You have a big idea, truckloads of ambition, and dreams of a thriving Delaware LLC, and you’re mentally prepared to make it happen.
But the Chinese philosopher Lao Tzu once said, “a journey of a thousand miles begins with a single step,” and for you, that first step is filing the Certificate of Formation.
With such grand plans, the last thing you might want to do is file paperwork, but completing the Certificate of Formation is what authenticates your LLC, making it official in Delaware. It’s perhaps the most important step in starting your Delaware LLC. Following this guide will help take the tedium out of paperwork and get your business started quickly.
But before you dive into the Certificate of Formation, you should have a few pieces of information ready to help streamline the process.
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Choosing an LLC Name
Before anything else, you will need to decide on an LLC name. You must include a business name on your Certificate of Formation, and if the Department of State deems that name unacceptable or unavailable, the document will be rejected, so make sure you nail down a good name right away.
When you land on an ideal business name, make sure that it adheres to Delaware’s business name requirements, which say that it must contain the words “Limited Liability Company,” or the abbreviations “L.L.C.” or “LLC,” and refrain from using any form of the word “bank” without approval from the Delaware Banking Commission. Further, it can’t contain any “lewd, vulgar, or racist” language, so keep it kind and family-friendly!
But following the rules won’t matter if your name is already taken. Perform a business name search to find out if it’s available.
Once you’ve found your perfect name, include it on your Certificate of Formation to automatically register it. In the event that you’re not quite ready to file an LLC, you can place a 120-day hold on your name by submitting a name reservation request.
Choosing a Delaware Registered Agent
A registered agent is your LLC’s liaison to the state, the mediator who takes care of all your important legal, tax, and compliance documents, keeping your business in good standing. Registered agent information is one of the few things required to complete your Certificate of Formation, so be sure to make arrangements with your agent before filing.
You have plenty of registered agent options, but they all fall into one of two categories: individuals and business entities. If you choose an individual like an attorney or business partner, that person must be a Delaware resident with a physical in-state address. And if you go with a corporation like a registered agent service, it must be authorized to do business in Delaware.
Quick Note: If your first choice doesn’t work out, don’t worry. You can always change your registered agent in the future.
Preparing to File Your Delaware Certificate of Formation
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Now for the main event: the Certificate of Formation. Here’s your opportunity to get your LLC officially on record and authorized to conduct business in Delaware.
The form itself is surprisingly short and easy. It’s a single page, and if you gather the necessary information beforehand, you can complete it in a matter of minutes. Here’s what you’ll need:
- The LLC name
- Registered agent name and address
- Organizer name and signature
That’s it! We weren’t kidding about its brevity. But keep in mind that, like Delaware’s other business filings, the Certificate of Formation must include a Filing Memo, and the Filing Memo requires:
- Priority filing (optional)
- The submitter’s name, mailing address, phone number, and email address
- The LLC name
- The type of document
- Number of certified copies or other requests
- Method of return
- Credit card information (if paying via card)
And let’s not forget about the fee! The Certificate of Formation costs $90, payable by check or credit/debit card, so have your payment method lined up as you complete the forms.
Standard processing time is 10-15 business days, although it can take 3-4 weeks during heavy filing periods. But if you’re short on time and need to start your LLC ASAP, you can request one of four expedited service options:
- 24-hour processing for $50
- Same-day processing for $100
- Two-hour processing for $500
- One-hour processing for $1,000
The easiest and fastest way to form an LLC in Delaware is to use the state’s document upload service to file online. If you would rather file on a paper form, you’ll need to download a paper application and Filing Memo, then submit them via mail, in person, or by fax.
If you want to file online, you can fill out the Certificate of Formation and upload it right here. It’s worth noting that the system does not accept filings late at night or on weekends.
Send your documents and payment to:
Delaware Division of Corporations
John G. Townsend Building
401 Federal St. Suite 4
Dover, DE 19901
Live in Dover? Feel free to hand-deliver your materials to the same address, if you prefer.
Or, you can fax them to (302) 739-3812.
What About Foreign LLCs?
The process outlined above works for domestic LLCs (those formed in Delaware), but what if your business is expanding to Delaware from another state? If so, you will have no need for the Certificate of Formation because your LLC will follow a different path.
Every out-of-state business entity must foreign qualify before conducting any business in Delaware, and it can do so by filing a Certificate of Registration (along with a Filing Memo). While the Certificate of Formation costs just $90 to file, the Certificate of Registration will set you back $200. And whatever you do, don’t attempt any business activities in the state before foreign qualifying, because this can lead to some serious consequences down the road.
After your business has foreign qualified, though, go ahead and make deals, sell products, hire employees, and transact business in Delaware.
Want Help Filing Your Certificate of Formation?
Let’s be honest: you’ve got a lot on your plate. Filing paperwork can take time away from your other tasks, ones more focused on setting your budding LLC up for success.
The good news is that you don’t need to file the Certificate of Formation yourself. But if an attorney is out of your price range, hiring an LLC creation service is a great option.
There’s no shortage of business incorporation services out there, but not all of them are equal. Each one offers different packages, costs, and processing times, so it’s important to find the right fit for your LLC.
While each service has optional upgrades and feature packages, on the most basic level, they will review your business information, prepare your formation documents, and submit them to the Delaware Department of State. They will complete everything outlined in this guide and notify you when your Certificate of Formation has been filed. You won’t have to lift a finger.
There are other benefits too. Some services will include a year of free registered agent service when you hire them. Other services offer order tracking, notifications on future documents, assistance drafting your operating agreement, or coverage of certain LLC formation costs.
Important Post-Formation Compliance Issues
Once you’ve successfully filed your Certificate of Formation, your LLC is an official business entity in the state of Delaware. However, this doesn’t mean that your responsibilities have come to an end. There are several other steps you’ll need to take if you want to operate a compliant LLC for years to come.
Acquire a Federal Tax ID Number (EIN)
An EIN is a requirement for all Delaware LLCs, and we would strongly recommend that every entrepreneur obtains one even if the state didn’t mandate it. An EIN enables your LLC to hire employees, open business bank accounts, file taxes, and take care of several other important aspects of LLC maintenance. Even if you operate a single-member LLC with no employees, you should still have an EIN for your business.
Set Up a Financial Infrastructure
One other crucial step is to solidify the financial aspects of your LLC, first by opening a business bank account. You must have separate bank accounts for your personal use and for business purposes, as this will help you keep your personal and business assets separate, a vitally important consideration for any entrepreneur. If you commingle these assets, you leave yourself wide open for lawsuits, as it would be easy for someone to claim that your business is simply an extension of your own personality and not a separate entity from you as a person.
The other portion of this step is to set up an accounting system. This can either mean that you hire an accountant to take care of your LLC’s bookkeeping, or you could acquire high-quality accounting software like QuickBooks. Either way, you need a reliable means of keeping detailed records for each financial transaction your LLC executes. This is another vital part of keeping your personal and business assets separated, and it will also be enormously helpful come tax time.
Acquire Licenses and Permits
The next step involves obtaining any industry-specific licenses and permits your LLC may need to operate in compliance with state laws. All Delaware LLCs must obtain a general business license to conduct business in the states. Beyond that, depending on the nature of your LLC’s business, you may require several permits or you may be able to operate your LLC without any additional state-level licenses.
Thankfully, Delaware makes it very easy to figure out your business’ licensing needs. All you need to do is visit the state’s Division of Professional Regulation and you’ll find the license and permit applications you require. Make sure to check with your county and locality as well, as there may also be licensing requirements for your business on these levels.
Obtain Business Insurance
This step isn’t a requirement, but it is a strong recommendation. The exact insurance policies your business needs will vary based on the type of products and services you offer, but most LLCs should at least have a general liability insurance policy to protect against common perils like slip-and-fall accidents. In some industries, you might need several different insurance policies to cover all of your financial bases, so do your research ahead of time to determine which types of insurance you should purchase.
Pay Your Annual Franchise Tax
Each year, every LLC in Delaware must pay an annual franchise tax of $300. The only information required for this annual filing is the filer’s name, phone number, and email address. Other than the franchise tax payment, Delaware does not require LLCs to file any sort of annual report.
Frequently Asked Questions
About Filing the Delaware LLC Certificate of Formation
How long does it take Delaware to form an LLC?
Standard processing time is 10-15 business days, although it can take 3-4 weeks during heavy filing periods. But if you’re short on time and need to start your LLC ASAP, you can request one of four expedited service options: 24-hour processing for $50, same-day processing for $100, two-hour processing for $500, or one-hour processing for $1,000.
Should I file my own Certificate of Formation, hire an attorney, or use an online service?
This question largely comes down to personal preferences, but we do have some general insights. The DIY route can be quite a bit of work, as you’ll need to complete each step of the formation process on your own with no assistance. As for hiring an attorney, this can be prohibitively expensive for new businesses, as a lawyer can charge hundreds or even thousands of dollars to form your LLC.
You can think of business services companies as a middle ground between these options. While most of these companies charge a fee to form your LLC, that fee will be significantly less expensive than an attorney’s fee. At the same time, you still aren’t going it alone. Instead, you have an experienced professional guiding you through the entire process.
What does Delaware require for LLC formations other than the Certificate of Formation?
Delaware requires all LLCs to obtain a federal tax ID number, also known as an EIN. Other than that, the Certificate of Formation is all you’ll need.
How many small businesses are there in Delaware?
Today, Delaware has nearly 85,000 small businesses. Clearly, entrepreneurs in many different fields find Delaware to be a great place to own and operate a business entity.
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