How to form a Delaware LLC

Why Delaware remains the top choice

Delaware has dominated business formation for decades thanks to its flexible statutes, experienced Court of Chancery, and privacy protections. The state allows single-member LLCs, keeps member names off public filings, and offers clear dispute resolution mechanisms. Even companies headquartered elsewhere choose Delaware to attract investors who prefer the state’s predictable legal environment. Before filing, confirm whether your home state requires foreign qualification, which adds annual fees but ensures you can operate legally where you maintain offices or employees.

Step 1: Choose a name and confirm availability

Delaware requires LLC names to include “Limited Liability Company,” “LLC,” or “L.L.C.” The name must be distinguishable from existing entities on file with the Division of Corporations. Use the state’s online Entity Name Search to verify availability. Consider reserving the name for 120 days by submitting a Name Reservation Application and paying the 75 dollar fee. Trademark conflicts still matter, so search the U.S. Patent and Trademark Office database and examine domain availability before finalizing branding.

Step 2: Appoint a registered agent

Every Delaware LLC must appoint a registered agent with a physical address in the state. The agent receives legal notices, lawsuits, and tax correspondence on behalf of your company. Many founders select commercial registered agents who charge between 50 and 300 dollars per year and forward mail digitally. If you maintain a physical presence in Delaware, an employee can serve as agent, but they must be available during business hours. Keep agent information accurate; failing to maintain a registered agent can lead to administrative dissolution.

Step 3: File the Certificate of Formation

File the Delaware Certificate of Formation by mail or through an authorized service provider. The document is short and includes the LLC name and registered agent address. The filing fee is 90 dollars, and you can request expedited processing for an additional fee if you need same-day approval. Once processed, the Division of Corporations issues a stamped copy that serves as proof of existence. Store this document with your corporate records.

Step 4: Draft an operating agreement

Delaware does not require operating agreements to be filed with the state, but investors and lenders expect one. The agreement outlines ownership percentages, capital contributions, voting rights, and procedures for admitting new members or handling disputes. Include provisions on management structure, profit distribution, indemnification, and exit scenarios. Delaware’s freedom of contract lets you customize terms extensively, so consult counsel, especially if you anticipate raising capital or issuing profits interests.

Step 5: Obtain an EIN and open bank accounts

Apply for an Employer Identification Number from the IRS using Form SS-4. You can file online and receive the EIN immediately. Banks require the EIN, operating agreement, and Certificate of Formation to open accounts. Prepare resolutions that authorize signers and outline banking policies. If your company has multiple members, collect personal information and identification to satisfy Know Your Customer requirements.

Step 6: Register outside Delaware if needed

If you operate outside Delaware, you may need to register as a foreign LLC in those states. Each jurisdiction has its own fees and compliance requirements. For example, California requires a 70 dollar registration fee and a Statement of Information filing within 90 days. Track these obligations in a compliance calendar to avoid penalties.

Annual franchise tax and reporting

Delaware LLCs pay a flat 300 dollar annual franchise tax due on or before June 1. There is no annual report for LLCs, but missing the tax deadline triggers a 200 dollar penalty plus 1.5 percent interest per month. Set calendar reminders and ensure your registered agent forwards tax notices promptly. If you dissolve the LLC, file a Certificate of Cancellation to stop franchise tax accruals.

Maintain good standing

Keep internal records up to date, including membership ledgers, minutes of major decisions, and amendments to the operating agreement. Update the registered agent information if it changes. When raising capital, investors may request a Certificate of Good Standing from the state, which costs 50 dollars and confirms that franchise taxes are current. Failing to maintain good standing can delay financings or contracts.

Other compliance considerations

Depending on your industry, you may need state or local licenses. Delaware does not require general business licenses for entities formed but not operating in the state, yet your home jurisdiction might. Sales tax registration, payroll tax accounts, and zoning approvals depend on where you conduct business. Secure business insurance that fits your risk profile, including general liability, professional liability, or workers’ compensation coverage.

Timeline and cost recap

Budget 90 dollars for the Certificate of Formation, 75 dollars if reserving the name, and 300 dollars annually for franchise tax. Registered agent service ranges from 50 to 300 dollars per year. EIN issuance is free. Foreign registration fees vary by state. With documents prepared, you can complete formation within one to three business days using standard processing. Expedited service shortens the timeline to a few hours for an additional fee.

Next steps after formation

Once formed, focus on building corporate infrastructure. Draft a capitalization table, adopt banking and expense policies, and implement bookkeeping software. If you plan to issue equity, create membership interest certificates and track transfers. When hiring employees, register for state payroll taxes and unemployment insurance. Keep stakeholders informed about compliance obligations, and revisit the operating agreement annually to ensure it reflects current ownership and governance.

Bottom line

Forming a Delaware LLC remains straightforward when you follow a structured checklist. Secure a compliant name, appoint a registered agent, file the Certificate of Formation, and build a thorough operating agreement. Stay on top of franchise taxes and foreign registrations to keep the company in good standing. With these steps complete, you gain the flexibility and legal protections that make Delaware the preferred domicile for small and mid-sized businesses.