Delaware LLC Formation Guide

This guide will help you set up an LLC in Delaware. It includes step-by-step instructions for obtaining tax IDs and filing company documents.

Overview

Because they are affordable to set up, offer flexibility for the owners and are simple to manage, LLCs are the most preferred business structure. Your LLC legalizes your business and limits your personal liability. It also allows you to have tax flexibility. As you go through this process, the following steps will guide you.

Instructions for forming Delaware LLC Step-by-Step

  1. Check Name Availability

    Your LLC’s legal name may not be in conflict with any registered name. You can search for the name you want to check availability.

    Name Search: Delaware Department of State – Division of Corporations

    Name search

    Name Reservation: Optional
    Suffix: Shall include the words “Limited Liability Company” (or the abbreviation L.L.C. Or the designation “LLC”.

    DC §18-102

  2. Name a registered agent

    Before you can file to officially create your Delaware LLC, it is necessary to determine who your Delaware registered agent will a be. A registered agent is the legal representative of a business that receives notices about lawsuits and other legal notices.

    Every LLC must have a registered agent as required by state law. When you file Delaware articles of incorporation with the Delaware Department of State Division of Corporations, the registered agent will be designated.

  3. Delaware Certificate of Formation

    To create a limited liability company, file the articles of organization

    Agency: Delaware Department of State – Division of Corporations
    Form:
    Certificate of Formation for a Limited Liability Company
    Filing Method Fax or mail
    Agency Fee: $90 + $50-$1000 optional expedite fee
    Turnaround: ~3 weeks. 24 hours for the $50 state expedite fees. Same-day delivery for the $100 state expedite fees. For $500 state expedite fee, it takes 2 hours. 1 hour for $1000 State Expedited Fee.
    Law:
    Delaware Code Title 6: Commerce and Trade Chapter 18: Limited Liability Company Act
    Notes: Include a cover letter.
  4. Establish Company Records

    Your LLC must maintain accurate and complete records. Your LLC’s first records will be your filed articles of organization. Other official records that your LLC may produce include:

    • Minutes of meetings
    • Operating agreement
    • EIN verification letter
    • Amendments to and other filings to the LLC during its lifetime
  5. Make the Operating Agreement

    An Operating Agreement is the governing document of the LLC. This document outlines the rules and procedures for how the LLC will operate, such as holding an annual meeting. The agreement will be reviewed and approved at your organization meeting.

  6. Organise the Organizational Meeting

    The organizational meeting is the first meeting of members of an LLC. To conduct this meeting, you will need to have your operating agreement and the filed articles of organization. Keep a record of the meeting and keep it in your company records book.

  7. Register for a Federal Employer Identification Number.

    An EIN is required for any LLC that has more than one member, or hires employees. A bank account opening requires an EIN.

    Agency: Internal Revenue Service (IRS).
    Form:
    IRS Form S-4
    Filing Method You can send mail, phone, fax or online.
    IRS fee $0
    Turnaround: Online or over the phone, immediately. 4 business days via fax. 4-5 weeks via mail
    Notes: Only certain hours are available for the IRS website. Before closing your session, print your EIN. For more information, please refer to IRS Pub 1635 Understanding Your EIN.
  8. Delaware State Tax Identification Numbers/Accounts

    Delaware LLCs will need to obtain a Delaware business licence and pay the gross receipts tax. Delaware LLCs must register with the Division of Revenue to open other tax accounts. Delaware provides a single application for registration of your company with the Division of Revenue and the Division of Unemployment Insurance.

    Send your submission to:
    Delaware Division of Revenue

    http://revenue.delaware.gov/

    Form:

    Form CCRA: Combined Application for State of Delaware Business License &/or Withholding Agent
    Filing Method
    Mail or online
    Fee:
    $75 for your first business license. Fees will vary depending on the applicable licenses, locations, or accounts.

    Register with the Delaware Department of Labor if you plan to hire employees.

  9. Consider Electing C-Corp Taxation or S-Corp Fiscal

    Your LLC will automatically be subject to pass-through taxation. However, the majority of LLCs maintain this tax classification. Some LLCs can choose to elect S-Corp and C-Corp tax treatment.

    • S-Corp is a tax-saving tool that can be used by owner-employees earning more than $75,000 annually.
    • Double taxation is a problem for C-Corps: members pay taxes on distributions and the corporation pays taxes. You may be eligible for C-Corp tax treatment if your profits exceed $250,000 or you offer employee benefits.
  10. Get Business Licenses and Permits

    You must have the appropriate licenses and permits to run your business legally. It is easy to find the right licenses and permits for your state and federal business.

    Delaware Business License – General Services

    Agency: Delaware Department of Finance – Division of Revenue
    Law:
    30 DE Code SS 2101
    Notes: A Delaware business license is required for any person or entity that conducts business or trade in Delaware. This applies to Delaware entities that do business in Delaware. You can submit a Nexus Questionnaire to determine if you have a significant presence in Delaware that is subject to taxation and licensing.

    Initial registration

     

    Register Renewal

     

  11. You must continue to file for your LLC

    You are required to file both federal and state tax returns.

    To maintain good standing with the secretary-of-state, many states require that business entities file an annual report. The table below shows the requirements for Delaware LLCs to file an annual report.

    Domestic Delaware Corporation Annual Report Requirements

    Agency: Delaware Department of State – Division of Corporations
    Filing Method
    Online
    Agency Fee: $50 annual fee + franchise tax (minimum $175).
    Due: Each year, March 1. After initial registration, the first report is due each calendar year.
    Law:
    Delaware Code Title 8 Chapter 5, SS 502.
    Original Ink Not necessary
    Notarize: Not necessary
    Penalties: Failure to file the report or pay required franchise taxes can result in a $200 penalty plus 1.5% interest per calendar month.
    Notes: If the corporation has not elected its board of directors, the president, secretary, treasurer, or any other appropriate officer authorized to sign the report (Title 8, Chapter 5, SS 502 (a), )
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