How to Form an LLC in Delaware
Forming an LLC in Delaware is a straightforward process that provides liability protection and tax flexibility for business owners. The initial filing fee is $90, filed with the Delaware Secretary of State.
Step 1: Choose Your Business Name
Your LLC name must be distinguishable from existing business entities registered in Delaware. The name must include "LLC" or "Limited Liability Company." Check name availability through the Secretary of State's website before filing.
Step 2: File Articles of Organization
Submit your Articles of Organization to the Delaware Secretary of State with the $90 filing fee. This document establishes your LLC as a legal entity. Processing times vary but typically take 5-10 business days.
Step 3: Obtain an EIN
Apply for a federal Employer Identification Number (EIN) from the IRS at no cost. This is required for tax filing, opening a business bank account, and hiring employees.
Step 4: Register for State Taxes
Register with the Delaware Division of Revenue for applicable tax accounts. Since there is no sales tax, focus on other applicable tax registrations. Delaware has a state income tax that affects LLC pass-through taxation.
Ongoing Costs
Delaware requires an annual franchise tax of $300 to maintain your LLC in good standing.
Delaware LLC Tax Advantages
While Delaware does impose a state income tax, the LLC structure offers flexibility in how income is taxed. Additionally, with no sales tax, retail and e-commerce businesses benefit from simplified compliance.