As we embark on this journey to discuss and explore how to start a Limited Liability Company in Delaware, it’s important to note that Northwest Registered Agent is the best LLC formation service you can use to do all this work for you.
Recommended: Northwest Registered Agent
Use Northwest Registered Agent and they will also give you the first year of their registered agent service included too. Go check it out and you’ll appreciate that you did.
I also like to make sure before we jump into this that we talk about what Delaware is known for and the business ideas associated to the state too. The top business ideas for individuals looking to start a Delaware Limited Liability Company are:
- Start a Beach Towel Business
- Start a Wilmington Touring Business
- Start a Blogging Business
The last one is not Delaware related but if you’re going to pick a third topic, I’d go with starting a blogging business.
Once you’ve figured out what type of business you’re going to start, it’s time to figure out your business name.
Name Your Delaware LLC
There are going to be Delaware LLC naming guidelines that you’re going to need to follow. Typically the rules you’ll need to be aware of and follow are:
- Your LLC’s name must contain the phrase “Limited Liability Company” or the abbreviation “L.L.C.”
- Your LLC’s name cannot contain language that would falsely imply that your LLC is something that it is not.
- Your LLC’s name cannot be too similar to an existing business name in Delaware.
- Your LLC’s name cannot be offensive.
Assuming you’ve followed all these rules, you can get creative on how you’d like to go about the next steps here. I always recommend keeping your name as short as possible but you also want to make sure the other LLC members are ok with the business name you’re thking about putting together. It can be difficult sometimes to come to an agreement through the LLC formation process but you’ll need to agree with your business partners. Once you’ve done that it’s imperative that you go to the Delaware Secretary of State’s office to validate that your name is actually available.
The Delaware Secretary of State’s office business name search portal is here:
Use that portal to figure out if your name is open and if so then you should also make sure there are no trademarks associated to it through the USPTO office. You can search and determine if there are active trademarks here:
It’s not a full proof plan but it gets you close to make sure you’re following all the right steps whether it’s a sole proprietorship, foreign LLC, S Corporation or a Delaware Limited Liability Company that you’re building.
Once you’ve done this, it’s time to make sure you can get your digital version of your business name.
Get a Website Domain for Your Delaware Limited Liability Company
I recommend you go to GoDaddy and use their service to register your website domain and use their website builder to make sure you’ve got something up and running quickly.
If you’re going to conduct business online, hire employees or thinking about having a physical street address where you operate – it’s important to also have a website where people can go when you are not open for business.
It’s pretty straightforward stuff but getting the right web address is imperative for your business to operate in the way you’d like it to.
Choose your registered agent
A registered agent is someone who is responsible for handling your legal and tax documents on behalf of your company.
The Delaware Registered Agents Association has a search portal that you can use to look up registered agents in the state of Delaware.
If you’re going to setup a registered agent you can also use an LLC formation service which can help you do just that. I would recommend for an LLC in Delaware that you think about using either a local law firm that’s done this or consider using Northwest Registered Agent. A Delaware Registered Agent is something you’re going to need an whether you try and be your own registered agent or use a service is up to you.
Once you’ve setup and decided on a registered agent service or a solution that works for you, it’s time to take the next step and file your articles of organization.
Prepare and File Articles of Organization
The Delaware Division of Corporations is responsible for handling all entity filings in the state.
You can find the forms you need to file here:
The filing fee is $90 and can be paid by check or money order.
You will need to include the following information in your filing:
- The name and address of your LLC
- The name and address of your registered agent
- The date when your LLC will dissolve (if applicable)
- The management structure of your LLC
- Signature of the organizer
Once you have everything filled out, you can mail or hand-deliver your filing to the address below:
Division of Corporations
401 Federal Street, Suite 4
Dover, DE 19901
After your Articles of Organization have been accepted, you will need to file a Certificate of Formation. Once you’ve done that you can move onto the next piece of the puzzle which is my favorite – operating agreements.
Create an operating agreement
A LLC operating agreement is a document that you put together with your business partners which could also be the managing members of the Limited Liability Company you’re building.
If you’re thinking about setting up a LLC operating agreement, you’re going to need to follow Delaware law which is going to tell you that you don’t need to submit one to the Delaware Secretary of State’s office but it is a good legal document to have.
As you think about what to include in your operating agreement, I highly recommend that if you’ve put personal assets into your business that you call that out.
The typical items you’ll see in an operating agreement are:
- What are the ownership percentages of each member?
- Who is going to manage the LLC?
- What happens when a member wants to leave the business or dies?
These are all important questions that you’ll need to answer as you’re putting your LLC together.
Once you’ve got your operating agreement in place you’ll feel quite a bit better especially if you have personal asset protection built in by referencing this. I would also argue that it’s not just about an LLC formation but any business entity which could include a Foreign LLC, S Corporation, Delaware Company or Delaware Corporations. It’s really a document that’s built to make sure you’re feeling like your business entities are covered when thinking about an operating agreement.
Once you’ve done this for your individual or business entity and feel like the business structure you’ve built is solid – you can move onto the next step which is just as important.
Get an EIN for your Delaware LLCs
The next thing you’re going to want to do is get an employer identification number for your new business.
You can apply for this online through the IRS website. The portal they let you do this on is here:
Once you’ve done that, you can really start thinking about hiring employees, tax structure, business assets, self employment taxes, sales tax, state income tax, federal taxes and so much more. The Internal Revenue Service wants to give everyone a number to operate their business and it’s important to think about this as a social security number for your business. It’s that important.
You’ll use this number when you open a business bank account and it’s also going to be used come tax time. I highly recommend saving the EIN document you have in a safe place so you can use it over and over again in the future.
Now that you have this ready to go – it’s time to go setup your bank account.
Open A Business Bank Account
I recommend you go to Lili to setup your online business banking account. They are the easiest to work with and by far the best mobile app. I love using their service and it’s better than having to go into a bank branch and bring all the documents with you.
You’ll also be able to determine what Delaware requires from a banking perspective. You can use your bank account to cover Delaware LLC costs and pay for a Delaware business license if needed. This is not legal or financial advice but using your bank account to help you pay for Delaware registered agent services and feel like you’re doing what you need – it’s perfect.
Go get one today and if you’re operating agreement has personal assets or you’re putting them into this account – call that out in the operating agreement too.
Get Small Business Insurance
I recommend you go to CommercialInsurance.net to get the quote(s) you’re going to need for the type of business you’re building.
The typical types of insurance are
General Liability Insurance
Professional Liability Insurance
Product Liability Insurance
Workers Compensation Insurance
Commercial Property Insurance
These are all going to be important as you’re thinking about building your business and want to protect yourself from any potential law suits that could come your way. Get the quotes, understand what they cover and remember – you always need to protect your personal assets and your business from personal liability as much as you can. Your LLC owners will thank you for making sure you’ve gone through the Delaware LLC formation in a way that’s going to keep your personal liability protection organized the right way for your Delaware LLC today.
Get a Business License
The last thing you need to do is get a business license. You can check with your state and local municipality on what’s required.
For example, in the City of Wilmington, Delaware – they require the following:
A business license application
A Zoning Certificate (if not already on file)
A Certificate of Good Standing from the Delaware Secretary of State
A Fire Prevention Inspection Certificate (if not already on file)
Proof of property insurance
A completed W-9 form
Payment for the license fee
These are just some examples but you’ll want to make sure you understand what’s required in order to get your license and operate your business in a way that is required.
File an Annual Report
The Delaware Secretary of State will require an annual report to be filed for your LLC. The report is due by June 1st and it’s important to make sure you file this on time so your business stays in good standing with the state.
You can file the annual report online or you can download the form and mail it in. The fee is $300 and it’s important to make sure you have this filed on time so your business can stay in good standing.
Pay Annual Taxes
The Delaware Division of Revenue will require you to pay annual taxes for your LLC. The tax is due by June 1st and it’s important to make sure you pay this on time so your business can stay in good standing with the state.
You can pay the annual tax online or you can download the form and mail it in. The fee is $300 and it’s important to make sure you have this paid on time so your business can stay in good standing.
Starting a Delaware LLC is a great way to protect your personal assets and give your business the legal liability protection it needs. Follow the steps outlined in this article and you’ll be on your way to success here. Congrats on your new business!
How much does it cost to start a Delaware LLC?
The filing fee for the Certificate of Formation is $90. You will also need to pay an annual tax of $300 and file an annual report with the Delaware Secretary of State.
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