How to Start Your Own LLC in Delaware

1. Name Your Delaware LLC

Naming your business can be challenging. You need a name that's unique, easy to remember, and conveys what your business does. To choose a name, you can try a few different methods:

• Decide on a Business Concept: Before you name your LLC, you need to have a clear idea of what your business will do.
• Ask People You Know for Suggestions: Reach out to people whose opinions you value and trust. Explain your business concept and ask for their thoughts on a name.
• Do a Web Search: Once you have a few name ideas, check their online presence. Is the domain name available? Are there companies with similar names that could create confusion?
• Use an Online Business Name Generator: They can provide inspiration and help you think about your business from different angles. Keep in mind, though, that these generators can't replace human creativity and may not understand the nuances of your business as well as you do.

Your business name is your brand identity and the first impression people will have of your company, so be sure to take your time with this step and get it right.

Check Name Availability in Delaware

Once you have a few business name ideas, you'll want to ensure they're available. First, do a business name search on the Delaware Division of Corporations website. You should also search for similar business names, as you don't want a name that can be easily confused with other businesses in Delaware.

Also, check Delaware's LLC naming regulations to ensure you comply.

Delaware LLC Naming Rules

Your LLC name must include "limited liability company" or an abbreviation such as LLC or L.L.C. and cannot have words that could confuse your LLC with a government agency.

Additionally, your business name must be distinguishable from all other business names in the state and cannot include words like bank, insurance, or university without state approval, and it must not imply unlawful activity.

Check Federal Trademarks

Next, check with the US Patent and Trademark Office to ensure the name is not federally trademarked and is available nationally.

Reserve Your Delaware LLC Name

Once you've confirmed these, it's a good idea to reserve the name with the state using its Name Reservation form. To reserve an LLC name in Delaware, start by visiting the Division of Corporations website, then head to the Name Reservation Application.

You'll enter your desired business name and click the Search button. If your desired name is available, you will be asked if you want to proceed with reservation. You will then enter payment information to complete the process. If you do not yet have an online account with the Division of Corporations, you must create one.

Alternatively, you can complete and mail a paper form.

Fees & Processing:

• Name reservation fee: $75
• Reservation period: Reserved for 120 days

Doing Business As (DBA)

You may want to do business under a name other than your LLC's legal name. To do this, you'll need to register a "doing business as" or DBA name.

Suppose you want to offer new product lines — for example, if your business is "JJ's Waffles" and you want to introduce "JJ's Muffins." You can operate under multiple DBAs under one LLC. When you use a DBA, you can also open a business bank account under that name.

In Delaware, a DBA is known as a fictitious name. To register a fictitious name in Delaware, visit the Delaware Courts website and fill out the registration form. Once completed, send the form to the prothonotary's office for each county where you wish to register. The registration certificates must include the date the business was organized and must be notarized.

DBA filing fee: $25

2. Select a Registered Agent

Delaware requires LLCs to appoint a registered agent, a person or company authorized to accept and respond to official business correspondence, such as legal, tax, or financial documents.

The registered agent ensures that all important notices and documents are received. In Delaware, the registered agent can be an LLC member, an individual, or a business entity that meets state requirements.

Registered Agent Requirements

In Delaware, a registered agent must:

• Be 18 years or older
• Have a physical address in Delaware
• Be available during regular business hours
• Be registered to operate in Delaware, if it's a business entity

Many business owners hire a registered agent service to ensure their LLC stays in compliance and for convenience.

If you choose to be your own registered agent, you must be physically present at the registered address during business hours. A registered agent service allows you to be wherever you need to be to run and grow your business.

3. Determine Your Management Structure

Members or managers can manage LLCs. In a member‑managed LLC, members handle all management duties. In a manager‑managed LLC, non‑member employees oversee operations and management duties.

Note that in a manager‑managed LLC, a member can be a manager, but only in cooperation with another manager who is not a member.

Member-Managed LLC

Member‑managed LLCs generally work best for LLCs with few members who can all take an active role in daily operations.

Manager-Managed LLC

Manager‑managed LLCs are better for LLCs with multiple members, some of whom want to be "silent" or passive investors.

Most LLCs are member‑managed because they are small businesses that cannot afford a management team.

In Delaware, your LLC is considered member‑managed unless otherwise specified in the Certificate of Formation.

4. File a Certificate of Formation with the Delaware Division of Corporations

To form your LLC, you'll file a Certificate of Formation with the Delaware Division of Corporations and enter the following information:

Information Required

• LLC name
• Registered agent information
• Registered office address

Filing Fee & Processing

• Filing fee: $90
• Processing time: Typically 7–10 days

You will receive confirmation of formation once the paperwork is processed.

Delaware Division of Corporations Contact Information

Division of Corporations
John G. Townsend Building
401 Federal Street, Suite 4
Dover, DE 19901

Phone: (302) 739‑3073 option 2

5. Draft an Operating Agreement

An Operating Agreement is a legal document that outlines ownership, management responsibilities, and member duties of your LLC.

Delaware requires an Operating Agreement at some point before, during, or after filing LLC formation documents. The agreement may be implied, written, or oral.

Typical Operating Agreement Sections

• LLC's name and principal address (primary registered location)
• Duration of the LLC
• Registered agent name and address
• Membership information
• Management and voting rules
• Financial matters (profit and loss allocation)
• Procedures for changes or amendments
• Dispute resolution and legal policies
• Recordkeeping and communication procedures

You can find agreement templates online, but it's best to have yours drawn up or reviewed by an attorney. The wording of an operating agreement can be crucial in resolving member disputes and clarifying responsibilities.

6. Get Your Employer Identification Number (EIN)

The IRS uses an Employer Identification Number (EIN) to identify your company for federal tax filing purposes.

An EIN is required if:

• Your LLC has more than one member
• You hire employees

Obtaining an EIN requires applying on the IRS website. All applications — whether by mail, fax, or electronic submission — must disclose the name and taxpayer identification number (SSN, ITIN, or EIN) of the responsible party. The responsible party is the individual who manages or directs the business and its funds.

Unless the applicant is a government entity, the responsible party must be an individual.

7. Obtain Business Licenses and Permits

Depending on the nature of your business, you may need licenses and permits at the federal, state, and local levels.

Federal Licenses

At the federal level, licenses and permits are often industry‑specific and may include health licenses or permits from the Occupational Safety and Health Administration (OSHA). The SBA provides guidance on federal licensing requirements.

State Licenses

In Delaware, all businesses must obtain a state business license annually from the Division of Revenue. You can register and apply through the One Stop Business Licensing and Registration Service.

Additional requirements may apply depending on your industry.

Delaware does not have a state or local sales tax, but it does impose a gross receipts tax on the sale of goods and services. Gross receipts tax is levied on the total gross revenue of businesses that sell goods or provide services in the state.

If you have employees, you must also withhold and remit payroll taxes to the state.

Local Licenses

For local licenses and permits (e.g., zoning, fire, health), check with the city or county where your business operates.

Common Requirements

• Industry‑specific professional licenses
• Zoning and building permits
• DBA permits (trade name registrations)
• Health licenses and permits
• Fire and sign permits

Operating without required licenses or permits can lead to significant fines and penalties.

Consult a business attorney or use a service like MyCorporation to research and complete necessary licensing.

8. Determine Your Tax Status

By default, an LLC is a "pass‑through" entity, meaning the business itself does not pay income taxes. Instead, profits or losses pass through to the members' individual tax returns.

Default Tax Treatment

Single‑Member LLCs:

If your LLC has only one member, it is taxed like a sole proprietorship by default. Income from the LLC is reported on the member's personal tax return (Schedule C), and the member is responsible for paying self‑employment taxes (Social Security and Medicare) on that income.

Multi‑Member LLCs:

If your LLC has more than one member, it is taxed as a partnership by default. The LLC files an informational return (Form 1065), and each member reports their share of income and deductions on their personal tax return. As with single‑member LLCs, members pay self‑employment taxes on their share of profits.

Optional IRS Elections

An LLC can elect to be taxed as a corporation:

C‑Corporation Taxation: In this case, the LLC is treated as a separate corporation for tax purposes. Corporate profits are taxed at the corporate rate (21%), and dividends paid to members are taxed again on their personal returns — this is known as double taxation. However, dividends are not subject to self‑employment tax.

S‑Corporation Taxation: The LLC remains a pass‑through entity for federal tax purposes but the members who work in the business must receive a reasonable salary subject to payroll taxes. Remaining profits can be distributed without self‑employment tax, which may result in tax savings.

Delaware State Tax Considerations

Annual Franchise Tax:

Delaware LLCs must pay a flat annual franchise tax of $300 to the Delaware Division of Corporations. This tax is due by June 1 each year and is required regardless of business activity.

Gross Receipts Tax:

Delaware does not levy a general sales tax, but it does impose a gross receipts tax on businesses that sell goods or provide services in the state. Gross receipts tax is calculated on total business revenue, and rates vary depending on business activity.

Payroll Taxes:

If your LLC has employees, you must withhold state income tax (if applicable) and remit unemployment insurance taxes through the Delaware Division of Revenue.

Pass‑Through Income Tax:

LLC members report business income on their personal tax returns. Delaware personal income tax applies to taxable income passed through from the LLC.

LLC Overview in Delaware - Additional Requirements

Open Your Business Bank Account

Separate your business and personal finances. Most banks will require your EIN and a copy of your Articles of Organization. Additional bank requirements may apply.

Apply for a Business Credit Card

A business credit card can help establish business credit and cover startup expenses.

Get Business Insurance

Insurance helps protect your investment. Common types of insurance include:

• General liability
• Professional liability (errors & omissions)
• Workers' compensation
• Property insurance
• Business property coverage
• Equipment breakdown insurance
• Commercial auto insurance
• Business Owner's Policy (BOP)

LLC Records

Keep copies of all formation documents, the operating agreement, contracts, and financial records in a secure location.

Annual Reporting

Delaware LLCs do not need to file an annual report with the state, but they must pay the annual franchise tax of $300 by June 1 each year to remain in good standing.

Delaware LLC FAQs