Forming an LLC in Delaware will help protect your personal assets from lawsuits and judgments against your business. An LLC is a legal structure that separates your business and personal assets. By not having your business in a separate legal structure, you can be held personally liable for certain debts and lawsuits incurred by the company. Forming a Delaware Limited Liability Company does not require an attorney and you can save a lot of money if you do it yourself with the five simple steps below.
Before getting into the five steps here are a few things to know about Delaware LLCs.
Any business doing business in Delaware are required to obtain a business license from the Delaware Division of Revenue and this license is required before starting to transact business.
The easiest way to get the business license is through the Delaware One Stop Business.
How Much Does It Cost to Get an LLC In Delaware?
The filing fee for a Delaware Limited Liability Company is $90, payable to the Delaware Secretary of State. Typical time of approval is 1-3 weeks but if you need it faster, you can pay $50 for expedited, same day processing
Delaware Annual Report and Annual Fees
Delaware requires all LLCs to file annual reports. Delaware LLCs are subject to a $300 Delaware Annual Franchise Tax annually.
- Minimum Number – one or more
- Members/Managers- at least one is required to be listed in the Articles of Organization
- Residence Requirements – none specified
- Age Requirements – none specified
Steps to Forming an Delaware LLC
Step 1. Name Requirements
Your corporate name must end with the words Limited Liability Company or an abbreviation of these words (“LLC,” “L.L.C.,” “Limited,” “LTD.,” “LTD”.). Check out our article on naming your LLC for all of the requirements that you must follow when naming an LLC.
Now that you have the perfect name, you want to be sure nobody else is using it as each state requires a unique name per LLC or Corporation. To check if your name is being used, visit our page to do a free Delaware LLC name search.
While you are picking a business name, you may want to see if a domain name is available too that matches. Do a domain name search here
Step 2. Choose a Registered Agent
The registered agent must have a physical presence in Delaware but may be an individual resident, domestic or foreign corporation authorized to transact business in Delaware. The registered agent must also have a physical address in Delaware and a Post Office Box is not acceptable. If the registered office includes a suite number, it must be included in the registered office address.
Provided you as the business owner have a physical presence in Delaware, you can be the registered agent however, there are some privacy benefits to having a third-party registered agent.
Check out our article on LLC Statutory Agents for more details.
Step 3. File the Certificate of Formation
This is the most important step and many people believe that you need an attorney to file. While we don’t discourage having an attorney, filing a Delaware LLC can be done by most people, but you can save considerable money over an attorney and make sure everything is filed correctly by using a formation service such as LegalZoom.
Step 4. Create an Operating Agreement
An operating agreement is not required in Delaware but is typically a good idea, especially for an LLC owned by multiple people. The primary function of the operating agreement is to govern the relationship between the owners of the business, but also outlines who makes what decisions, how profits or losses are distributed and the operating procedures of the LLC.
Step 5. Get an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number (FEIN), is used to identify a business entity. It is essentially a social security number for the company.
In addition to the EIN being an identifying number for the LLC it serves a few other purposes such as:
- Opening a business bank account
- Federal and State tax purposes
- Conduit to pass payroll taxes for employees paid by the company
This link will take you to the IRS website to get an EIN for your LLC. Less than five minutes and you will have your number free of charge. Wait until your LLC is approved and filed before applying for your EIN.
Something to consider with a new LLC is that it has no credit history associated with it and as such may make it a more difficult to acquire business funding or vendor credit. Depending on the industry, you may want to look into building your LLC’s business credit soon after filing to begin generating a credit history. Dun & Bradstreet offers a lot of information about improving business credit.
Don't want to go it alone but don't want the expense of an attorney? Another alternative is to use an LLC formation service that will do the formation at a low cost. Take a look at our comparison page of popular LLC formation services.
IncFile has a special right now for LLC formation services for only $49 plus state fees, plus a free registered agent for the first year!