does and how it can help.
Get A Business Phone Number
Since your business is now an approved Delaware LLC, you should think about getting a business phone number. Having a business number is a great way to show professionalism to your clients and customers. It makes you more serious and, more importantly – more trustworthy.
There’s a variety of different online phone services you can go with, or you could go the traditional route and open an account through a local branch. You can get a local number or a 1-800; the options are endless!
Open Your Delaware LLC Business Bank Account
You’ll want to open a business account that’s separate from your personal banking. This will not only make accounting easier, but you won’t have to worry about your finances mixing in with your business finances.
USA Business Bank Accounts
If you already have online banking, it might be easier to open a business account through your current bank, so all your banking (although in separate accounts) will be accessible in the same place. If you prefer to open something new, keep these checking accounts in mind:
Chase – Free checking account with no extra fees – as long as you keep a $1,500 minimum balance.
BlueVine – Free checking account with mobile banking and a debit MasterCard.
Bank Novo – Open a free checking account with Free transfers and free ATM fees.
If you’re opening up a business checking account, you should consider applying for a business credit card. Having a credit card that’s unique to your company will help organize your finances to truly make sure that your personal and business finances stay separate.
Even if you don’t plan on using a credit card often, it’s still a good idea to get one to build your business’s credit score, which can help if you ever need a loan.
Find Accountant/Buy Accounting Software
Taxes get complicated fast and can be a burden to handle. We recommend getting an accountant or using accounting software to ensure all your spending actions are tracked (payroll, bills, invoices, receipts, etc.). Here are some popular options to look into:
Wave – Free invoicing & accounting software with credit card processing & payroll services.
Intuit Quickbooks – Online accounting software to track expenses, customize invoices, and run reports.
Freshbooks – Accounting software to send invoices, track time, manage receipts, expenses, and accept credit cards.
Directory of Federal Tax Return Preparers with Credential – If you want to use a local tax specialist, you can search for a certified public accountant (CPA) through the IRS online directory.
Having all of your business reports in one spot is highly beneficial, so you can keep an eye on your cash flow. To run a successful business, you will need to analyze how your business performs and narrow down what’s working or what isn’t working. Finding areas for growth will ensure success.
Annual Report & Franchise Tax
To keep an LLC active in almost all other states, you need to file an annual report. However, you don’t have to file any annual reports for Delaware LLCs. That being said, instead of a yearly report, you have to pay an annual franchise tax.
The annual franchise tax needs to be paid every year before June 1st. The first due date to pay the tax is the year following your LLC approval. For example, if you were approved in March 2021, then the following year, in June 2022, you’d have to pay.
It costs $300 for every LLC, regardless of how much money your business makes. If you fail to submit it by June 1st you’ll be fined $200 as a late fee. After that, each month you are late on making a payment, you’ll be charged 1.5% interest.
You can pay your LLC’s annual tax through Delaware’s online filing system by entering your LLC’s file number and following the instructions.
Notify Delaware Of Any Changes You Make To Your LLC
If at any time you make changes to your LLC you need to inform the state. If you’re using a registered agent they can do this for you. If you’re going about this alone, you can update changes through Delaware’s business portal or through your registered agent.
8 Benefits of Forming an LLC in Delaware
Setting up an LLC in Delaware makes sure your business finances stay separate from any personal finances and that each member’s personal possessions are safe. It’s a great business entity for small, medium or large businesses as it gives you the freedom of a sole proprietorship or partnership with the protection of a corporation. Best of all, it’s easy to get (approval is instant), and it won’t cost you an arm and a leg. Some of its major benefits include:
1. Protect Your Personal Assets
The LLC will have its liability that does not automatically extend to the owners, unlike a sole proprietor, where you are legally responsible for everything. That means Delaware LLC protects the liabilities and debts incurred by the business. In most situations, your assets, such as your car, home, or savings, will never be at risk if your Delaware LLC is faced with lawsuits or bankruptcy.
2. Benefit From Business Profit Taxation
In an LLC in Delaware, your profits and losses can pass through to your income without having to have corporate taxation.
3. Simple to Create and Maintain
The formation of a Delaware LLC requires minimal paperwork and requirements. They are known for being easy to start and simple to maintain.
4. Minimal Restrictions
Your business matters can be managed by more than one owner or member while still being one main business to the public. This means all decisions and transactions behind the scenes can be equitably distributed while presenting one entity as you move forward.
5. Heighten Your Credibility
As you move forward, your Delaware LLC will continuously be recognized as an entity. People and other businesses prefer doing business with a legitimate entity because it shows your level of professionalism.
6. Gain Access to Business Loans
When you form your Delaware LLC, you will obtain a DUNS number and build your business credit, helping you to further build upon your business.
7. Benefit From Flexible Profit Distribution
In an LLC, you are not required to spread the distribution of profits equally across the owners. You have complete control over profit distribution in your Delaware LLC.
8. Good For Any Kind Of Business
An LLC business structure in Delaware is an excellent choice for both medium and higher-risk level businesses. You might always want to consider opting to go with an LLC if you have a significant amount of personal assets to protect from your company. And lastly, LLCs are great for owners who are interested in paying lower tax rates than corporations.
Registering your business as an LLC is an excellent choice for any serious business owner who wants to legitimize their business. It’s a straightforward process that isn’t costly to set up or maintain. Best of all, if your business ever gets sued and you find yourself in legal problems, your personal assets (along with the personal assets of any other member of your LLC) will be protected.
You can register your LLC entirely online and have it set up within 7-10 business days. The only problem you might run into when filing your LLC is if there are any mistakes in your application.
Since an LLC is a business entity, you want it to be set up correctly from the get-go so that if you are ever in trouble, you’ll have protection. To avoid future headaches, if it’s within your budget, we suggest using a formation service that can not only act as your registered agent, but they’ll be able to handle the legal side of your business. Formations services are affordable, and they help ensure you’re properly registered and in good standing with the state.File Your Dream Business with ZenBusiness
FAQ About Forming Delaware LLC
There are several different steps you’ll need to take to form your LLC legally. It’s a lot of information to take in and can get confusing. To help out, we’ve compiled some answers to the most frequently asked questions:
What are LLCs, and why are they important?
An LLC is a Limited Liability Company. It’s a business structure used to protect your assets, like your house, your car, or even your savings. No matter what happens to your business (lawsuits, bankruptcy, etc.) your assets are kept safe.
How Much Does It Cost to Start an LLC in Delaware?
You need to pay $90 to complete the LLC certification of formation, which registers your LLC with the state. Once your LLC is approved each year, you have to pay a $300 franchise tax.
How Long Does It Take to Form an LLC in Delaware?
As long as there are no errors or discrepancies in your application, the Delaware state takes 7-10 business days to process applications.
Can You Start an LLC on Your Own?
Yes, you can start forming an LLC on your own by following the step-by-step instructions provided in this article. For additional help, look to hire an all-around service provider.
Do You Need a Lawyer to Start an LLC in Delaware?
No, you can start an LLC without a lawyer just be prepared to file and report everything on your own. If you’re not interested in getting a lawyer but want to make sure everything is filed correctly, use an online business formation service, like the ones listed in this article, with ZenBusiness as our #1 recommendation.
Does an LLC Need to Make Money?
No, an LLC doesn’t need to make profits, but if you’re claiming tax deductions with no income, the IRS will likely audit your business.
What Are The Downsides to Having an LLC?
There are pros and cons to forming an LLC. The pros are tax reductions, protecting your personal assets, and creating credibility for your business (and possible future business loans). The main con of an LLC is you’re considered self-employed. This is a disadvantage as you’d be taxed under self-employment and responsible to pay Social Security and Medicare taxes. The amount you’d be required to pay depends on your business’s total net earnings.