If you've already decided that forming an LLC is right for your business, you may want to consider forming in Delaware. There's a reason well over half of all Fortune 500 companies choose to incorporate in Delaware: the state offers important tax savings, low-cost business formation and business-friendly laws, among other benefits. Here are the fairly straightforward steps you'll need to take to form an LLC in the state of Delaware.
1. Choosing a Name
You will be required to select a name that's available, and it must not be too similar to another business filed with the state. The name you choose cannot seem like it's intended to deceive people, and it must include the words "Limited Liability Company" or "LLC." You are free to add the names of members or words like "institution," "society" or "foundation," if you like.
To make sure the name you want is still available, search the business name database through the Delaware Secretary of State. If you aren't ready to form an LLC yet but you don't want your name to be taken, you have the option of reserving the name online through the Delaware Division of Corporations for $75.
2. Choosing a Registered Agent
It's required to choose a registered agent for your LLC as well. This may be a person or business who will accept legal documents on behalf of your business. If you operate in Delaware, you can act as your own registered agent. If you do business elsewhere, you must choose someone with a physical address in Delaware and authorized to do business in the state.
3. Filing Your Certificate of Formation
The next step is filing your Certificate of Formation of Limited Liability with the state. Once you file this form, your Delaware LLC is official! It will have your business name and the address of your registered agent and the filing fee is a mere $90 -- one of the lowest in the country.
4. Creating an Operating Agreement
Now that you have officially formed a Delaware LLC, the work isn't done. Creating an Operating Agreement is not mandatory, but it's a very wise decision. This document will structure managerial, financial and functional decisions and it will ensure your LLC operates in a way that best fits the needs of its owners, however many there are. It will also become a legally binding contract once all members have signed.
5. Ongoing Requirements
Finally, don't forget that you will need to comply with all regulatory and tax requirements once you form an LLC. This means you should obtain an IRS Employer Identification Number (EIN) if you have more than one member, or if you have a single member but choose to be taxed as a corporation.
You may also need to get business licenses through Delaware and the county in which you operate, and you will be required to file the Annual Franchise Tax Statement by June 1st of every year. The fee for this is $250.
The good news is forming an LLC offers you a lot more flexibility than a corporation and you will not be required to hold regular meetings, or even do business in the state. Delaware offers some of the lowest fees in the country with very business friendly laws, which is why so many businesses choose to incorporate here.
You will be required to select a name that's available, and it must not be too similar to another business filed with the state. The name you choose cannot seem like it's intended to deceive people, and it must include the words "Limited Liability Company" or "LLC." You are free to add the names of members or words like "institution," "society" or "foundation," if you like.
To make sure the name you want is still available, search the business name database through the Delaware Secretary of State. If you aren't ready to form an LLC yet but you don't want your name to be taken, you have the option of reserving the name online through the Delaware Division of Corporations for $75.
2. Choosing a Registered Agent
It's required to choose a registered agent for your LLC as well. This may be a person or business who will accept legal documents on behalf of your business. If you operate in Delaware, you can act as your own registered agent. If you do business elsewhere, you must choose someone with a physical address in Delaware and authorized to do business in the state.
3. Filing Your Certificate of Formation
The next step is filing your Certificate of Formation of Limited Liability with the state. Once you file this form, your Delaware LLC is official! It will have your business name and the address of your registered agent and the filing fee is a mere $90 -- one of the lowest in the country.
4. Creating an Operating Agreement
Now that you have officially formed a Delaware LLC, the work isn't done. Creating an Operating Agreement is not mandatory, but it's a very wise decision. This document will structure managerial, financial and functional decisions and it will ensure your LLC operates in a way that best fits the needs of its owners, however many there are. It will also become a legally binding contract once all members have signed.
5. Ongoing Requirements
Finally, don't forget that you will need to comply with all regulatory and tax requirements once you form an LLC. This means you should obtain an IRS Employer Identification Number (EIN) if you have more than one member, or if you have a single member but choose to be taxed as a corporation.
You may also need to get business licenses through Delaware and the county in which you operate, and you will be required to file the Annual Franchise Tax Statement by June 1st of every year. The fee for this is $250.
The good news is forming an LLC offers you a lot more flexibility than a corporation and you will not be required to hold regular meetings, or even do business in the state. Delaware offers some of the lowest fees in the country with very business friendly laws, which is why so many businesses choose to incorporate here.