How To Start An LLC In Delaware

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Are you looking to start an LLC in Delaware and don't know where to start? Worry not, this free guide will help you form an LLC in Delaware. This is step by step guide and I will discuss everything you need to know about Delaware LLC.

How Much does Delaware LLC Cost and what Time it will take to get approved?

The LLC in Delaware Costs $90 and it takes 10 business days to get approved if you file online. However, If you file via mail it will also take 10 business days but the mail time will be added which can vary according to the courier company you are using.

Start An LLC In Delaware

You need to go through the following six steps to form an LLC in Delaware.

1. Choose a name for Delaware LLC
2. Appoint a registered agent for your LLC
3. File certificates of formation to the state of Delaware
4. Make an operating agreement for your LLC
5. Obtain EIN From the IRS.
6. Obtain Business License

If you want to go through all the steps by yourself follow this guide till the end. However, If you need help I would recommend Hiring the Registered Agents Inc. They only charge a $100+State Fee and your LLC will be ready. Also, you will get the Registered agent-free for the first year.

If you hire them Your Delaware LLC will be ready in just $190.

Choose a Delware LLC name

When selecting a name for your Delaware LLC, it's crucial to follow several important steps to ensure it adheres to state regulations and effectively represents your business. Below are some guidelines to assist you during this process:

Compliance with State Laws:

LLC Designation: Your chosen name must contain "Limited Liability Company," "LLC," or "L.L.C."

Avoid Restricted Words: Certain terms such as "bank," "insurance," or "trust" may necessitate additional paperwork or could be entirely prohibited.

Uniqueness:

Check Availability: Perform a search on the Delaware Division of Corporations website to confirm that your desired name is not already in use. Your name must be distinct from other registered entities. You can search here Name Availability Search.

Descriptive and Memorable:

Reflect Your Business: Opt for a name that provides potential customers with an understanding of your business's nature.

Keep It Simple: A name that is easy to spell, pronounce, and remember can aid in marketing and brand recognition.

Consider Future Growth:

Avoid Limiting Names: Select a name that allows for the potential expansion of your services or products in the future.

Domain Name Availability:

Online Presence: Check for the availability of a matching domain name if you intend to have a website. This can be helpful for branding and online marketing.

Trademark Considerations:

Conduct a Trademark Search: Ensure that your desired name does not infringe upon existing trademarks, particularly if you plan to operate nationally or internationally.

Seek Feedback:

Get Opinions: Share your top name choices with trusted friends, family, or colleagues to gather feedback on what resonates.

Consider Future Branding:

Logo and Marketing: Consider how the name will appear in a logo and how it will work in marketing materials.

Once you have selected a name, you can reserve it with the state for a fee if you are not yet ready to establish the LLC. This can help guarantee that your chosen name will be available when you are prepared to register your business.

2. Appoint a Registered Agent for Your Delaware LLC

The second step is choosing the Delaware Registered Agent For your LLC.

An LLC formed in Delaware must have a registered agent to handle important documents on its behalf, such as legal notices, official state correspondence, and other crucial paperwork.

Here are the main points to consider regarding a Delaware registered agent for an LLC:

Physical Location: The registered agent must maintain a physical address in Delaware, not a P.O. Box, where documents can be received during regular business hours.

Availability: The registered agent should be accessible to accept documents during standard business hours.

Legal Requirement: Delaware law stipulates that every LLC must have a registered agent. Failure to comply can result in penalties or the administrative dissolution of the LLC.

Professional Services: Many LLCs opt to use professional registered agent services to fulfill this role. These services offer additional privacy and ensure compliance with state laws.

Changing Agents: If you need to change your registered agent, you can do so by submitting the appropriate form to the Delaware Division of Corporations and paying the required fee.

Utilizing a professional service can be especially beneficial if your business is not physically situated in Delaware, as they provide a dependable address and help ensure that you receive all important legal notices.

Who can be a Registered Agent in Delaware LLC?

In the case of a Delaware LLC, the registered agent can be:

• You, if you are a resident of Delaware and have a physical address in the state where you can receive legal documents during business hours.
• A family member provided that the family member is a Delaware resident and has a physical address in the state.
• A friend, if the friend is a Delaware resident and has a physical address in the state.
• A professional registered agent service refers to companies specialized in serving as registered agents and authorized to conduct business in Delaware. These entities often provide additional services such as mail forwarding and compliance management.
• A law firm or accounting firm, as many of them offer registered agent services as part of their business.
• A corporation or LLC, if these entities are authorized to act as registered agents and are registered to do business in Delaware.

The critical requirement is that the registered agent must have a physical address in Delaware and be available during business hours to receive documents.

I Recommend Registered Agents Inc. If you want privacy or don't have an address In Delaware

Registered Agents Inc. can offer several advantages for your LLC:

• Professionalism is ensured as they provide reliable and professional services to handle your LLC’s legal documents accurately.
• Your privacy is maintained by using a registered agent to keep your personal address off public records, ensuring that legal documents and official notices are sent to the registered agent's address.
• They help you stay compliant with state regulations by keeping track of important filing deadlines and handling necessary paperwork.
• They provide a centralized location for handling legal documents, which is particularly beneficial if you manage multiple LLCs or operate your business from out of state.
• Their expertise in the requirements and regulations of different states is valuable if your LLC operates across state lines.
• They offer additional services such as document scanning, online access to important documents, and reminders for upcoming deadlines.

Choosing a reliable registered agent can simplify the process of running your LLC and help you stay compliant with the law.

3. File certificates of formation to the state of Delaware

The formation of an LLC in Delaware requires a Certificate of Formation, also known as Articles of Organization in other states. This documentation must be submitted to the Delaware Division of Corporations and contains crucial information about the LLC. The necessary details to include are as follows:

- LLC Name: It must be distinctive and contain "Limited Liability Company" or its abbreviations like "LLC" or "L.L.C."

- Registered Agent: This includes the name and address of the authorized individual or business to receive legal documents on behalf of the LLC.

- Duration: While most LLCs are perpetual, there is an option to specify a different duration.

- Purpose: A brief overview of the business activities the LLC will undertake. In Delaware, a general purpose statement is often sufficient.

- Management Structure: Indicate whether the LLC will be managed by members (owners) or managers (appointed individuals).

The Certificate of Formation must be submitted online or sent by mail to the Delaware Division of Corporations, along with the applicable filing fee of $90. Upon approval, it provides legal recognition to the LLC in the state of Delaware.

How to File Certificate of Organization For Delaware LLC

When filing a Certificate of Formation for a Delaware LLC, the process is fairly simple. Here's a detailed, step-by-step outline to guide you through it:

Gather the Information: Ensure that you have all the necessary particulars, such as the LLC's name, the registered agent's name, and address, the LLC's duration (if not perpetual), the purpose of the LLC (a general statement is typically acceptable), and the management structure (whether managed by members or managers).

Complete the Form: You have the option to file online or by mail.

Online Filing: Visit the Delaware Division of Corporations' website and utilize their online filing system to fill out and submit the Certificate of Formation. If you don't have an account, you will need to create one.

Paper Filing: Download the Certificate of Formation form from the Delaware Division of Corporations' website, complete it, and mail it to the Division of Corporations.

Pay the Filing Fee: The filing fee for the Certificate of Formation is generally around $90 (as of 2024). Verify the current fee on the Delaware Division of Corporations' website to ensure accurate payment.

Submit the Form:

Online: Follow the instructions on the website to submit your form and pay the fee.

By Mail: Send the completed form along with a check or money order for the filing fee to the Delaware Division of Corporations at the following address:

Delaware Division of Corporations

John G. Townsend Building

401 Federal Street – Suite

4. Make an Operating Agreement

A document outlining the management structure and operating procedures of a Delaware LLC is known as an operating agreement. While not required by Delaware law, it is highly recommended for various reasons.

This document typically includes details about the LLC members and their ownership percentages, specifies the management structure, describes capital contributions, outlines profit and loss distribution, defines voting rights and procedures, establishes rules for transferring ownership, outlines dissolution procedures, provides mechanisms for resolving disputes, and details meeting frequency and procedures if applicable.

A well-drafted operating agreement helps prevent member disputes and provides clarity on running the LLC, making it a best practice to have one in place, even if not mandatory.

5. Obtain EIN For Your Delware LLC

The Employer Identification Number (EIN) assigned to a Delaware LLC (Limited Liability Company) has several important functions:

Tax Reporting: The IRS uses the EIN to monitor the company's tax responsibilities and payments, making it necessary for filing federal tax returns and, in some cases, state tax returns.

Opening Bank Accounts: Most banks mandate an EIN to establish a business bank account under the LLC's name.

Hiring Employees: If the LLC intends to hire employees, an EIN is required for payroll tax purposes and to adhere to federal and state employment regulations.

Business Licenses and Permits: Some local and state business licenses and permits necessitate an EIN for issuance.

Business Credit: Obtaining an EIN aids in building business credit separate from the owner's personal credit.

Operating as a Corporation: If the LLC chooses to be taxed as a corporation, it will require an EIN for corporate tax filings.

Overall, an EIN is crucial for legal, financial, and operational purposes, helping to distinguish the LLC’s activities from the personal matters of its members.

How to Obtain EIN From the IRS (For US Residents)

To obtain an Employer Identification Number (EIN) for a Delaware LLC, you can submit an application electronically through the IRS website. Follow these steps:

1. Go to the IRS EIN Online Application page on their website.

2. Click on “Apply Online Now” to start the application process.

3. Choose “Limited Liability Company” as the entity type for your application.

4. Enter all necessary details about your LLC, such as its name, address, and information about the members and the responsible party (usually the applicant).

5. Review the provided information and submit your application. Your EIN will be issued immediately after submission.

Ensure that you have all the required LLC formation documents and relevant information readily available to complete the application. Alternatively, you can also opt to apply via fax or mail, but the online method is generally the quickest.

How To Obtain EIN (Non-US Residents)

Here are the steps to obtain an Employer Identification Number (EIN) for a Delaware LLC as a non-U.S. resident:

1. Ensure that your Delaware LLC is properly formed with the LLC’s Certificate of Formation and other necessary documents.

2. Gather the required information, including the LLC’s name and address, the name and address of the LLC’s responsible party, and the LLC’s principal business activity.

3. Complete Form SS-4, the application for an EIN, which can be downloaded from the IRS website or completed online. This form will require information about your LLC and its responsible party.

4. Submit Form SS-4:

- Online: while non-U.S. residents cannot apply online directly, the form can be prepared online and then submitted by fax or mail.

- By Fax: fax the completed Form SS-4 to the IRS at +1-855-641-6935.

- By Mail: Send the completed Form SS-4 to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

USA

5. Non-U.S. residents may need to provide a U.S. address on the form, which can often be a registered agent’s address or another address associated with the LLC.

6. After submission, the IRS will process the application. The EIN may be received within a few business days if the form was faxed, but it might take several weeks if it was mailed.

7. If working with a registered agent or an attorney in the U.S., they can often assist in facilitating this process and ensuring everything is done correctly.

6. Business License And Permits

In Delaware, an LLC must have a general business license to operate within the state, whether it is based in Delaware or just doing business there. The Delaware Division of Revenue issues the license, and it must be obtained before commencing business activities.

To obtain the license, you typically have to:

- Register your business with the Division of Revenue.

- Complete the business license application, which is often available online.

- Pay the necessary fee, which varies depending on your business activities.

Make sure to renew the license as required and adhere to any other local regulations or permits that may apply to your specific business activities.

Further Explanation

When running a business in Delaware, such as an LLC, you will need to take into account various types of licenses and permits.

• A state business license is required by Delaware for all businesses and can be obtained from the Delaware Division of Revenue. This license is essential for any business operating in the state, and you can submit your application online through the Delaware Division of Revenue's website.
• Depending on the location of your business within Delaware, you may require local permits or licenses from the city or county. To find out the specific requirements for your location, check with your local government or municipal office.
• If your business activities are regulated by federal agencies, such as selling alcohol, firearms, or operating a transport service, you will need additional federal permits.
• For certain professional services like medical, legal, or financial services, specific professional licenses may be necessary.

To begin, visit the Delaware Division of Revenue and your local city or county government website to access detailed requirements and application procedures.

What to do After the approval Of Delaware LLC?

After your Delaware LLC is approved, it's important to complete several crucial tasks to ensure that your business is fully compliant and operational:

1. Register for State Taxes: Depending on your business activities and location, you may need to sign up for state taxes, such as sales tax or unemployment insurance.

2. Obtain Necessary Licenses and Permits: Check the requirements at the local and state levels to ensure that you have all the required business licenses and permits.

3. Open a Business Bank Account: Use your EIN and a copy of your approved Certificate of Formation to establish a business bank account.

4. Comply with Annual Franchise Tax Requirements: Delaware LLCs must file an annual franchise tax report and pay the franchise tax. The fee is $300 per year

5. Maintain Good Standing: Keep your LLC in good standing by submitting your annual report, paying franchise taxes, and adhering to state regulations.

6. Keep Records: Maintain accurate records of your LLC's financial transactions, meetings, and business activities.

7. Consider Business Insurance: Depending on the type of your business, you might require general liability insurance, professional liability insurance, or other types of coverage.

8. Review and Comply with Local Zoning Laws: Ensure that your business location complies with local zoning regulations if you have a physical business presence.

Following these steps will assist you in launching your Delaware LLC successfully and ensuring its compliance with legal requirements.

Delaware LLC Taxes

Delaware is a favored choice for establishing LLCs because of its business-friendly regulations and well-established legal structure. Here's a brief summary of tax considerations for a Delaware LLC:

Franchise Tax: Delaware LLCs are required to make an annual franchise tax payment, which amounts to a flat fee of $300 per year.

Annual Report: like corporations, LLCs do have to submit an annual report to the state.

Federal Taxes: For federal tax purposes, Delaware LLCs are generally classified as pass-through entities. This means that the LLC itself does not pay income taxes; instead, profits and losses are passed on to the members, who report them on their individual tax returns.

State Taxes in Other States: If your LLC conducts business in other states, you may be liable for taxes in those states too. This could involve income tax, sales tax, or other state-specific taxes, depending on the location where your LLC operates.

Employment Taxes: If your LLC has employees, you will be responsible for managing federal and state employment taxes, such as Social Security, Medicare, and unemployment taxes.

If you have specific circumstances or require more detailed guidance, seeking advice from a tax professional or accountant is advisable.

How to Start an LLC in Delaware FAQs

I have answered Delaware LLC's Frequently asked questions below. Hope it will help you.

How much does it cost to start an LLC in Delaware?

To establish an LLC in Delaware, there are several expenses to consider:

Filing Fee: The cost of submitting a Certificate of Formation for an LLC in Delaware is $90.

Registered Agent Fee: LLCs in Delaware must have a registered agent, which typically incurs an annual cost ranging from $50 to $300.

Annual Franchise Tax: Delaware LLCs are obligated to pay a flat annual franchise tax of $300.

Operating Agreement: While not mandated by the state, it is advisable to have an operating agreement. The expense of creating one can vary based on whether you choose to do it yourself or enlist the services of a lawyer.

Additional expenses may include business licenses or permits, depending on the nature of your business activities.

Can a foreigner open an LLC in Delaware?

Certainly! Here are the reworded sentences based on your request:

1. It is possible for a non-U.S. citizen to establish an LLC in Delaware because the state's business laws are favorable and do not impose citizenship or residency requirements on LLC owners.

2. If you are a foreigner, you will be required to appoint a registered agent with a physical address in Delaware, as this agent will receive all legal correspondence.

3. Additionally, you will need to submit the necessary formation paperwork to the Delaware Division of Corporations and acquire an Employer Identification Number (EIN) from the IRS if you intend to hire employees or open a bank account.

Can I form an LLC in Delaware if I don't live there?

Certainly! It is possible to establish an LLC in Delaware even if you are not a resident there. Delaware's business-friendly laws allow non-residents to form LLCs. However, it is essential to appoint a registered agent with a physical address in Delaware to handle legal documents for your LLC. This registered agent may be an individual or a company offering registered agent services.

Conclusion

Delaware is a popular option for establishing an LLC due to several factors:

Business-Friendly Legislation: Delaware has well-established laws for businesses, including a specialized court (the Court of Chancery) that handles corporate cases, leading to more predictable legal outcomes.

Privacy: Delaware allows for a high level of privacy as the names of LLC members or managers are not required to be listed in public records.

Flexibility: Delaware's LLC laws offer considerable flexibility, accommodating various management structures and operating agreements.

Tax Advantages: Although Delaware does not levy a state-level income tax on LLCs not conducting business in the state, there is an annual franchise tax and a small filing fee.

Ease of Establishment: The process for forming an LLC in Delaware is relatively simple and can often be completed swiftly.

However, if your business operates in another state, you will still need to register your Delaware LLC as a foreign entity in that state, which may involve additional fees and paperwork. Therefore, it's essential to consider whether the benefits outweigh these extra steps for your specific situation.

If you need help with Delaware LLC Formation I would Recommend Registered Agents Inc.