Delaware's business-friendly environment makes it one of the most popular places to start a new company. Forbes reports that it's home to more than two-thirds of the nation's Fortune 500 companies.
If you're ready to join their ranks by creating a limited liability company in Delaware, follow these 4 steps to begin your new business endeavor.
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X Steps to Start an LLC in Delaware
The Delaware Division of Corporations manages the process of forming new business entities in the First State. Creating a legal business like an LLC protects your personal assets from business debts and judgments. For example, if someone sues your company and wins, you'll have to pay them from your personal accounts if you haven't established a separate legal business entity.
These 4 steps will guide you through official LLC registration with the Delaware DOC. You can complete most of the steps to start your LLC through the Delaware One Stop business registration and licensing portal.
1. Pick a Unique LLC Name
First, you need to find a name for your LLC that hasn't been taken by another Delaware business. You can search the online database provided by the state Division of Corporations to see whether your selected business name is unique enough to make the cut.
When you find the right name, you need to add either Limited Liability Company, LLC or L.L.C. Optional additions for Delaware LLC names include Trust, Syndicate, Union, Society, Institute, Fund, Club and Foundation.
If you're not ready to form your LLC but you have the perfect name in mind, you can reserve it for 120 days. You simply need to fill out the online Application for Reservation of Limited Liability Company Name form through the Division of Corporations and pay the associated $75 fee. You can also print this form and mail it to the agency with a check or money order for your fee.
You can also create a fictitious business name if you plan to do business under a name other than the legal LLC name.To register a so-called assumed, doing business as, or DBA name, you'll need to submit the Registration of Trade, Business & Fictitious Name Certificate with the Delaware Superior Court. This form carries a fee of $25.
2. Select a Registered Agent
You must name a registered agent who agrees to accept legal paperwork and other official documents for your LLC. This person (age 18 or older) or business must have a Delaware mailing address (physical street address, not a post office box). If your company has a location in the state, the LLC can act as its own registered agent.
You can also hire a registered agent service to fill this role for your Delaware LLC. The DOC maintains a list of professional registered agents approved to do business in the state.
3. Submit the Formation Documents
You'll need to complete the Certificate of Formation of a Limited Liability Company, which requires:
- The full legal name of your LLC
- The name and address of your Delaware registered agent
- The signature of an authorized person
You can upload these documents through the state's online portal or send them by postal mail to Division of Corporations -John G. Townsend Building – 401 Federal Street – Suite 4 – Dover, DE 19901. Postal submissions must have a cover sheet that includes your name, LLC name, address and phone number.
The filing fee for the Certificate of Formation is $90. You can also pay $50 extra to receive a certified copy of your certificate upon approval.
Check your document carefully before you click Submit. If you have an error like misspelling of your LLC name, you'll have to pay $200 to have it corrected in the future.
4. Obtain a Business License
You need to get a Delaware business license through the Division of Revenue for your LLC if you plan to:
- Make sales in the state
- Have a business location or real estate in the state and/or
- Hire employees to work in Delaware
Before you can hire employees in the state, you must register for a withholding account with the DOR. The agency also requires you to file forms for Unemployment Insurance and Workers' Compensation policies, so you need to obtain insurance before moving forward with your hiring plans.
Delaware may require other licenses and permits depending on your industry. You can review the full list of industries with mandated permits and explore the associated paperwork to operate your LLC on the state's Business First Steps page. This portal also provides information about municipal business licenses and permits in Delaware, which you might need depending on where you set up shop.
The Next Steps After Forming an LLC in Delaware
You have a few more tasks to complete before you can officially start operating your Delaware LLC.
Create an Operating Agreement
Like most states, Delaware recommends but doesn't require LLCs to have an operating agreement. This legal document describes operational elements of your business, such as the management structure, division of profits and losses, rights and responsibilities of the owners (members) and managers, and protocol for resolving disputes.
If you don't have an LLC operating agreement, you'll need to default to state law when a conflict arises, which may not serve the best interests of your business.
Sign Up for an Employer Identification Number
The Employer Identification Number (EIN) lets you pay taxes, set up a bank account, and conduct other financial business for your LLC. You can get your EIN for free from the IRS by submitting a simple online form. You can also request your EIN by mail if you prefer.
Open a Bank Account for Your Business
Preserving limited personal liability for business debts is one of the main reasons to create an LLC. However, you risk losing this benefit if you mix personal and business assets. Once you have your EIN, you can open bank accounts specifically for your LLC. Most companies start out with a checking account, savings account, and credit card for daily operational expenses.
Select a Payment Services Provider
You'll need a way to accept payments for the products and services sold by your LLC, and Pay.com has the full-service infrastructure you need. We combine simple setup and seamless customization with advanced security measures and an affordable price.
You'll be able to accept credit cards, debit cards, digital wallets and more shortly after completing our simple signup process.
Other benefits of selecting Pay.com as your payment services provider include:
- Easy customization even for new business owners and tech novices
- Access to advanced APIs that support high-tech ecommerce strategy
- Transparent flat-fee rate structure
- Expansive range of available payment methods, helping your business align with your customers' preferences
- Robust data reporting through our intuitive Pay Dashboard platform
- High-level security that complies with Level 1 of the Payment Card Industry Data Security Standards (PCI DSS), including features like tokenization and multi-layer authentication.
Fulfill Annual Tax Requirements
Delaware LLCs must pay an annual tax of $300. It's due by June 1 each year. Unlike corporations, however, LLCs don't have to file an annual report.
The Bottom Line
Opening an LLC in Delaware has many benefits for your small business. In addition to liability protection, you'll experience tax advantages and operational convenience compared to the corporate business structure. The First State makes it easy for companies to set up shop, one of the reasons why Delaware is such a popular LLC location.
Pay.com provides the power to accept multiple methods of payment. Regardless of the size and type of business you plan to start, we offer the solutions you need to create a secure, satisfying checkout experience that will build loyalty among your target audience. Click here to get started now!
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