Complete Guide to Forming an LLC in Delaware

Overview: Delaware Limited Liability Company Formation

A Delaware Limited Liability Company (LLC) provides business owners with liability protection while maintaining operational flexibility. The Delaware Division of Corporations oversees LLC formation under Title 6, Chapter 18 of the Delaware Code, known as the Delaware Limited Liability Company Act.

Step 1: Choose Your LLC Name

Delaware LLC Name Requirements

Delaware law mandates specific naming conventions. According to 6 Del. C. § 18-102, your LLC name must:

• Include the words "Limited Liability Company" or the abbreviation "L.L.C." or the designation "LLC"
• Distinguish itself from all existing entities registered with the Delaware Secretary of State
• Avoid restricted words such as "Bank" or "Insurance" without proper authorization

Name Availability Search

Check name availability using the Delaware Division of Corporations Entity Name Search. This free tool searches existing Delaware business entities.

Optional: Reserve Your Name

The Delaware Division of Corporations allows name reservations for 120 days at a $75 fee. Name reservation guarantees availability but is not required for formation.

Step 2: Appoint a Delaware Registered Agent

Registered Agent Requirements

Every Delaware LLC must maintain a registered agent with a physical Delaware address. The registered agent accepts service of process and official correspondence on behalf of your LLC.

Choosing Your Registered Agent

You have three options:

1. Act as your own agent if you have a physical Delaware address
2. Designate an individual Delaware resident
3. Hire a professional registered agent service

Step 3: File the Certificate of Formation

Certificate of Formation Requirements

Form your LLC by filing a Certificate of Formation with the Delaware Division of Corporations. According to 6 Del. C. § 18-201, the certificate must include:

Filing Methods and Fees

Expedited Service: Available for additional fees. Contact the Division of Corporations at (302) 739-3073 for expedited processing options.

Certified Copies

Request a certified copy of your Certificate of Formation for $50. Many businesses need certified copies for opening bank accounts or applying for business loans.

Step 4: Obtain a Federal Employer Identification Number (EIN)

EIN Requirements

Most Delaware LLCs need an Employer Identification Number from the Internal Revenue Service. According to IRS guidelines, LLCs require an EIN if they:

• Have employees
• File excise tax returns
• Withhold taxes on non-wage income paid to non-residents
• Have more than one member (multi-member LLCs)

How to Apply for an EIN

Cost: Free. The IRS never charges for an EIN.

Step 5: Create an LLC Operating Agreement

Operating Agreement Requirement

Delaware requires LLCs to adopt an operating agreement, though filing it with the state is not mandatory. Under 6 Del. C. § 18-101(9), an LLC operating agreement governs the internal affairs and business operations of your company.

Operating Agreement Benefits

The operating agreement establishes:

• Member rights and responsibilities
• Profit and loss distribution
• Management structure (member-managed or manager-managed)
• Voting procedures
• Procedures for adding or removing members
• Dissolution procedures

Legal Framework

Delaware's LLC Act provides default rules if your operating agreement does not specify certain provisions. According to 6 Del. C. § 18-402, management vests in members proportionally unless the operating agreement designates managers.

Step 6: Register for Delaware Business Licenses

Delaware Business License Requirement

Delaware requires any person or entity conducting business in Delaware to obtain a business license from the Delaware Division of Revenue. This applies whether your LLC operates within Delaware or conducts business from a Delaware entity outside the state.

How to Obtain Your Business License

Register through Delaware One Stop Business Registration, which allows simultaneous registration with:

• Delaware Division of Revenue
• Division of Unemployment Insurance (if you have employees)
• Division of Workers' Compensation (if you have employees)

Business License Fees

According to the Delaware Division of Revenue:

• General Services License: $75 per year for first location
• Additional Locations: $25 per location per year
• License Duration: Expires December 31st annually
• Three-Year Option: Available after first year (three times the annual fee)

Processing Time

Most businesses receive their Delaware business license within one month. Upon completing online registration, you can print a temporary license immediately. Permanent licenses arrive by mail within 10 business days.

Step 7: Understand Delaware Annual Requirements

Annual Tax for LLCs

Delaware LLCs must pay an annual tax of $300 to the Delaware Division of Corporations. This requirement applies to all Delaware LLCs regardless of income or activity level.

No Annual Report Required

Unlike corporations, Delaware LLCs do not file annual reports. The only annual filing requirement is the $300 tax payment.

Business License Renewal

Renew your Delaware business license annually through Delaware's Online Renewal portal or the Revenue One Stop system. Licenses expire December 31st each year.

Step 8: Delaware Gross Receipts Tax Registration

Understanding Gross Receipts Tax

Delaware imposes a gross receipts tax instead of traditional sales tax. According to Delaware Division of Revenue guidelines, businesses selling goods or services in Delaware pay gross receipts tax on their receipts.

Registration Process

Register for gross receipts tax through the Delaware One Stop portal when obtaining your business license. File and pay gross receipts tax through the Delaware Taxpayer Portal.

Step 9: Obtain Professional and Occupational Licenses

Additional Licensing Requirements

Some Delaware businesses require profession-specific licenses beyond the general business license. The Delaware Division of Professional Regulation oversees these requirements.

License Application

The Delaware One Stop system integrates occupational license applications with your general business license application, allowing single-session registration for all required licenses.

Summary: Delaware LLC Formation Checklist

Additional Resources

Delaware Government Contact Information