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How to Start a Business in Delaware

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Delaware is a tiny state, but has an outsized importance in the world of corporations — more than half of public and Fortune 500 companies are incorporated in Delaware, including giants like Apple, Coca-Cola, Google, and Wal-Mart. Why? Delaware is one of five U.S. states that levies no sales tax of any kind. And, it’s income tax rates are relatively low. For corporations, there is no state corporate income tax for companies that are formed in Delaware, but do not transact business there. Additionally, the Delaware LLC is the most flexible type of business entity offered by any state or country in the world. There are more registered businesses in Delaware than there are residents! Aside from its beautiful beaches and central location in the Mid Atlantic, Delaware boasts some of the best financial benefits for residents and business owners in the entire country. We’re very on board with that.

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General resources for starting a business in Delaware

  • Physical Address
    Delaware Secretary of State
    Townsend Building
    401 Federal St #3
    Dover, DE 19901

  • Delaware Tax Forms
    http://revenue.delaware.gov

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Fun facts about starting a business in Delaware

Famous business founded in Delaware: Happy Harry’s

Happy Harry’s was an American drugstore chain that was eventually merged into Walgreens in 2006. In 1962, Harry Levin opened the first store in Wilmington, Delaware, simply called “Discount Center.”

Famous entrepreneur born in Delaware: Phineas Banning

Phineas Banning (1830–1885) was an American businessman, financier and entrepreneur, born in Wilmington, Delaware. He was known as “The Father of the Port of Los Angeles,” and was one of the founders of the town of Wilmington. His drive and ambition laid the foundations for what would become one of the busiest ports in the world.

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Which type of legal structure is best for my business in Delaware?

You must consider the tax, legal, and liability implications carefully before deciding on the best structure. We strongly recommend you incorporate.

Here are five helpful steps to determine the best legal structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Delaware.
LLC (Limited Liability Company)
A limited liability company (LLC) is a hybrid legal structure that provides the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership.

Steps to starting an LLC in Delaware:

  • Step 1 — Choose a name for your LLC.
  • Step 2 — File a Certificate of Formation.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with necessary publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — Pay your state tax obligations.
  • Step 8 — Register foreign LLCs doing business in Delaware.

For help forming your LLC in Delaware we recommend CorpNet (they have fees for their service).
Alternatively visit the Delaware Secretary of State website.

Other Delaware resources for LLCs:

Department of State: Search for the availability of your LLC name here.
Reserve your LLC name here.

Delaware Division of Corporations: File your “Certificate of Formation of Limited Liability” here.

List of Delaware Agents: Every Delaware LLC must have an agent for service of process in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC. If your LLC has more than one member, even if it has no employees, you will need an EIN.

Delaware Division of Corporations Franchise Tax Section: All LLCs and foreign LLCs must pay Alternative Entity Tax each year.

Delaware Division of Revenue: Register here if you will be selling goods, or if you have employees.

Delaware One-Stop Registration: Register for all necessary licenses here.

Sole Proprietorship
A sole proprietorship is an unincorporated business. A sole proprietorship has one owner who pays personal income tax on all profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual business owners or self contractors.

Steps to starting Sole Proprietorship in Delaware:

  • Step 1 — Choose a business name.
  • Step 2 — File a trade name with the Superior Court of your county.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in Delaware we recommend CorpNet (there are fees for their service). Alternatively, you can visit the Delaware Secretary of State website.

Other Delaware resources for Sole Proprietorship:

Department of State: Search for the availability of your sole proprietor name here. You can use your own given name or a fictitious business name.

Delaware State Court: Trade name search.
Register your trade name here.

U.S. Patent & Trademark Office: Federal site for your business name search. Click on the “TESS” link.

Delaware One-Stop Registration: Register for all necessary licenses here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) here. You will need an EIN if you hire employees.

Delaware Division of Revenue: Register here if you will be selling goods, or if you have employees.

Partnership
A partnership is created from two or more people doing business together for profit and share ownership. There doesn’t have to be a written agreement to form the partnership. Each partner contributes to all aspects of the business, and shares in the profits and losses of the business.

Steps to starting Partnership in Delaware:

  • Step 1 — Choose a name for your partnership.
  • Step 2 — File a trade name.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Get an Employer Identification Number (EIN).

For help forming your partnership in Delaware we recommend CorpNet (they have fees for their service). Or, you can visit the Delaware Secretary of State website.

Other Delaware resources for Partnership:

Department of State: Search for the availability of your sole proprietor name here. You can use your own given name or a fictitious business name.

Delaware State Court: Trade name search.
Register your trade name here.

U.S. Patent & Trademark Office: Federal site for your business name search. Click on the “TESS” link.

Delaware One-Stop Registration: Register for all necessary licenses here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) here. You will need an EIN if you hire employees.

Delaware Division of Revenue: Register here if you will be selling goods, or if you have employees.

S Corporation
An S corporation (or S Corp) is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. The corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

Steps to starting S Corporation in Delaware:

  • Step 1 — Name your corporation.
  • Step 2 — Prepare and file a Certificate of Incorporation.
  • Step 3 — Find a Registered Agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Delaware Annual Report and Franchise Tax Requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Delaware.

For help forming your S corporation in Delaware we recommend CorpNet (they have fees for their service). Alternatively visit the Delaware Secretary of State website.

Other Delaware resources for S Corporation:

Department of State: Search for the availability of your corporation name here.
Reserve your corporation name here.

Delaware Corporate Forms: File your “Certificate of Incorporation” here.
File your “Annual Report” and pay business entity tax here.

List of Delaware Agents: Every Delaware corporation must have an agent for service of process in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

Delaware Division of Revenue: Register your corporation here.

Delaware One-Stop Registration: Register for all necessary licenses here.

C Corporation
A C corporation (or C corp for short), refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. There is no limit to the number of shareholders a C corporation can have. It is the most common type of corporation in the U.S.

Steps to starting C Corporation in Delaware:

  • Step 1 — Give your corporation a name.
  • Step 2 — Prepare and file a Certificate of Incorporation.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Delaware Annual Report and Franchise Tax Requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Delaware.

For help forming your C corporation in Delaware we recommend CorpNet (there are fees for their service). Alternatively, you can visit the Delaware Secretary of State website.

Other Delaware resources for C Corporation:

Department of State: Search for the availability of your corporation name here.
Reserve your corporation name here.

Delaware Corporate Forms: File your “Certificate of Incorporation” here.
File your Annual Report and pay business entity tax here.

List of Delaware Agents: Every Delaware corporation must have an agent for service of process in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

Delaware Division of Revenue: Register your corporation here.

Delaware One-Stop Registration: Register for all necessary licenses here.

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Why choose Delaware for my business?

  • 1

    Grasshopper - The Best States to Incorporate
    “What is it that makes Delaware so attractive to corporations? Besides not charging any sales tax, the state offers a comprehensive package of incorporation services including thorough and easily accessible legal guidance from their well-developed legal courts.”

  • 2

    Rocket Lawyer - Delaware’s Business-Friendly History
    “According to the pamphlet, ‘Why Corporations Choose Delaware,’ more than 50 percent of Fortune 500 companies, and close to one million business entities, have made Delaware their home.”

  • 3

    Economic Development Office
    Delaware Grant Programs.

  • 4

    Delaware Incentives
    “Delaware offers several types of incentive programs to stimulate new business growth, expansion and relocation, and spur more employment opportunities. Incentive programs include grants, loans, tax credits, local property tax incentives and workforce training grants.”

  • 5

    Minority, Women, and Veteran Owned Businesses
    Opportunities for minority, women, and veteran owned businesses.

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