7 Steps to Form a Delaware LLC
Forming an LLC in Delaware is a popular choice for entrepreneurs who want a flexible business structure in a state known for business-friendly laws. A Delaware limited liability company can work well for holding companies, online businesses, startups, investors, and companies that may operate in multiple states.
Before getting started, new LLC owners should take note of the required steps and form submissions in Delaware. You can learn more about forming an LLC with the Delaware Division of Corporations, or you can form one online with Harvard Business Services, Inc.
Let’s review some of the most important steps when forming an LLC in Delaware.
Step 1: Choose a Name for Your Delaware LLC
Your Delaware LLC needs a unique business name that is distinguishable from existing Delaware entities. The name should include an acceptable LLC designator, such as “LLC,” “L.L.C.,” or “Limited Liability Company.” Before filing, check name availability via a company name check. You may also want to check domain availability, social media handles, and possible trademark conflicts. If you are not ready to form yet, you can also reserve the name temporarily.
Step 2: Select a Delaware Registered Agent
Every Delaware LLC must maintain a registered agent in Delaware. A registered agent receives legal notices, service of process, and official state correspondence on behalf of the company. For many founders, hiring a professional registered agent is the easiest option, especially if they do not have a physical Delaware business address.
Step 3: File the Certificate of Formation
To officially create your Delaware LLC, you file a Certificate of Formation. This document typically includes the LLC name and registered agent information. You can file directly with the state or use a formation service like Harvard Business Services to prepare and submit the filing for you.
Step 4: Create an Operating Agreement
An operating agreement explains how the LLC is owned and managed. It may cover member roles, voting rights, profit distribution, ownership transfers, and procedures for adding or removing members. Delaware does not require you to file the operating agreement with the state, but it is still an important internal document.
Step 5: Prepare for Tax Payment
Most LLCs need a federal business identifier from the IRS to open a business bank account, hire employees, and complete federal tax filings. Business owners can request this tax identifier directly through the IRS. Non-U.S. founders may also be able to obtain one, although the process can involve additional steps if the responsible party does not have a Social Security number or ITIN.
Step 6: Handle Licenses, Taxes, and Foreign Qualification
After forming your Delaware LLC, check whether your company needs any business licenses or permits. If your LLC is physically operating in another state, hiring employees there, or maintaining an office there, you may also need to foreign qualify in that state. Non-Delaware residents should keep in mind that forming in Delaware does not automatically replace the need to register where you actually conduct business.
Step 7: Stay Compliant Each Year
Delaware LLCs must pay an annual tax, which is due by June 1 each year. This is one of the most important recurring obligations for Delaware LLC owners. Missing the deadline can lead to penalties and loss of good standing. You should also keep your registered agent active, update company records, and maintain your operating agreement.
Harvard Business Services, Inc. can help form your Delaware LLC, provide registered agent services, assist with Certificates of Good Standing, and support related filings such as foreign qualification and mail forwarding.
FAQs
How long does it take to form a Delaware LLC?
Processing time depends on the state’s workload and whether expedited service is selected. Many founders use a formation provider to help submit the filing correctly and choose the right processing option.
Do I need to live in Delaware to form a Delaware LLC?
No. You do not need to live in Delaware, but your LLC must maintain a Delaware registered agent with a physical address in the state.
What is the main cost after forming a Delaware LLC?
The main recurring state cost is Delaware’s $300 annual LLC tax, due by June 1 each year. You should also budget for registered agent service and any required licenses or foreign qualification fees.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.