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Delaware LLC Cost

You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.

And we’re not talking about renting office space or paying employees  before you sell a single product, there are startup costs associated with launching an LLC in Delaware.

Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Delaware startup fees here.

Bare Minimum Cost to Start an LLC in Delaware

Optional: LLC Name Reservation Fee

    • $75 for either an online or paper application

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $79 for LegalZoom

Required: Certificate of Formation Fee

    • $90 for a hard copy filing

Required: Business Licenses

    • Cost varies depending on location and license type

Overall Delaware LLC Formation Costs

LLC Name Reservation Fee

The Delaware Secretary of State doesn’t require a name reservation to start an LLC. However, you may have a great name that you’d prefer to keep to yourself while you sort out your formation paperwork. In that case, reserving it could be a good move. Name reservation, either online or by mail, will place a 120-day hold on your name for $75. After your reservation expires, you can renew it for another $75. But if you’re ready to start your business, it saves time and money to jump right to the Certificate of Formation, which will officially register your name.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

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Certificate of Formation Fee

This is the big one, the most important form that you’ll file to start your Delaware LLC. Your business isn’t authenticated until the Secretary of State accepts and files your Certificate of Formation, but it’s going to cost you a $90 fee. Plus, if you want expedited processing, the S.O.S. offers four options ranging from $50-1,000. Once you file your Certificate of Formation, your business will be legitimate and you won’t have to pay this fee again.

The Delaware Certificate of Formation is probably the simplest document required by any state for LLC formation, but it does include some vital information about you and your business. You’ll need to include the name of your LLC, the name and address of your registered agent, your name, and your title.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Certificate of Formation on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

Business Licenses

Every entity conducting business in Delaware is required to apply for a business license online or using this form. Depending on your location and the type of business you do, your LLC may need multiple licenses. For example, an electrician is also required to seek licensure from the Delaware Board of Electrical Examiners. And there are local licensure laws for different cities. Fees vary based on the type of license. To find out which business licenses you might need, visit the Delaware Division of Professional Regulation website.

What are some of the most commonly required business licenses for Delaware LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

Delaware LLC Service

Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for a Delaware LLC service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.

Most of these services (like LegalZoom or ZenBusiness) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

Registered Agent Service

Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Delaware business law. In short, you need an agent you can trust.

While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best-Rated Registered Agent Services guide.

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.

Cost variations depend on the experience and location of the lawyer, and there are plenty of options, so you should take some time to compare different lawyers’ specialties, rates, location, and experience. When doing your research, utilize sites like Avvo, that offer attorney databases that allow you to find the best Delaware business attorney for you.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Delaware. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

Foreign Qualification Fee

This only applies if your LLC was formed in another state and is now expanding into Delaware. To gain authorization for doing business in Delaware, you’ll need to submit a “Certificate of Registration,” which takes the place of the Certificate of Formation.

All foreign business entities are required to foreign qualify in Delaware, or they could incur some pretty severe penalties. But to file the Certificate of Registration, you’ll need to shell out some money, $200 to be exact. Fortunately, like the Certificate of Formation, this is a one-time fee, so you won’t have to worry about it again down the line.

LLC Annual Fees

Delaware makes annual reporting simple for LLCs  they don’t require it! Often, states will require LLCs to file annual or biennial reports to keep their information up-to-date, but Delaware doesn’t, so check that one off your to-do list. However, they do subject LLCs to an annual franchise tax. See below for details.

Taxes

They might not require an annual reporting fee, but Delaware does have a somewhat hefty franchise tax. All LLCs must pay $300 per year before June 1st. This is a recurring tax, so make sure to include it in your annual budget.

Other taxes that might apply to your LLC are employer taxes (if you hire employees) or gross receipts tax (if you sell merchandise).

Otherwise, LLCs are typically classified as “pass-through” entities, so they don’t have to file corporate tax returns. But if you’ve deliberately set up your LLC to be taxed like a corporation, it will be subject to the corporate income tax of 8.7%.

What if I Don’t Pay?

Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.

Failure to pay your franchise taxes will result in a $200 fee, plus 1.5% interest per month your payment is outstanding. Plus, your LLC will be rendered “void.” If you fail to maintain a valid registered agent, your LLC will be labeled “forfeited.” Both of these statuses mean that your company has fallen out of good standing with the state, and without good standing, you will be unable to foreign qualify in other states, apply for business loans, renew business licenses, and make certain other transactions.

Don’t put off reconciling with the state if your business has gone “void” or “forfeited.” Fail to make the necessary payments and filings and the Secretary of State will cancel your LLC.

Planning Your Expenses

By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Delaware.

Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees  like registered agent updates and franchise taxes  so your business doesn’t fall out of good standing.

Key Steps for Starting a Delaware LLC

  1. The first step to forming a Delaware LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  2. Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Delaware, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
  3. The third step involves the preparation and filing of your Certificate of Formation. You’ll need to fill out the paperwork and pay a $90 fee. Once the state processes this document, your LLC will be officially open for business!
  4. That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Delaware LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  5. You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  6. Next, you’ll need to register for any relevant taxes with the Delaware Division of Corporations, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Delaware!

Key Steps for Maintaining a Delaware LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

LLC maintenance is a bit easier in Delaware than in most states, due to the fact that this state does not require annual reports. However, you might still want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Delaware LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($39) – Northwest offers a bit more of a premium service. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Delaware.

What are the state business tax rates in Delaware?

If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 2.2% and 6.6%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Delaware’s 8.7% corporate income tax on your business revenue.

How quickly does Delaware process LLC formations?

Ordinarily, the Secretary of State should be able to process your LLC’s formation within 10-15 business days. However, in the busy months of March, June, and December, it could take up to four weeks. If you’re in a hurry, you can pay an expediting fee to shorten your turnaround time:

  • $50 – 24 hours
  • $100 – Same-day
  • $500 – Two hours
  • $1,000 – One hour

How many small businesses are there in Delaware today?

The state of Delaware is home to more than 77,000 small businesses. Entrepreneurs of all backgrounds and business types find that Delaware is a great place to own and operate a small business.

What are the top small business resources and websites in Delaware?

The Delaware chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Delaware LLCs. The U.S. Small Business Administration’s Delaware District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.

Should I form my LLC in Delaware, or choose a state like Wyoming?

Some people like to form their LLCs in states with favorable legal settings. However, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. Therefore, it’s unlikely that you would be tempted to form your business in another state. That said, Wyoming has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.