Starting an LLC in Delaware
A limited liability company (LLC) is a business entity that offers significant liability protection, flexible organization and streamlined taxation. You can form a Delaware LLC by filing a Certificate of Formation with the Delaware Division of Corporations (and paying the $90 filing fee). Processing times vary based on the volume of items received by the Corporations office, but you can pay extra to have the state process your filing the day they receive it or within 24 hours of receipt. Before applying, you’ll need to decide on your LLC’s name and appoint a registered agent. From submitting your paperwork to funding your company, here’s everything you need to know about forming an LLC in Delaware.
Ready to Start an LLC in Delaware?
Get Started
Name Your LLC
Designate a Registered Agent
Submit LLC Articles of Formation
Write an LLC Operating Agreement
Get an EIN
Open a Bank Account
Fund the LLC
File reports + taxes
1. Name Your LLC
Coming up with a unique name for your Delaware LLC is your first task. The rules for naming your limited liability company are spelled out in Del. Code tit. 6 § 18-102—but here are the basics. Your LLC’s name:
- Needs to include either “limited liability company,” “L.L.C.,” or “LLC.”
- Cannot currently be in use by another business in the State of Delaware.
Have a name in mind? Run it through the Delaware Business Name Search to see if it’s available.
Can I reserve an entity name in Delaware?
Yes. If you don’t want to form your business right away, you can reserve your LLC’s name online, for a period of 120 days. The fee is $75 per name.
What’s the difference between my LLC’s legal name and a DBA?
The legal name of your LLC is the one shown on your Certificate of Formation. A DBA (doing business as) name, also known as a fictitious business name (FBN) or an assumed name, is any name other than your LLC’s legal name that your LLC uses to conduct business. If you want to do business in Delaware under a DBA, you’ll need to file a Registration of Trade, Business & Fictitious Name Certificate with the Prothonotary’s office in your LLC’s home county.
Learn more about How to Get a DBA.
2. Designate a Registered Agent
All Delaware LLCs are required to appoint a registered agent—so choosing one is your next step. A registered agent is an individual (like yourself) or a company (like us) designated to receive legal and state mail on behalf of your business. Before you fill out your Certificate of Formation, you’ll need to have your registered agent’s name and address on hand.
Learn why the pros use a registered agent service.
What does a registered agent do?
A registered agent in Delaware must fulfill certain duties in accordance with Del. Code tit. 8 § 132. At a minimum, your registered agent is required to:
- Have a physical address in the state of Delaware (not a P.O. box).
- Maintain regular business hours.
- Accept legal mail and communications from the Delaware Secretary of State on behalf of your business and forward them to you promptly.
Can I be my own registered agent in Delaware?
Yes. You can be your own registered agent in Delaware if you don’t mind having your name and address on the public record. You’ll need to be on hand at this address during regular business hours to accept any legal mail that arrives.
Can I change my registered agent after I start an LLC?
Yes. You can change your registered agent in Delaware anytime by filing the Certificate of Change of Agent form with the Delaware Division of Corporations. The form costs $50 to file.
3. Submit LLC Certificate of Formation
You’ll need to fill out a form called Certificate of Formation of a Limited Liability Company to officially form your LLC. You can submit the form to the Delaware Division of Corporations online or by mail once it’s completed.
Note: Everything you include in your form will be added to the public record.
The following information is required:
- Company name. Write your name exactly as you want it to appear in the state’s records.
- Registered agent. This is the person or business that will accept official mail on behalf of your LLC.
- Registered office. This must be a physical address in Delaware where your registered agent is present during office hours.
- Authorized person. The person who is submitting your Certificate of Formation will need to add their printed name and signature.
When you’re done, you can submit the document and your $90 payment online or by mail (applications submitted online are processed faster).
What can I do to keep my personal information private?
All of the names and addresses you provide on this form will be publicly accessible online—which means they’ll be accessible to marketers. If you’d rather avoid the tidal wave of junk mail and spam calls, your best bet is to keep your personal information off of your Certificate altogether.
If you hire a registered agent company (like us!) to list their address on this form, you can keep your address private.
What’s the difference between a member-managed and a manager-managed limited liability company (LLC)?
Owners (referred to as members) are in charge of day-to-day operations in a member-managed LLC. In a manager-managed LLC, members designate a manager or managers to run the show. Your LLC’s manager will have the authority to sign contracts, recruit and fire staff, and open bank accounts, among other things.
Not sure which management structure will work best for you? See our page on LLC Member Vs Manager for guidance.
What’s a Series LLC?
Delaware is one of only 14 states where you can form a series LLC. This is a business entity made up of a single parent company, or “master” LLC, and one or more “series” or “cells.” Each company in a series LLC has its own funds, bank accounts and limited liability. Often formed as holding companies for real estate investments, series LLCs create a legal barrier between these interrelated companies. If the parent company (or one series or cell) ever faced a lawsuit, only the assets of the company in question would be at risk.
Want to protect your assets with a series LLC? Learn How to Start a Series LLC in Delaware.
How do I file the Delaware Certificate of Formation?
You can submit your Certificate of Formation using the Delaware Division of Corporations’ Document Upload Service (recommended), or you can apply by mail. If you choose to mail your document, note that a cover sheet is required.
Mailing Address:
Division of Corporations
John G. Townsend Building
401 Federal Street, Suite 4
Dover, DE, 19901
4. Write an LLC Operating Agreement
An operating agreement is a document that details how your company will function behind the scenes. It defines the fundamentals—including member contributions, voting rights, conflict resolution, the distribution of profits and losses, and dissolution (if the time comes).
Check out our attorney-drafted Delaware LLC Operating Agreement.
Is an operating agreement required for Delaware LLCs?
In a nutshell, no. Del. Code tit. 6 § 18-101 states that your operating agreement (or “limited liability company agreement”) can be written, oral or implied—which means you aren’t required to file it with the Delaware Division of Corporations.
Regardless, it’s vital that you get this legal agreement in writing. Your operating agreement proves ownership of your LLC, reinforces your limited liability status, and can help to settle disputes between members.
What should I include in my operating agreement?
A robust operating agreement will spell out how the company will address internal issues such as profit distribution and dissolution. Here are some topics typically covered by operating agreements:
- initial contributions
- profits, losses, and distributions
- voting rights, decision-making powers, and responsibilities
- transferring membership interesting
- dissolving the company
Delaware’s state statutes provide LLCs a lot of flexibility when it comes to drafting an operating agreement—you can include anything that isn’t prohibited by law or the Certificate of Formation.
I have a single-member LLC. Do I still need an operating agreement?
Yes. You won’t need an operating agreement to resolve a disagreement with yourself, but you’ll need one to open a bank account and keep your LLC’s limited liability intact.
5. Get an EIN
An EIN (employer identification number) is the business equivalent of a social security number. Your EIN will be used by the IRS to identify your company on tax returns. You can apply for an EIN on the IRS website (the application is free). However, if you don’t have a social security number, you’ll need to use the paper form.
Does my Delaware LLC need an EIN?
Yes. While a single-member LLC without employees is not legally required to have an EIN, you’ll still need one—especially if you want to open a business bank account. By applying for an EIN, you’ll also avoid having to use your social security number for your business.
What To Do After Forming Your Delaware LLC
6. Open a Bank Account
To preserve the liability protection that your LLC affords you, you’ll need to draw a clear line between your business and personal finances. Opening a business bank account is an important way of creating (and maintaining) this separation.
You’ll need to bring the following items to the bank to open your account:
- a copy of your Delaware LLC Certificate of Formation
- the LLC’s operating agreement & EIN
- an LLC Resolution to Open a Bank Account (if your LLC has multiple members).
Starting a multi-member LLC? Use our free LLC Resolution to Open a Bank Account.
7. Fund the LLC
Now that you have an LLC and a bank account, it’s time to start building capital. Each member should make a one-time contribution to cover the cost of their membership. Members usually make their initial contributions by writing a check to the LLC’s bank account, but they can also provide the LLC with property or services. It’s worth noting that contributions in the form of property or services may have tax implications.
What is LLC membership interest?
Membership interest is your share of the LLC’s ownership. In most cases, your membership interest is proportional to your investment. If you invest $6,000 in your LLC, and the other four members of the company invest $1000 each, you’ll own 60% while your partners will each own 10%. Voting power is often linked to membership interest.
8. File State Reports & Taxes
Although limited liability companies formed in Delaware are not required to file an annual report, they must pay a $300.00 annual franchise tax on or before June 1st of each year. Late payment comes with a $200 penalty, so be sure to set a reminder before the deadline.
Worried you’ll forget to file? Let us take care of the franchise tax requirement for you.
If I haven’t started doing business yet, do I still owe franchise taxes?
If your Certificate of Formation has been approved by the state, then yes. All legal entities formed under Delaware law are subject to the franchise tax, regardless of whether they’re actively doing business.
How are Delaware LLCs taxed?
Under the default tax classification, your Delaware LLC will be taxed as a pass-through entity. This means that your share of the LLC’s profits will “pass through” to your personal tax return—and you’ll likely be able to claim the Qualified Business Income (QBI) deduction. Profits earned by an Delaware LLC are subject to the federal self-employment tax rate (15.3 percent ). If you’d rather be taxed as a C or S corporation, you’ll need to file an application with the IRS.
Read our guide to S-Corps Vs LLCs to learn which tax designation is right for your business.
