The legislative hall in Delaware to incorporate a business
ComplianceLegalDecember 06, 2022

How to incorporate a business in Delaware

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The cost to form an LLC (limited liability company) or incorporate a business in Delaware is consistently among the lowest in America. And because Delaware imposes no income tax on either LLCs or corporations, and imposes no tax on capital stock for small companies, business owners are continuously drawn to Delaware for its pro-business and pro-privacy laws. Learn more about incorporating in Delaware by reading on.

Top reasons for incorporating in Delaware

General corporation law. This is the standard by which all others are measured. It’s clear and concise, and possesses enough provisions to handle any situation corporations are likely to encounter.

Business-oriented legislature. Delaware utilizes experts in corporate law in reviewing business statutes and recommending changes annually to meet the needs of modern businesses.

Court system. Delaware has a special Chancery Court to hear equity cases involving corporate entity matters that does not award punitive damages, has no jury trials, and has expert judges to render thorough decisions with great speed.

Case law. Delaware case law is the largest, most comprehensive, and most complete body of corporate case law in the country, which provides corporate officials and
their legal counsel extensive precedents.

Division of Corporations. Delaware’s Division of Corporations handles more than 20,000 corporate filings per month with the efficiency of a well-oiled machine and can expedite filings
within 24 hours or — in cases of extreme urgency — in one or two hours.

Steps to take when incorporating your business in Delaware

1. Choose a name for your business

Selecting a name that aligns with your business message, product and service isn't always easy. You also want a name that appeals to your customers and is easy to remember.

Additionally, it is very important to conduct a state name check, which lets you know if your desired name is already taken in the preferred state of incorporation. Also, Delaware has rules specific to corporations and LLCs regarding what names you can use, including what words must be included.

Consult our Delaware State LLC Guide or Corporation Guide to find out more about naming requirements for LLCs and corporations.

2. Recruit and/or appoint members/managers (LLCs) or directors (corporations)

Corporation requirements:

  • Delaware requires a corporation to have one or more directors.
  • Delaware does not specify age requirements.
  • Delaware does not specify where directors must reside.
  • Delaware does not require director names and addresses to be listed in the Certificate of Incorporation.

LLC requirements:

  • Delaware requires LLCs to have one or more members/managers.
  • Delaware does not specify age requirements of members/managers.
  • Delaware does not specify where members/managers must reside.
  • Delaware does not require member/manager names and addresses to be listed in the Certificate of Formation.

3. Obtain a registered agent

A registered agent is a person or a business appointed by your business to receive service of process and other important legal and tax information. Delaware requires all corporations and LLCs to have and maintain a registered agent with a physical address (no PO boxes) in the state of Delaware.

Form an LLC

4. File the incorporation paperwork

A Certificate of Incorporation (for corporations) or a Certificate of Formation (for LLCs) needs to be filed with the Department of State.

5. Review annual report and franchise tax requirements

Delaware requires corporations to file an Annual Franchise Tax Report. The due date for corporations is March 1. The annual report fee is $50. The franchise tax is calculated based on the corporation's number of authorized shares and par value. If the number of shares exceeds 5,000, the annual fee may increase. Delaware requires LLCs to file an Annual Franchise Tax Statement by June 1. The fee is $250.

6. Obtain any required business licenses and/or permits

Permits and/or business licenses are necessary for most types of businesses, including sole proprietorships. To operate legally and meet government standards, you may be required to obtain licensing at the municipal level as well as the state and federal levels.

7. Complete other regulatory obligations and registrations.

Other tax and regulatory obligations you should consider for your corporation or LLC include obtaining a Federal tax identification number (EIN), an IRS identification number used for businesses. Corporations and LLCs must use an EIN when filing taxes.

Keeping your business' finances separate from your personal is not only a practical idea but is required to show that you are keeping the assets of your business separate from your personal assets. To apply this practice early on, open a bank account for your LLC or corporation.

8. Additional start-up considerations

Depending on the structure of your business and the decisions made by the owners and/or management, incorporating your business in Delaware may also include these variables:

  • Real estate and zoning requirements
  • Loan and capitalization requirements
  • Vendor contracts
  • Professional licensing

Register in other states where you are transacting business

If you incorporate your business in Delaware but are conducting business in other states, you may need to foreign qualify in those states. LLCs and corporations are considered domestic only in the state of incorporation. In all other states, they are considered foreign companies. States require foreign companies that are transacting business there to register. This process is called foreign qualification.

The foreign qualification process is very similar to that of incorporation. A state filing must be made and applicable state fees paid. States also impose ongoing requirements on foreign-qualified companies, such as annual report filings and fees. So when you incorporate in Delaware and foreign qualify in another state or states, you will be responsible for the ongoing filings and fees in Delaware and the state(s) of foreign qualification.

  • What constitutes transacting business can vary by state, but common criteria include:
  • Physical presence. Does your company have an office in that state?
  • Employees. Does your company have employees in that state?
  • Bank account. Does your company have a bank account in that state?
  • Transactions orders. Does your company service customers or take orders in that state?

It is best to contact an attorney if you have questions on whether your company is transacting business in a particular state or group of states and would foreign qualify.

Learn more

BizFilings is dedicated to making starting a business easier so you can focus on doing what you love. For more information, check out our state guides for LLCs and corporations.

Register your company to transact business in another state or multiple states

Foreign Qualification Starts at $219 + state fees

Nikki Nelson
Customer Service Manager
small business services


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