Delaware LLC – How to Form an LLC in Delaware [5 Easy Steps]

Forming an LLC (Limited Liability Company) in Delaware is easy and affordable. The following are few easy steps on how to start an LLC in Delaware. LLCs form in two ways, domestic or foreign. Suppose you plan to set up an LLC in states other than Delaware; visit How to Start an LLC for a quick list of the states.

Delaware LLC

How To Start a Delaware LLC

Suppose you’re planning to invest in some profitable business where you won’t have to put your personal assets at risk. Maybe you have a prospective business or corporation that you want to set up in Delaware. In that case, forming an LLC in Delaware is the simplest option for you.

An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on How to Start an LLC in Delaware. 

Step 1: Decide a Name for Your LLC

name llc

If you are to start an LLC in Delaware, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Take note, however, that any successful business started with coming up with a name. Thus, you have the option to choose a name that complies with the Delaware business naming requirements. It must also be easily searchable for potential clients.

Why do you need a proper business name?

If you want your LLC to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.

Here are some of the major benefits of choosing the best LLC names.

  • Helps establish a company’s presence in the market;
  • Creates a new identity that will resemble your LLC;
  • Allows ease in finishing your LLC registration process;
  • You can get the EIN once you have your name registration certificate 
What are the requirements when deciding a name for your LLC? 

name search is vital to make sure your business name unique. Check the availability of your name with the General Information Name Search on the Delaware Division of Corporations. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.  

  • Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
  • You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
  • As for a business website and your URL name, check if your name is still available for domain use with NameCheap.
Reserve a business domain

Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.

If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.  

Step 2: Assign a Registered Agent in Delaware

get registered agent

A registered agent for service is your authorized person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Delaware. Choosing Delaware-registered agents for your LLC is required.

Make sure your registered agents are residents of Delaware. It could also be a business. Here are the recommended agents :

LLC Service

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$49 + State Fees

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$399 + State Fees

  • 1st year free agent service

  • Digital storage

  • Different types of plans

These LLC formation services are recommended registered agents’ services as they are authorized to conduct business in Delaware. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional formation service because they have been in the business for years. 

Step 3: File Certificate of Formation in Delaware

file formation certificate

A Certificate of Name Reservation is needed to file a Certificate of Formation or Articles of Organization or Certificate of Organization, as other states call it. You need to make reports of this certificate with the Delaware Secretary of State, which costs $90. You may file them online or by mail. 

This Certificate of Formation is a legal document that forms your business officially. It will indicate details about your LLC in Delaware, like if it is a member-managed or managers-managed

Before you start filing your forms, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Delaware LLC will offer.

How to File by Mail

If you prefer filing hard-copy forms for your Delaware LLC registration, then you can download the Delaware Limited Company Certificate of Formation. Read the form thoroughly and fill it out. You will have to fill, among others,  your name, city, state, zip code, and signature. Mail it to the Delaware Division of Corporations 401 Federal Street Suite 4 Dover, DE 19901.  

Step 4: Create Your Delaware LLC Operating Agreement

create operating agreement

An operating agreement is a document that legally outlines the proprietorship or partnership and operating procedures of your LLC. This internal document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts. 

Starting an LLC in Delaware does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve our Delaware LLC later.

Step 5: Filing a Delaware LLC EIN

The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter. 

It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for taxation filing and to determine tax classification options.

Mail to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

After Starting your Delaware LLC 

After forming your LLC, there are still some things that you will need. Take note of the following:

  • Get a company business account
  • File Delaware business permits and licenses
  • Get liability for business insurance with coverage for employees
  • File a Delaware LLC annual report or biennial report
  • Already existing LLCs that wish to operate in Delaware must register as foreign Delaware LLC.  

This page has provided you with steps to Delaware LLC formation and formation requirements and processes. You now have to remember upcoming filing deadlines for federal taxes and additional taxes as well as business licenses, filing fees, and filing costs, including late filing fees, to make sure your LLC is up-to-date.  

Why an LLC in Delaware

A person can perceive a whole set of benefits if they are thinking of registering an LLC outside your home state in Delaware. These benefits will help people make up their minds if they are confused about what they should do. So, let us hop in and start looking at the benefits of Delaware LLC. 

Business Laws are Cutthroat 

The biggest and most critical aspect of running a business is that a person should abide by all the rules and regulations. Only in this case will one achieve success. The same laws and regulations must apply to the employees of the company. That is why it is best to choose LLC in Delaware.

The rules in Delaware State are stringent, due to which keeping an eye on the employees and regulating them becomes easy. Moreover, these rules make business-to-business meetings more trustworthy and reliable. If a person opens up their LLC in Delaware, then the chances of getting cheated are decreased manifolds. 

Legal Bodies are Very Active

Delaware government legal bodies are more active than any other state. Also, they have the proper right to interfere if the businesses are not working in the right way. The state government will quickly solve any business issue between rivals or other similar instances. 

Flexible Federal Taxes

The taxation system designed in the state is very flexible for business owners. There is the flexibility provided to the Delaware LLC in which they were given a time period to provide the taxes. Due to this, the businesses get some extra time. Moreover, there are different slabs of taxes set according to the type of business a person owns. 

Formation of Series of LLCs is Allowed

Here you will get plenty of expansion opportunities. The government also allows a person to make more than one LLC for the same company. The benefit of the LLC series is that one can hire different members in the new LLC at top management. Along with that, if one series is under debt, then this debt will not affect other LLC of the series. 

Top Delaware Businesses

If you are an entrepreneur and are thinking of forming an LLC in Delaware, then the very first decision you need to take is to think of a business to start with. Out of plenty of business ideas, one needs to figure out which is the best profitable niche to start a business in? So, here are the best ideas a business person can consider.

Agriculture

If you look at Delaware’s state, then the main business established in the state is agriculture. The backbone of the state’s economy is Agriculture. Delaware is the largest producer of corn, and its demand is increasing day by day, due to which the demand of businesses is also growing. You can easily select a product and apply it for processing that raw product, which has increased demand in the country and nearby countries.

Manufacturing of Paper Product

Paper and its products are supplied to the whole country from Delaware, and its demand is increasing day by day. That is why there is more demand for paper industries in the state. So, you can think of starting a paper industry also.

Mining Business

If you look at the statistics of soil present in Delaware, then the sand and gravel in the state have magnesium present in it. That is why the mining businesses are thriving well in the State of Delaware. If a businessman is looking to invest more money in business, they can take a site and start their mining. On the other hand, if one has less money to invest, one can think of manufacturing magnesium products currently in demand.

Small businesses that one can also think of starting are mentioned below.

  • Dairy Farm
  • Microbrewery Business
  • Digital Marketing

Delaware LLC Formation Review

Time needed: 30 minutes.

To recap, here are the easy steps again when forming an LLC in Delaware. Click on the steps in this list to read the full detail.

  1. Name your Delaware LLC

    The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
    name llc

  2. Choose a registered agent

    In Delaware, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
    get registered agent

  3. File a formation certificate

    Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
    file formation certificate

  4. Create operating agreement

    An operating agreement is not a strict requirement but something encouraged when you start an LLC.
    create operating agreement

  5. Get an EIN

    The Employer Identification Number (EIN), also called  Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
    get an ein

F.A.Qs

What is the difference between ‘domestic LLC’ and ‘foreign LLC’?

A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.

What do I need for Domestic and Foreign LLCs?

For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.

Is the cost to form an LLC the same across states?

The cost to form an LLC varies per state.

Does an LLC need to use a DBA?

Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here

Why are operating agreements important?

This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.

Is there anything else I should keep in mind when naming my LLC?

>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.” 
>Do not include words that could create confusion between your LLC and any government business. 
>Words like ‘bank, attorney, university’ are restricted as well. 
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.

Where can I file my LLC name?

Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the filing fee for business names may also vary per state.  

How can I know if my URL name is available?

As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website. 

Can I mail the LLC Certificate of Formation to the Secretary of State?

No. Never mail these documents or payments to the Secretary of State directly. 

Why do I need an EIN?

The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing federal and state taxes
>Hiring employees or agents

How do I get an EIN when I do not have a Social Security number?

You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.

I already have an EIN for a sole proprietorship; what now? 

Note that an LLC is different from a sole proprietorship. If you already have an EIN for your sole proprietorship, the IRS will require you to get a new one when your convert to an LLC. 

Do foreign applicants need an SSN to get an EIN?

International EIN applicants do not need an SSN to get an EIN.

What is an IRS?

The IRS is the one that will issue your EIN. You can request an EIN from the IRS ONLINE or download the FORM, fill it out, and send it by mail or fax.

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