Cost to Form an LLC in Delaware: DE LLC Cost

Last Updated on November 29, 2023 by Dr. Gabriel O’Neill, Esq.

Welcome to the world of Delaware’s business opportunities! If you’re thinking about starting a Limited Liability Company (LLC), you’re in the right place. But before you jump in, it’s important to understand the costs involved. These costs include fees you have to pay when you apply, as well as money you’ll need to keep your LLC running. 

This guide will break down all the costs you might encounter when forming an LLC in Delaware. And if you’re looking for extra help, LLC services like ZenBusiness can guide you through the paperwork and make sure everything is done correctly. 

With the right information and assistance, you’ll be ready to handle the expenses and details of creating your LLC in Delaware.

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What Is the Cost of Forming an LLC in Delaware?

The primary cost to form an LLC in Delaware is the $90 charge for submitting the Certificate of Formation for your LLC through the Delaware Department of State online platform.

Here’s the LLC Cost Guide for all US States:

Delaware Foreign LLC Formation Costs

If you possess an LLC already established in a different state and wish to extend your business operations into Delaware, the requirement is to enroll your LLC as a foreign entity within the state.

The fee associated with the registration of a foreign LLC in Delaware stands at $200. The process entails submitting a Certificate of Registration of Foreign Limited Liability Company through online means or traditional mail.

Annual Cost for LLCs in Delaware

When contemplating the initiation of a Limited Liability Company (LLC) in Delaware, comprehending the continuous expenses linked to LLC upkeep is crucial. 

The key recurring expenses for a Delaware LLC encompass the annual franchise tax and partnership return. LLCs and partnerships in Delaware are subjected to a $300 flat fee for the annual tax, with partnership return costs contingent on individual partners’ state tax returns. 

There’s a registered agent fee, obligatory for each LLC in Delaware, which involves either self-appointment or hiring a professional service that typically costs between $100 and $300 annually. 

These ongoing expenses should be considered while outlining your LLC’s financial plan in Delaware, enabling well-informed decisions and ensuring the financial robustness of your LLC.

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How Much Does It Cost to Start an LLC in Delaware With the Best LLC Service? 

ZenBusiness LLC Formation Cost

In Delaware, the initial cost for filing an LLC amounts to $90, which serves as the foundational expense before potential increments. To process duration, the standard period stands at 2 to 3 weeks. 

For those seeking expedited processing, an option exists to accelerate it within 4 to 6 days for a supplementary fee of $50. Additionally, a more accelerated route can be taken, reducing processing to 1 to 2 days, albeit at a higher fee of $100.

ZenBusiness provides a selection of three pricing tiers for their LLC formation services, namely: Starter, Pro, and Premium.

• Starter package: This presents a suitable choice for fundamental business formation requirements and is accompanied by a cost of $0, exclusive of state fees.

• Pro package: With an expense of $199 in addition to state fees, the encompasses supplementary functionalities such as expedited filing and registered agent service, enhancing its value.

• Premium package: As the most extensive offering, the builds upon the features of the Pro package by incorporating limitless Worry-Free Compliance, a service designed to assist enterprises in maintaining adherence to both state and federal regulations. This comprehensive package comes at a price of $349, along with state fees.

As an added incentive, ZenBusiness includes a complimentary year of Worry-Free Compliance with the purchase of the aforementioned plans.

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Additional Costs When Starting an LLC in Delaware

Delaware LLC Name Costs

The expense for registering a business name in Delaware is $0. Registering the name for your Limited Liability Company comes at no charge. Once the state approves your Certificate of Formation filing, your chosen Delaware LLC Name also gets approved with no additional fees.

There might be information circulating online that suggests the necessity of LLC Name Reservations. Nonetheless, this is generally incorrect for the majority of states. The formation of an LLC in most states usually does not mandate a Name Reservation.

Delaware Registered Agent Costs

The Delaware registered agent Fee can either be $0 or $125 per year. When establishing your LLC in Delaware, it’s mandatory to appoint a registered agent.

A Delaware registered agent can be an individual or a company responsible for receiving legal documents and state-related notifications on behalf of your LLC. The registered agent should possess a physical address within the state and be available during standard business hours.

Opting to serve as your own registered agent or having someone you’re acquainted with take on this role doesn’t entail any extra charges.

You have the alternative of employing a registered agent for service, which comes at a cost ranging from $100 to $300 annually. These service providers not only handle registered agent duties but also provide other valuable business services and aid in safeguarding your confidentiality.

Engaging a registered agent for service is advisable if:

• You lack an address within the state (Delaware regulations mandate registered agents to possess a physical street address in the state)

• You wish to keep your address undisclosed in public records (certain service companies might allow you to use their address to maintain privacy)

Delaware Operating Agreement Costs

There’s no fee for the LLC Operating Agreement ($0). 

A Delaware LLC Operating Agreement stands as a documented agreement between the members of the LLC. These agreements encompass intricate details concerning LLC ownership, management structure, and the distribution of profits. Both Single-Member LLCs and Multi-Member LLCs are advised to formulate an Operating Agreement, preserving it within their business documentation and providing each member with a copy.

The prevailing practice on most platforms involves charging between $50 and $200 for LLC Operating Agreements.

Delaware EIN Cost

The EIN Number, also recognized as the Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), holds various purposes. It’s crucial for income tax filing, establishing an LLC bank account, and, when relevant, recruiting employees.

While several websites impose service charges for procuring an EIN for your LLC, obtaining one can come at no expense.

You can secure an EIN for your LLC through the Internal Revenue Service (IRS) without incurring any fees. The online application process can be accomplished within a matter of minutes.

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Delaware LLC Taxes

Numerous variations of Delaware LLC taxes necessitate payment by owners, resulting in a significant fluctuation in this yearly expense.

Several of the taxes paid by LLC owners encompass:

Federal Income Taxes

The Internal Revenue Service (IRS) offers various approaches for tax treatment of your LLC. With Single-Member LLCs, the IRS regards them as Disregarded Entities for taxation. This implies that the LLC isn’t required to file its federal income tax return; instead, the owner of the Single-Member LLC handles the filing and payment of federal income taxes. 

The tax structure depends on the owner’s identity: for individual owners, it’s similar to a Sole Proprietorship, while if owned by a company, it’s treated as part of the parent company.

Multi-Member LLC Taxes

If an LLC has multiple owners, it’s taxed as a Partnership. The LLC must submit a 1065 Partnership Return and furnish a Schedule K-1 to the LLC owners. These K-1s detail each owner’s share of profits, which is then attributed to them for tax. The owners are responsible for paying income taxes on their individual tax returns (Form 1040).

Husband and Wife LLC Taxes

Certain states allow a husband and wife LLC to opt for Single-Member LLC tax status, known as a Qualified Joint Venture, rather than the standard Multi-Member LLC. However, this option is only available in community property states. Delaware, not being one, doesn’t offer this choice.

Election for Corporate Taxation

An LLC can opt for corporate taxation, diverging from the default statuses. There are two types of corporate elections: S-Corporation and C-Corporation.

• An LLC can choose to be taxed as an S-Corporation by submitting Form 2553 to the IRS. This election can help established businesses save on self-employment taxes, though it entails additional expenses. Typically, this decision is more suitable once the business has consistent revenue and profitability.

• An LLC can elect to be taxed as a C-Corporation by filing Form 8832 with the IRS. This option is less common and is usually not the preferred choice for most business owners.

Delaware State Income Tax for LLCs

For Single-Member LLCs in Delaware, the LLC itself doesn’t file a state-level return. Instead, the owner includes the LLC’s profits or losses in their personal state-level return. For Multi-Member. LLCs, the LLC may need to file a Partnership return at the state level, with the owners reporting the LLC’s profits or losses in their personal state-level returns.

Local Income Tax for LLCs

LLCs in Delaware may have local income tax obligations to their municipalities. This entails filing and paying income taxes at the local level. Seeking professional assistance from an accountant is recommended to ensure compliance with local requirements.

Delaware Sales Tax

Delaware differs from most states by not imposing a sales tax. Instead, businesses pay a “Gross Receipts Tax” based on the total receipts from selling goods and services. This tax is applicable to nearly all businesses. To pay, you must register your LLC with the Delaware Division of Revenue and use their online portal.

Delaware LLC Payroll Taxes

If your Delaware LLC has employees, you must manage payroll taxes, which include federal and state income tax withholding, Social Security tax, Medicare tax, unemployment taxes, and various deductions. Setting up and managing payroll can be complex, so many turn to payroll companies or accountants for assistance.

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Delaware LLC Cost FAQs

How Much Does It Cost to Open an LLC in Delaware?

The fee for forming a Delaware LLC is $90, covering the submission of the LLC Certificate of Formation as a singular payment.

Certain LLCs might require a business license within the state of Delaware. The necessity for these hinges on your specific industry and the geographic location of your LLC. The pricing for local business permits can differ.

How Much Does an LLC in Delaware Cost Per Year?

Every Delaware Limited Liability Company is obligated to remit a Franchise Tax of $300 per year. These fees are directed to the Division of Corporations and represent the sole compulsory annual payment to the state. This payment is essential to ensure the continuous compliance of your LLC.

Should you have enlisted the services of a registered agent, there will be an associated annual subscription fee, typically around $125 per year. Notably, there’s no distinct registered agent fee applicable during the LLC formation process.

For specific LLCs, the necessity for a business license in Delaware hinges on factors such as the industry and the geographic location of the LLC. It’s advisable to inquire with your local municipality to ascertain any potential annual renewal charges for the business permit.

Should I Hire an LLC Formation Service?

While it’s not mandatory to engage a professional service to establish your Delaware LLC, you retain the choice to handle the formation process on your own. However, for those aiming for streamlined and accurate filing, it’s recommended to consider the assistance of ZenBusiness. 

With a proven history of outstanding customer support, it also extends the benefit of free registered agent services for the first year, in addition to other services such as drafting an Operating Agreement and managing the submission of Annual Reports.

Conclusion

In conclusion, forming an LLC in Delaware involves certain costs that should be carefully considered. While the state offers business-friendly regulations and tax benefits, the expenses associated with creating an LLC in Delaware include filing fees, registered agent fees, and potentially legal or consulting fees. Moreover, LLC services like ZenBusiness offer various plans to simplify the process.

It’s important for entrepreneurs to weigh these costs against the advantages of operating in Delaware, such as its strong legal framework and established business reputation, to determine if forming an LLC in the state aligns with their overall business goals and financial resources.

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