How to Start a Business and Form Your LLC in Delaware
- Delaware Business Facts and Environment
- Step 1: Decide on a Business Structure
- Step 2: Pick a Business Name
- Step 3: Register the Business
- Step 4: Obtain Your Federal Employer Identification Number
- Step 5: Open Company Bank and Credit Accounts
- Step 6: Set-up An Accounting System
- Step 7: Obtain Licenses and Permits
- Step 8: Hire Employees (if applicable)
- Step 9: Obtain Business Insurance
- Step 10: Systemize and Organize
- Step 11: Branding and Marketing
- Step 12: Annual and Ongoing Requirements
- Important Delaware Contacts
Delaware Business Facts and Environment
DE Business Facts
Delaware is the second-smallest state, with a total land area of only 1,948 square miles. It is also the least-populated state in the US, and has the fewest counties.
Nicknamed “The Diamond State,” Delaware is best-known for its extremely business-friendly corporate laws.
Delaware is known by neighboring states as the “Home of tax-free shopping.”
Delaware’s economic growth is closely tied to the DuPont family, founders of one of the largest chemical companies in the world.
Tourism is one of Delaware’s chief industries, and many people travel from Washington to enjoy the shores of the Atlantic.
Delaware’s state tree is the American Holly, and its state bird is the Blue Hen.
Delaware’s capital, Dover, is only the second-largest city in the state, with a population of 38,499 as of 2020. The largest is Wilmington, with a population of 70,139.
Major Companies in Delaware
Major companies include DuPont, Integrity Staffing Solutions, W. L. Gore and Associates, Swissport Holding, Mountaire Farms, and the Chemours Company.
Startup Environment
Wilmington, Delaware’s largest city, is experiencing rapid growth in the tech industry, with a growing number of tenants and a receptive attitude towards entrepreneurial ventures. The State’s friendly environment and less restrictive business laws have drawn many startups to the area, and measures such as the Delaware Founders Initiative promise to draw even more.
Step 1: Decide on a Business Structure
There are 3 basic options: a DBA, a Corporation or an LLC. Click here to learn more about business entities.
- A DBA or “Doing Business As” (also known as a “Fictitious Business Name” or FBN) is not really a separate structure, but just a different name that an individual or partners use as their business name.
- A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding. Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.).
- An LLC or “Limited Liability Company” is a newer type of business that is both a separate entity but provides very easy management (doesn’t require directors or officers) and taxation. Has largely replaced the DBA and Corporation in popularity recently as it provides liability protection but with much less complexity (and taxation) than a Corporation.
Step 2: Pick a Business Name
Picking a business name is easier said than done – many legal and business problems can arise from picking the wrong name (you can always change it later but the less times you have to do that, the better). In Step 3 we’ll show you how to search for the name in Delaware, but we highly recommend you do the following before searching Delaware state databases:
- Make sure you’ve covered the basics: unique, easy to understand/pronounce (practice saying it out loud: “Thanks for calling XYZ”) and can survive over time (“DVD World” is not timely). Here are some of our tips on business identity including logo and trademarks.
- Search the web for your proposed name. Search Google, Bing and DuckDuckGo as a “first sweep” for any potential conflicts, especially in your state or local jurisdiction. NOTE: If you intend to operate nationally or even internationally it will be even more important that your name be unique. This should cover many cases where a company name is being used but not officially trademarked (see next tip).
- Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if you’re name will have any conflicts. There’s an art to trademark searches (trademark specialists will charge you handsomely to do a thorough search) but in our experience if you can use google at a fairly advanced level you can reasonably clear a name yourself.
TIP: search misspellings, plurals, variations of spelling, sound-alikes and other versions of your chosen name to be sure it’s not already registered. - Make sure your company name choice is available by searching Delaware’s Department of State: Division of Corporations business name database. Note: Make sure to search variations of spelling, plurals and misspellings as the state may reject a name that is too similar (then you have to start all over again, wasting valuable time).
Step 3: Register the Business
Each state has it’s own requirements for registering a business. Now that you’ve chosen a business structure and picked your business name, here are the requirements to register your business in Delaware.
How to form an LLC in Delaware
- File the Corporate Forms And Certificates For A Limited Liability Company with the Delaware Department of State Division of Corporations
- Hire a professional Registered Agent
- Hold an Organizational Meeting
How to Incorporate in Delaware
- File the Corporate Forms And Certificates For A Corporation (Articles of Incorporation) with the Delaware Department of State Division of Corporations
- Hire a professional Registered Agent
- Hold an Organizational Meeting
- Corporations can elect S-Corporation status with the IRS by filing IRS Form 2553. Click here to learn more about S-Corporations.
Notes about Incorporation and forming an LLC in Delaware
The Division of Corporations could take anywhere from 2-3 business days for e-filing to 3 to 5 days for mail filings to process the paperwork. This may increase during peak periods.
- A professional Registered Agent is a requirement for every Delaware Corporations and LLC. The chosen registered agent must have a physical street address in Delaware. They will provide their address and forward any important documents to you. This is convenient if you have to move, since you won’t have to file forms or pay fees, (just update your address with your agent).
- “Organizational Meeting” which takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more. Many people simply do steps 1 and 2 above but this leaves your company unorganized and possibly exposed to legal, tax and compliance issues. Save time and money now by properly organizing the company.
How to File a DBA in Delaware
DBAs are filed with the county. You’ll want to contact your local County Recorder to find out exactly what forms to submit and what they’re submission process is. You can find the local county recorder’s office by searching “YOURCOUNTY county recorder”.
- Search your business name as listed in step 2.
- Obtain and file the correct forms with the county to register your DBA.
Ready to Start Now? Let Us Do The Work
Sure, you could do all the steps above or you could spend 5-10 minutes on our order form and let us take care of it while you work on more important things.
- Learn more about our business formation service
- Read our verified reviews and 100% Satisfaction Guarantee
- Contact our friendly support team if you have any questions
Step 4: Obtain Your Federal Employer Identification Number
Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
To obtain an EIN you can apply online with the IRS or via IRS Form SS-4.
TIP: We will obtain your EIN for you if you we form your company.
Step 5: Open Company Bank and Credit Accounts
To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and can later qualify for larger loans and lines of credit. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork b) your EIN c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
TIP: Our business formation service includes a free banking resolution for your use.
Step 6: Set-up An Accounting System
Setup your Accounting and Record-keeping system and learn about the taxes your new company is responsible for paying.
Company documents generally are required to be kept for 3 years, including: a list of all owners and addresses, copies of all formation documents, financial statements, annual reports, amendments or changes to the company. All Tax and Corporate Filings should be kept for at least 3 years. View our “Accounting & Financial Management” section for help with setting up an accounting system and purchasing accounting software.
Step 7: Obtain Licenses and Permits
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
The State of Delaware has a One Stop Business Registration and Licensing System where you can register your business with the Division of Revenue, the Division of Unemployment Insurance and the Office of Workers Compensation.
TIP: We work with a company that can obtain and prepare business licenses and permits for you. Click here to learn more.
Step 8: Hire Employees (if applicable)
If you intend to hire yourself or others as a full or part-time employee of your company, then you may have to register with the appropriate State Agencies or obtain Workers Compensation Insurance or Unemployment Insurance (or both). View our “Employees & Payroll” section for help with hiring employees and processing payroll.
Step 9: Obtain Business Insurance
There are many types of insurance for businesses but they are usually packaged as “General Business Insurance” or a “Business Owner’s Policy”. This can cover everything from product liability to company vehicles. A decent policy can run as little as $300/year and offers a great extra level of protection. Click here to view our preferred provider of business insurance online.
Step 10: Systemize and Organize
Prepare the business as if someone needed to take it over and run it for you. This means have a method to process orders, pay bills, pay employees, pay taxes, maintain your permits, etc. Basically, try to make the operational aspect of the business as automated and efficient as possible so you can concentrate on growing your business. View our “Manage Your Company” section for help with systemizing and automating your business.
Step 11: Branding and Marketing
Now that you’ve set-up the company for success, you need to get the word out. Create a marketing plan for your products and services that targets your ideal customer. View our “Marketing & Sales” section for help for more information.
Step 12: Annual and Ongoing Requirements
DBA: Your Fictitious Business Name should be valid for 5 years (unless you change company name or other information listed on the FBN) at which point you’ll need to renew it with the county.
LLC: Delaware LLCs are required to pay an annual tax of $300 on, or before June 1 each year. There is no requirement to file an annual report.
Corporation: All businesses incorporated in Delaware must file an annual report and a franchise tax. Even if your corporation is tax-exempt, you must still file an annual report before March 1 each year. The annual filing fee is $49, and the minimum tax is $225. Annual reports can be filed online through the Delaware Corporations Information System.
Franchise Taxes: Delaware corporations are required to file a Franchise Tax of $300 annually, due on June 1. This is standard protocol for an LLC, regardless of age, sales, activity, or inactivity. A late penalty of $200 is levied against business that fail to pay on time.
Important Delaware Contacts
Delaware Divisions of Corporations
Delaware State Taxation Departments
Delaware Department of Professional Regulation
Delaware State Labor and Employment Departments
Delaware Startup Resources
1. Delaware Small Business Administration
Small Business Administration (SBA) Delaware State District Office
2. SCORE Mentors
SCORE is made up of active and retired business people who volunteer their time to support startup businesses. From coaching to funding resources, finding a local SCORE mentor can save precious time and money.
- Delaware Business Portal
- Delaware Small Business Development Center
- Delaware Job Link Employer Portal
- Tax Information For Delaware Businesses
3. Delaware State Legal Statutes:
- Delaware Business Corporation Act
- Delaware State Limited Liability Companies – the specific act that applies to Delaware State LLCs.
- Delaware State Businesses and Professions – includes regulations on topics such as business and professions codes.
4. Delaware State Chambers of Commerce
5. Angel.co Delaware State Startups
6. Delaware Business News
7. Delaware State Small Business Development Center
