Forming an LLC (Limited Liability Company) in Delaware is easy and affordable. The following are few procedural steps on how to start an LLC in Delaware. LLCs forms in two ways, domestic and/or foreign. Suppose you plan to set up an LLC in states other than Delaware, visit How to Start an LLC.
On this page, you’ll learn about the following:
- Why an LLC in Delaware
- How to Start a Delaware LLC
- After Starting your Delaware LLC
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 a person make up their mind 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 in the state of Delaware
The biggest and the 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. It means that 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. Any kind of business issue between rivals or other similar instances will quickly be solved by the state government.
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 opportunities for expansions. The government also allows a person to make more than one LLC for the same company. The benefit of series of LLC is that one can hire different members in the new LLC at top management also. Along with that, if one series is under debt, then this debt will not affect the working of other LLC of the series.
How to Start a Delaware LLC
Suppose you’re planning to invest in some profitable business or maybe about to set up your corporation in Delaware. In that case, forming an LLC in Delaware is the simplest option for you.
An LLC or a Limited Liability Company a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. 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
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. 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. Here is a step-by-step guide to follow when naming your Delaware LLC.
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.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN when you have your name registration certificate with you
What are the requirements when deciding a name for your LLC?
A name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Delaware Secretary of State’s website. 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 URL use with NameCheap.
Reserve a business URL
Even if you don’t have plans to set up a website today, it will help if you buy a URL to avoid others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website.
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
A registered agent, or business entity, is a person 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 corporation. Here are the recommended agents and employees for you:
These five LLC formation services are recommended agents’ registered services as they are authorized to conduct Delaware business. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Certificate of Formation in Delaware
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 filings, 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 real-life 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. It 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
An operating agreement is a document that legally outlines the proprietorship or partnership and operating procedures of your LLC. This 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 an operating agreement, but it is ideal to have one that contains all your details of business operation.
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.
It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for taxation filings and to determine tax classification options.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
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 & 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 a foreign Delaware LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming deadlines on filings and filing fees or filing costs, including late filing fees, to make sure your LLC is up-to-date.
Delaware LLC Formation Review
Time needed: 1 hour and 5 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.
- 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.).
- 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.
- 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.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- 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.
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.
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.
The cost to form an LLC varies per state.
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.
This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>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.
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 fees for business names may also vary per state.
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.
No. Never mail these documents or payments to the Secretary of State directly.
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
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.
International EIN applicants do not need an SSN to get an EIN.