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Last Updated on May 14, 2024 by Dr. Gabriel O’Neill, Esq.
Delaware has earned acclaim for its business-friendly atmosphere, drawing in entrepreneurs eager to launch their ventures. Despite the state’s reputation for efficient registration procedures, the prospect of starting a business might still feel daunting.
Worry not, as we’re here to lend a hand! This guide will walk you through the seven simple steps to register your business in Delaware. From selecting a name to obtaining necessary permits, we’ll cover every aspect and offer tips and resources to simplify the process.
Recognizing that not everyone has the time or desire to navigate the registration process alone, we’ve compiled a selection of excellent business registration services such as Northwest Registered Agent. These services can handle the entire process on your behalf.
Whether you’re an experienced entrepreneur or just starting out, our goal is to help you confidently and effortlessly register your business in Delaware. Let’s embark on this journey together!
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How to Register Your Business in Delaware in 7 Simple Steps
Registering your business in Delaware doesn’t have to be a complicated process. Follow these 7 simple steps to get your business up and running in the First State:
Step 1: Choose Your Business Structure
Choosing the right business structure is an important decision when starting a business in Delaware. The right structure will depend on the type of business you plan to operate, the number of owners involved, and your expansion plans. Here are some of the most common business structures in Delaware:
Sole Proprietorship
A sole proprietorship is the simplest and most common business structure in Delaware. As the owner, you’re personally responsible for the business’s debts and liabilities, and there is no legal separation between you and the business. You don’t need to register your sole proprietorship with the state, but you may need to obtain local permits or licenses.
Partnership
A partnership is a business owned by two or more people who share profits and losses. There are two types of partnerships in Delaware:
- General Partnership: Each partner is personally liable for the business’s debts and legal obligations.
- Limited Partnership (LP): It consists of one or more general partners who manage the business and have unlimited personal liability and one or more limited partners who provide capital but have limited liability.
To create an LP in Delaware, you must file a Certificate of Limited Partnership with the Delaware Secretary of State.
Limited Liability Company (LLC)
An LLC is a popular business structure that combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. To create an LLC in Delaware, you must file a Certificate of Formation with the Delaware Secretary of State and create an Operating Agreement to outline the company’s management and ownership structure.
Corporation
A corporation is a separate legal entity from its owners (shareholders) and offers limited liability protection. There are two types of corporations in Delaware:
- C-corporations: Taxed separately from their owners and shareholders
- S-corporations: Allow the business to avoid double taxation on profits
To create a corporation in Delaware, you must file a Certificate of Incorporation with the Delaware Secretary of State and create bylaws outlining the company’s management and ownership structure.
Choosing the right business structure for your Delaware business is crucial. It affects how much you pay in taxes, your liability, and how much paperwork you need to file. Consider consulting with a legal or business professional to help you make the right decision.
Step 2: Select a Unique Business Name
Choosing the right name for your Delaware business is a critical step in the registration process. Your business name should be unique and memorable and convey the essence of your brand. Here’s what you need to know to select a unique business name in Delaware:
Conduct a Name Search
Before registering your business name, you must first ensure that it’s available. The Delaware Division of Corporations offers an online name availability search that allows you to check if the name you want is already in use.
Choose a Legal Entity Name
In Delaware, you’re required to register a legal entity name when forming your business. This name will be used to identify your business by the state and should reflect the type of business structure you choose, such as LLC or corporation.
Consider a Trademark
If you want to protect your business name and logo at a national level, you may want to consider registering a trademark with the United States Patent and Trademark Office (USPTO). A trademark gives you exclusive rights to use your business name and logo for similar goods and services.
Register a Fictitious Name (DBA)
If you plan to operate your business under a name different from your legal entity name, you can register a Fictitious Name, also known as a Doing Business As (DBA) name. This name is registered with the Delaware Division of Corporations and provides a way for you to conduct business under a name that’s more recognizable or marketable.
By understanding and considering these naming options, you can successfully register your business name in Delaware and protect your brand identity.
Step 3: Consider Taxes and Other Costs in Delaware
Delaware is a popular choice for businesses due to its favorable tax laws. Businesses incorporated or formed as LLCs in Delaware are exempt from state income tax and sales tax. Instead, they’re required to pay a franchise tax based on the business entity type and the number of authorized shares.
Additionally, businesses operating in Delaware may be subject to other taxes, such as business and occupation taxes, gross receipts taxes, and employment taxes. The specific taxes applicable to a business depend on factors like business type, income, and number of employees.
Here are some additional details about the taxes that businesses in Delaware may be subject to:
- Franchise tax: The franchise tax is a flat fee that’s based on the type of business entity and the number of authorized shares. For LLCs, the franchise tax is $300. For corporations, the franchise tax is calculated based on the type of corporation and the number of authorized shares, with a minimum of $175-$400, depending on the share reporting method.
- Business and occupation taxes: Business and occupation taxes are based on the gross receipts of the business. The rates vary depending on the type of business activity.
- Gross receipts taxes: Gross receipts taxes are based on the total amount of money that the business receives from its customers. The rates vary depending on the type of business activity.
- Employment taxes: Employment taxes are paid by businesses to fund Social Security, Medicare, and unemployment benefits. The rates are 6.2% for Social Security, 1.45% for Medicare, and 6% for unemployment insurance.
Businesses should consult with a tax advisor to determine which taxes they’re required to pay and how much they owe.
Web-based services like ZenBusiness can simplify the process of registering a business in Delaware and help ensure compliance with state regulations. They assist business owners in registering their companies, submitting the required paperwork to the Delaware Secretary of State, obtaining an Employer Identification Number (EIN), and creating an operating agreement. Additionally, they provide ongoing compliance support to guarantee businesses maintain their reputable status within the state.
Step 4: Register and Acquire Licenses and Permits in Delaware
To operate your business legally in Delaware, you need to apply for several licenses and permits:
Tax Registration: If you plan to sell goods in Delaware, you must register with the Division of Revenue (DOR) and pay the state’s gross receipts tax if applicable. If your business has employees, you also need to register with the DOR for employer withholding taxes. You can register for both taxes online through Delaware’s One Stop Business Registration and Licensing System or by using Form CRA for paper registration.
EIN (Employer Identification Number): If your business has employees or is taxed separately from you, obtaining a federal Employer Identification Number (EIN) from the IRS is necessary. Even if not mandatory, there are practical reasons to obtain an EIN. Many banks require an EIN to open a business account, and other companies may require it for payment processing. Applying for an EIN is free and can be done online.
State Business License: Every Delaware business must obtain an annual state business license issued by the Division of Revenue. You can register for the license online through the One Stop Business Licensing and Registration Service. Depending on your business type, additional licenses or permits may be required from specific state agencies or local governments. It’s important to check the websites of relevant cities, counties, or state agencies to ensure compliance.
Professional and Occupational Licenses: If you work in a regulated profession or occupation, you may need to obtain professional and occupational licenses. The Division of Professional Regulation (DPR) oversees various professional regulatory boards in Delaware. You can find a comprehensive list of regulated professions on the DPR website’s homepage.
Remember to carefully follow the necessary steps and requirements to ensure legal compliance and avoid any potential penalties or issues in running your business in Delaware.
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Step 5: Open a Bank Account For Your Business in Delaware
After obtaining your EIN, the next step in starting your business in Delaware is to open a business bank account. This will allow you to keep your personal finances separate from your business finances, making it easier to manage your money and file taxes.
LLCs, corporations, and partnerships are required to open a business bank account in Delaware. Sole proprietors are not required to do so, but it’s still recommended to help keep your finances organized.
When selecting a bank for your business account, consider factors such as fees, interest rates, and services offered. Shop around and compare different banks to find the best fit for your business needs.
To open a business bank account in Delaware, you will need to provide the bank with the following documentation:
- Your EIN
- A certificate of formation or incorporation
- A copy of your business license
- A copy of your partnership agreement or operating agreement, if applicable
- Identification for all business owners or authorized signers
By opening a business bank account, you will ensure that your finances are organized and that you’re complying with Delaware’s business regulations.
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Step 6: Protect Your Intellectual Property in Delaware
In Delaware, protecting your intellectual property is crucial to safeguarding your business’s unique ideas, products, and services. Here are the three main ways to protect your intellectual property in Delaware:
Trademark
A trademark is a word, phrase, symbol, or design that distinguishes your products or services from those of other businesses. Registering a trademark in Delaware isn’t required, but it’s highly recommended to ensure your rights are protected.
To register a trademark in Delaware, you can apply with the United States Patent and Trademark Office (USPTO). This provides nationwide protection and legal recourse against unauthorized use of the trademark. Additionally, Delaware businesses can register their trademark with the Delaware Secretary of State for state-level protection.
Copyright
Copyright law protects original works of authorship, including literary, musical, artistic, and other intellectual works. When you create a new work in Delaware, you’re automatically granted copyright protection as the creator of the work.
To enhance protection, you can register your copyright with the United States Copyright Office. This provides evidence of ownership and legal protection against infringement.
Patent
A patent is a form of intellectual property protection that gives you exclusive rights to your invention for a certain period. To obtain a patent, you must submit a patent application to the United States Patent and Trademark Office.
The patent process is complex and can take several years to complete, but it’s important to start early to secure your invention’s exclusivity.
By protecting your intellectual property in Delaware, you can ensure that your business has a competitive edge and maintains control over its unique ideas and creations.
Step 7: Set Up Your Payment Infrastructure in Delaware
Having a reliable payment infrastructure is crucial for any Delaware-based business. Here are some steps to set up your payment infrastructure in Delaware:
Choose a Payment Processor
There are many payment processing services available, including PayPal, Stripe, and Square. Consider the fees, security, and customer support when choosing a payment processor.
Obtain a Delaware Sales Tax License
If you sell taxable goods or services in Delaware, you’ll need to obtain a Delaware Sales Tax License from the Delaware Division of Revenue. You can apply for the license online.
Set Up Your Payment Gateway
A payment gateway is an e-commerce application that authorizes credit card payments for online purchases. Popular payment gateway options include Authorize.net, PayPal Payments Pro, and Stripe.
Establish Your Tax Compliance
In addition to obtaining a Delaware Sales Tax License, you’ll need to register for a Delaware Business License and file an annual franchise tax report with the Delaware Division of Corporations.
Monitor and Manage Your Payment Transactions
It’s important to keep track of your payment transactions and monitor for any fraudulent activity. Consider using a payment management system or hiring a bookkeeper to help you manage your finances.
By following these steps, you can set up a reliable payment infrastructure for your Delaware-based business and ensure legal compliance with tax and licensing requirements.
Top 5 Business Registration Services for Delaware Entrepreneurs
These are the top five business registration services for Delaware entrepreneurs:
ZenBusiness
ZenBusiness is an online business registration service that provides business formation, registered agent services, annual report filing, and more. They offer affordable pricing and packages with personalized support and resources to help businesses stay compliant and grow. They also provide a streamlined process to make it easy for entrepreneurs to register their businesses in Delaware.
Swyft Filings
Swyft Filings is a business registration service that offers fast and easy business formation, including LLC formation, incorporation, and compliance. They provide personalized support and resources to help businesses navigate the formation process and stay compliant with state and federal regulations. They have a user-friendly website and provide affordable pricing to make the registration process easy for entrepreneurs.
Tailor Brands
Tailor Brands is an online branding and design service that helps businesses create a professional and cohesive brand identity. They offer a range of branding packages that include logo design, business card design, and social media branding. Tailor Brands also provides a suite of design tools and resources to help businesses create and customize their own branded assets. While not a traditional business registration service, Tailor Brands can help businesses create a professional brand image to attract customers.
Northwest Registered Agent
Northwest Registered Agent is an online business registration service that specializes in registered agent services, compliance management, and document filing. They have a strong reputation for quality and exceptional customer service, and they offer personalized support to help businesses stay compliant with state and federal regulations. Northwest Registered Agent provides a range of business formation services for LLCs, corporations, and nonprofits.
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Bizee (Previously Incfile)
bizee is an online business registration service that offers fast and affordable business formation services. They offer various packages, including registered agent services, compliance management, and document filing. bizee platform is user-friendly and streamlined, making the business registration process easy and hassle-free. They also provide ongoing support and resources to help businesses stay compliant and grow.
These business registration services provide unique features and benefits to help Delaware entrepreneurs register their businesses. By researching and comparing these services, entrepreneurs can find the best one to meet their specific needs and make the registration process easy and efficient.
Business Registration Laws in Delaware
Delaware is known for its business-friendly environment and is a popular choice for many companies, including startups and large corporations, to incorporate. Delaware has specific laws and regulations regarding business registration that govern the process of establishing and operating a business entity in the state. Here are some key points to consider:
- Choosing a Business Entity: Delaware allows various types of business entities, including corporations, Limited Liability Companies (LLCs), partnerships, and sole proprietorships. The most common entity types in Delaware are corporations (both C corporations and S corporations) and LLCs.
- Name Reservation: Before registering your business, you can reserve a name with the Delaware Division of Corporations for a fee. This reservation ensures that no one else can use the chosen name for a period of 120 days.
- Certificate of Incorporation or Formation: To register a corporation or LLC in Delaware, you need to file a Certificate of Incorporation (for corporations) or a Certificate of Formation (for LLCs) with the Delaware Division of Corporations. These documents typically include information about the company’s name, purpose, registered agent, authorized shares (for corporations), and members or managers (for LLCs).
- Registered Agent: Delaware requires all business entities to appoint a registered agent who maintains a physical address in the state and is available during business hours to receive legal documents and official correspondence on behalf of the company.
- Franchise Tax: Delaware imposes an annual franchise tax on corporations and LLCs. The tax amount varies based on the type and size of the entity. Corporations may also have additional annual report requirements.
- Operating Agreements and Bylaws: LLCs and corporations should have operating agreements (for LLCs) or bylaws (for corporations) that outline the internal rules, governance structure, and rights and responsibilities of the owners, directors, and officers.
- Business Licenses and Permits: Depending on the nature of your business, you may need to obtain additional licenses and permits at the local, state, or federal level to operate legally in Delaware. The specific requirements vary based on the industry and location of your business.
It’s important to note that the registration process and requirements may vary depending on the specific circumstances of your business. It’s advisable to consult with an attorney or a professional business service provider who can guide you through the registration process and ensure compliance with all applicable laws and regulations.
Alternative Business Registration Methods in Delaware
Delaware is a popular state for business incorporation due to its favorable business laws and tax regulations. The traditional way to register a business in Delaware is by filing the Certificate of Incorporation with the Delaware Division of Corporations. However, there are also alternative business registration methods available in Delaware.
Registered Agent Services
Delaware law requires every business to have a registered agent in the state who can receive legal and official documents on behalf of the company. Registered agent services can be utilized to provide a registered agent for your business in Delaware. These services are offered by various companies, and they can handle the registration process on behalf of the business.
Incorporation Services
There are several companies that offer incorporation services for businesses looking to register in Delaware. These services can help you with the entire registration process, including preparing and filing the necessary documents with the Delaware Division of Corporations.
Online Filing Services
The Delaware Division of Corporations offers an online filing service for businesses that want to register in the state. The online filing system allows businesses to file their Certificate of Incorporation, Annual Reports, and other necessary documents electronically.
Expedited Services
Delaware offers expedited services for businesses that need their registration documents processed quickly. These services can be utilized by paying an additional fee to expedite the processing of the registration documents.
It’s important to note that while these alternative registration methods can be helpful, it’s still recommended to consult with an attorney or accountant before registering your business in Delaware to ensure that you’re making the best decision for your specific situation.
Benefits of Registering Your Business in Delaware
There are several benefits to registering your business in Delaware, which is why many entrepreneurs and business owners choose to incorporate or form an LLC in the state. Some of these benefits include:
- Business-Friendly Environment: Delaware has a reputation for having a pro-business environment, with flexible corporate laws and a streamlined process for registering and maintaining a business. This helps make the state attractive to both domestic and international businesses.
- Court of Chancery: The Delaware Court of Chancery is a specialized court that handles corporate disputes. It’s widely respected for its expertise in corporate law and its ability to resolve complex legal issues quickly and efficiently. This can provide greater legal certainty for businesses incorporated in Delaware.
- Tax Advantages: Delaware offers several tax benefits for businesses registered in the state, including no state corporate income tax for companies that operate outside of Delaware, no state sales tax, and no personal property tax. Additionally, Delaware does not tax intangible assets, such as trademarks and patents.
- Privacy: Delaware allows a higher level of privacy for business owners compared to some other states. For example, Delaware does not require the names of LLC members or managers to be disclosed in public records, which can help maintain privacy for business owners.
- Flexible Corporate Structure: Delaware’s General Corporation Law provides a flexible framework for businesses, allowing companies to customize their corporate governance structure to meet their unique needs. This can make it easier for businesses to adapt to changing circumstances and grow over time.
- Strong Legal Protection for Directors and Officers: Delaware offers strong legal protection for directors and officers of corporations, which can help attract and retain top talent. This can be particularly beneficial for companies seeking venture capital or planning to go public.
- Prestige: Incorporating in Delaware is often viewed as a sign of prestige and credibility, as many well-established and successful companies choose to incorporate it in the state. This can help build trust with investors, customers, and partners.
Overall, the benefits of registering your business in Delaware can provide a strong foundation for growth and success while offering a supportive and stable legal and regulatory environment.
Is Business Registration Required in Delaware? Find Out Here
In Delaware, most businesses are required to register with the state, with specific requirements varying based on the type of entity and nature of the business. Common registrations include Corporation, LLC, LP, or GP. Delaware is known for being business-friendly and popular for incorporating businesses.
Professional licenses or permits may also be necessary, and the state offers tax benefits and incentives to attract businesses. It’s important to research and complies with registration obligations to avoid legal and financial consequences in Delaware and any other states where the business operates.
How to Register Your Business in Delaware – Frequently Asked Questions
What Do I Need to Register a Business in Delaware?
To register a business in Delaware, you will need to choose a business name, determine your legal structure, and file the necessary paperwork with the Delaware Division of Corporations.
The specific requirements will depend on the type of business you’re starting, but generally, you will need to file a Certificate of Formation for an LLC, a Certificate of Incorporation for a corporation, or a Certificate of Limited Partnership for a limited partnership. You will also need to appoint a registered agent and obtain any necessary licenses or permits.
How Much Does It Cost to Register a Company in Delaware?
The cost of registering a company in Delaware depends on the legal structure of your business and the type of filing you’re submitting. The filing fee for a Certificate of Formation for a Delaware LLC is $90, while the filing fee for a Certificate of Incorporation for a Delaware corporation starts at $89 (plus additional fees depending on the number of authorized shares). There may be additional fees for other filings and permits required for your business.
Can a Foreigner Start a Business in Delaware?
Yes, foreigners are allowed to start a business in Delaware as long as they meet the legal requirements for doing so. Foreign business owners may need to register their businesses with additional state and federal agencies, but they do not need to be U.S. residents to form a Delaware LLC or corporation.
Do I Need to Register My Online Business in Delaware?
If you’re operating an online business in Delaware, you may be required to register your business with the state, depending on the type of business you’re operating and the nature of your online activities. Sole proprietorships and partnerships may not need to register, but corporations and LLCs likely will. You may also need to obtain certain permits and licenses, such as a business license from the state or local jurisdiction.
It’s important to consult with a qualified attorney or accountant to determine the specific requirements for your business in Delaware. They can help you navigate the complex rules and regulations governing businesses in the state and ensure that you comply with all applicable laws and regulations.
Bottom Line on How to Register Your Business in Delaware
Registering your business in Delaware is a crucial step to ensure adherence to state laws and regulations. Despite the perceived challenges, diligently following the necessary steps and meeting specific criteria will help you establish a strong foundation for your business.
Key steps include selecting a business name and legal structure that complies with the requirements of the Delaware Division of Corporations, filing essential paperwork, and obtaining any required licenses and permits for your industry and location. Simplify this process and ensure compliance by utilizing business registration services such as Northwest Registered Agent or bizee.
Taking the time to register your business accurately in Delaware is a proactive measure against potential legal and financial issues, setting you up for success. Additionally, Delaware’s reputation for its business-friendly environment and legal framework enhances its appeal, making it a top choice for many entrepreneurs and business owners.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.