How To Form An LLC In Delaware
To start an LLC in Delaware, you must file a Certificate of Formation with the Delaware Division of Corporations. You can file the document by fax or mail. The Certificate of Formation costs $90 to file. Once filed with the state, this document formally creates your Delaware LLC. However, to actually ready the LLC to do business, you must complete several additional steps.
Starting a Delaware LLC Guide:
Delaware LLC Filing Options
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Delaware LLC Certificate of Formation free download. When you're done filling out the form, submit it to your state.
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Delaware LLC Certificate of Formation Requirements
To form a Delaware LLC, you must complete and file the Certificate of Formation with the Division of Corporations. See the document below and click on any number to see what information is required in the corresponding section.
The name must contain the words “limited liability company,” “limited company,” or an abbreviation of one of these phrases.
The registered agent can either be a business (but not your own) or an individual Delaware resident. The registered office must be a physical address and will be a permanent public record for your LLC. Tip: Hire us as your registered agent and you can use our Delaware address as your principle address. (Wouldn’t it be annoying if we told you to hire someone other than Northwest at this point?)
If you want your LLC to dissolve on a certain date, you can enter it in the third section of the Certificate of Formation.
If you have conditions you’d like to put on the LLC like duration of existence (how long the LLC will exist) or some other special restriction, you can put that information in this section. Otherwise, you can leave it blank.
This is where the organizer signs and dates the Certificate of Formation. It is the last and final part of the Delaware LLC Certificate of Formation. Once you sign and date, either submit it via fax or mail it in. You’ve just formed a Delaware LLC.
How much does it cost to start a Delaware LLC?
The Delaware Division of Corporations charges a $90 filing fee to record your LLC Certificate of Formation. Need it expedited? Add on $50.
If you hire us to form your Delaware LLC, your total, out-the-door cost is $315 total ($365 expedited). With our Delaware LLC formation service, we also include an operating agreement, Delaware registered agent service and everything you need to get your LLC up and running.
How long does it take to start a Delaware LLC?
Delaware LLC filing times vary depending on your filing method. If you’re filing yourself, the fastest option is fax, which takes 4-5 days. If you’d prefer to file by mail, it’ll take a bit longer, around 7-10 days. Expediting cuts a few days off each filing option.
While the state doesn’t offer individuals online filing options for LLCs, we are one of only a few companies that have online filing access with the Division of Corporations, so an expedited filing typically takes just 1 business day.
If you hire Northwest to start your LLC, we file online and typically have your Delaware LLC formed within 5 days (or 1 day expedited).
Does a Delaware LLC need a registered agent?
Yes, you must list a registered agent in Delaware on your Certificate of Formation. You can list yourself as the registered agent if you live in and reside in Delaware. However, you’ll need to list your physical address on public record and be available during business hours to accept any legal notices like services of process. Many people forming an LLC in Delaware hire us to be their registered agent and use our registered office address for the principal, mailing, registered agent, registered office, members, managers, and correspondence address to show stability as their LLC grows or changes and not have to update addresses or worry about unwanted visitors at home or their office.
Create the Delaware LLC Operating Agreement
Do I need an Operating Agreement?
Technically, you do not need an operating agreement. There’s no office to file it with. A Delaware LLC Operating Agreement is a private document, but we think it’s an important one.
For all LLCs that have multiple members or investors, you might be insane if your LLC doesn’t have an operating agreement. Even though you won’t file it with any state agency, it’s the most important document to your Delaware LLC. Even if you’re a single member LLC, it’s ideal for you to have a Delaware LLC operating agreement so you get used to the lingo and technicalities. Someday you might want to invest in another LLC or bring on a partner. The more familiar you are with how an operating agreement works, the better off you’ll be. A bank will want to see your operating agreement before opening a bank account, and if you take on debt, creditors will want to see a copy of the agreement. Although your state filings you submit create the LLC, the ONLY thing that truly matters is your operating agreement.
Why is an Operating Agreement important?
The LLC operating agreement is the document that shows how your LLC will function and who owns it and what you’ll do if you want to close it down or get in a fight with your investors or other members.
In creating an LLC, you’re obviously starting a venture that involves some amount of risk. You should know and understand and take a few days to digest what your Delaware LLC operating agreement actually says. Anyone can form an LLC. Something we’re proud of at Northwest, is that when you hire us to form your Delaware LLC, you get an operating agreement specific to how you decided to manage your LLC. We include this for free with all orders because it is important. We only charge $100 and state fees to form your LLC, and this includes the Certificate of Formation (kind of worthless), resolutions (critical), operating agreement (more than critical), and initial resolutions to start a bank account.
Do I have to write the Operating Agreement?
We believe in this so much that we were the first website to hand out free LLC forms. Free operating agreements, free resolutions, and everything your LLC in Delaware will need. But unlike the rascals that have tried to copy us by putting “free” garbage documents online, we’ve spent years refining and making our free legal forms better and better.
More than 1 million LLCs have used our free LLC forms to help form and maintain their LLCs. Take a look:
Get a Delaware LLC EIN
Do I have to get a tax ID number (EIN)?
If you’re going to hire employees, elect to be taxed as an S corporation, or register for a Delaware business license, you will need a federal tax ID. Just about every bank will require you to have a EIN number if you want to open an account for your LLC. EINs are free and easy to get online on the IRS website, or you can hire Northwest Registered Agent to get you an EIN. Generally speaking, it is best to get an IRS EIN even if you don’t think you need it right now. EINs are basically your LLC’s social security number. If you run into a situation where a vendor asks for it, then you have it. A Delaware LLC EIN number will help establish credit with many of the vendors you’ll do business with and give you the option to not provide them your personal social security number.
Open a Bank Account for Your Delaware LLC
To open a bank account for your Delaware LLC, you will need to bring the following with you to the bank:
- A copy of the Delaware LLC Certificate of Formation
- The LLC operating agreement
- The Delaware LLC’s EIN
If there are multiple members in the LLC, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC.
We recommend calling your bank ahead of time before going in and asking what their requirements are. Most banks don’t open business accounts nearly as frequently as personal accounts, so some bankers may be unfamiliar with their own bank’s requirements. As frustrating as that may be for you, calling ahead will help save you from being super annoyed when you walk into the bank.
Obtain a Business License
Does a Delaware LLC need a business license?
When you form a Delaware LLC, you only need a business license if you’re actively engaged in doing business inside state lines. If you’ve formed either a business that isn’t selling goods or services in Delaware, you do not need a business license in Delaware.
If you do need a Delaware business license, you can register online with the Delaware Department of Revenue. This is a combined registration business license that will register your business with the Division of Revenue, the Division of Unemployment Insurance and the Office of Workers Compensation. To complete the form you will need an Employer Identification Number and a credit card. The fees vary based on business type. Most fees are around $75.
File the LLC Annual Tax
What is the Delaware LLC Annual Tax?
Essentially a franchise tax, the Delaware LLC Annual Tax is a flat rate tax of $300 that every LLC in Delaware must pay each year to keep its good standing with the state. You can pay the tax online on the Delaware Division of Corporations website. Due by June 1st each year, the tax has a late fee of $200 and accrues interest at 1.5% for each month late.
How much does an LLC in Delaware cost each year?
It will cost you $300 a year to keep your Delaware LLC in good standing with the state, thanks to the Delaware LLC Annual Tax.
Pay the LLC Taxes
Are there Delaware LLC tax benefits?
If you’re thinking about forming an LLC in Delaware, you’re likely aware that business formations are the state’s claim to fame. Part of the reason for this is that Delaware has structured its taxes to be beneficial to businesses formed in Delaware that don’t actually do business in Delaware. That has attracted many national and small businesses alike for the following reasons:
- No Taxes On Intangible Property
This means that Delaware doesn’t have an intangible personal property tax on things like patents and trademarks. It makes Delaware an ideal place for LLCs designed to be holding companies.
- No State Income Tax
LLCs located in Delaware that don’t do business in Delaware don’t have to pay Delaware’s income tax.
- No Sales Tax
Delaware doesn’t put a sales tax on goods or services.
What are the Delaware income tax rates?
The personal net income tax rates in Delaware are:
6.95%: over $60,000
There are also a lot of local income taxes with an average rate of 0.16%.