Start an LLC in Delaware with Tailor Brands for Free
Tailor Brands is a trusted LLC formation service provider that can help you establish an LLC in Delaware at no cost. The user-friendly platform has assisted over 500k companies in registering an LLC and can guide you through each step of the LLC in Delaware formation process.
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Things to Know Before Starting an LLC in Delaware
The Delaware Division of Corporations charges different fees for various LLC-related services. These will add up to your cost of forming an LLC in Delaware, so you must be aware of these.
Let’s briefly discuss some important requirements for forming an LLC in Delaware.
- The state charges $110 filing fees for accepting filled-out applications or Certificates of Formation for an LLC.
- You can get expedited processing services at $50 for 24-hour processing and $100 for same-day processing of applications.
- Once processed, you’ll get a filed copy of your application, and requesting a certified copy will cost an extra $50.
- All LLCs in Delaware need to pay a $300 annual tax, called a Franchise Tax, which is payable by the first of June of each year.
Apart from this, you must follow Delaware law and meet all legal requirements to keep your LLC in Delaware in good standing with the state. This mainly involves paying taxes on time, as there is no requirement to file annual reports.
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How to Form an LLC in Delaware
Starting an LLC in Delaware is a straightforward process. But it’s recommended that you know all the important steps so you don’t miss anything important.
Here is a step-by-step guide to starting an LLC in Delaware.
Choose a Name for Your Business For LLC in Delaware
When forming an LLC in Delaware, carefully choose your legal name or trade name, as it represents your brand and identity. Ensure your business name is unique, easy to spell, relevant, and easy to remember. Also, make sure that your LLC in Delaware name follows the Delaware naming guidelines for LLCs.
This may require adding words like “LLC” or “limited” to your LLC name, which may make it longer. To ensure that your chosen business name is not in use by any other business, you will need to thoroughly search the state database.
Reserve Your Name and Secure a Domain
If you anticipate delays in filing your LLC in Delaware or registering your business name, it’s a good idea to reserve your business name. In Delaware, you have the option to reserve a business name for up to 120 days by paying a small filing fee of $75.
This is in line with what you’ll get in most states. Next, find a matching domain name and get it for your LLC in Delaware before someone else snatches it up. This is important as it will help customers easily find your business online.
Appoint a Delaware Registered Agent
Unlike many other states, Delaware requires the appointment of a registered agent for the process of service. Whether you want to start a business or reserve a name, you will need a local resident agent to represent your business.
The registered agent will also be responsible for receiving all legal correspondence on behalf of your business and notifying you in time. The registered agent for your LLC in Delaware can be an individual or a business entity with a local address who can also help you with all legal documentation.
Create a Delaware LLC Operating Agreement
An operating agreement is a document that contains the rules of governance for a Limited Liability Company. This includes guidelines for how day-to-day decisions will be made and how conflicts will be resolved among LLC members.
While you’re not legally required to create an LLC operating agreement, drafting one in writing is still recommended. This will make managing your LLC in Delaware easier and will help streamline decision-making.
File Your Delaware Certificate of Formation of LLC in Delaware
To officially register your LLC in Delaware, you need to file Articles of Organization (called Certificate of Formation in Delaware) with the concerned authorities. In this case, this would be the Delaware Secretary of State.
You can fill out the form available on the official website and either upload it online or send it via mail. It will cost you a $110 state filing fee to submit the application and $50 or $100 extra for 24-hour and same-day services, respectively.
Get a Federal Employer Identification Number
An EIN, aka Tax ID, is the number through which the Internal Revenue Service identifies a business for tax purposes and other reasons. You can think of it as a social security number but for a business instead of an individual.
This is an important identification number that lends credibility to a business. So, get an EIN for your LLC in Delaware as it will be useful for various purposes, such as opening a business bank account or paying employee taxes.
Open a Business Bank Account
Every smart entrepreneur knows the importance of keeping business finances separate from their personal finances. That’s why it’s important to open a separate bank account for your Limited Liability Company in Delaware.
You should consider various options to find a bank that offers the best services and rates for a new business. Also, consider online and hybrid banking options as they offer more flexibility, which is great for small businesses like yours.
Get Business Licenses and Permits
To officially start operating your LLC in Delaware, you will need several licenses and permits based on your type of business and locality—for example, real estate business and others. You may need such permits at federal, state, and local levels.
Some businesses just need a general Delaware business license, while others require industry-specific licenses. For example, if you plan on running a cosmetics business, you may need health permits and product safety certifications for your LLC in Delaware.
Choose Your Tax Structure
One of the benefits of choosing an LLC is that it offers flexibility on how you want the business to be taxed. A single-member LLC is treated as a Sole Proprietorship and a multi-member LLC is treated as a Partnership.
This means your LLC in Delaware is considered a pass-through entity and doesn’t pay corporate taxes. As such, if you want a different tax structure for your LLC in Delaware, you can choose to be taxed as a Corporation or fill out Form 2553 to set up an S-corp and get the S-Corp tax status.
File for a DBA (Optional)
An LLC in Delaware is required to follow certain rules when naming an LLC. You are, for example, required to add words like “LLC” or “limited” to your LLC name, which can cause your business name to get longer and less marketable.
If you want to run your business under a shorter, more memorable name, you can file for a DBA (doing business as). This allows you to register a fictitious or assumed name of your choosing and run your LLC in Delaware under this name.
Get a Website (Optional)
Forming a Delaware Limited Liability Company is easy. What’s tough is getting those initial customers and letting your target audience know that your business exists. Having a website plays a crucial role in achieving this.
A business website is an organic way of letting prospects know about your business and its products or services. Ensure you get professional web design and marketing services to create a user-friendly website for your LLC in Delaware.
Stay in Good Standing with the State
Lastly, you should follow all the rules and regulations laid down by the state government and the Delaware Secretary of State. This will ensure that you remain in good standing with the state and retain your Delaware LLC status.
This typically requires paying your annual taxes on time. Make sure you find out all other requirements or hire professional legal services to help you stay compliant. There is no annual report requirement for an LLC in Delaware.
Why Should You Outsource LLC Formation Services?
For a new entrepreneur, starting a business can be a time-consuming and overwhelming process that requires too many documents and legal hassles. Outsourcing the process to formation service providers makes things simpler for you. Here’s why.
It’s Convenient
The biggest advantage of outsourcing to a professional is that you reduce your burden and let them handle the tedious processes and complex forms and applications. It’s simply convenient and makes things much easier for you.
It’s Error-Free
When filling out long and tedious applications, the chances of making mistakes are high, especially for a beginner. Letting experts take care of the process ensures that there are no mistakes. This ensures your application gets approved.
It’s Quicker
As a new entrepreneur, you may have to spend hours or even days going through all the paperwork and ensuring everything is ready to go. Experts can complete the entire process within the same day or at least within 24 hours, which is still fast.
Benefits of Starting an LLC in Delaware
Of all the business entities, an LLC is the preferred choice for small and mid-sized businesses. After all, it offers the best of both worlds—the flexibility of a Sole Proprietorship and the liability protection of a Corporation.
Let’s discuss some of the key benefits of forming an LLC.
Personal Liability Protection
Just like a C-Corp, an LLC also protects its members from legal threats in case the business doesn’t do well. Though a pass-through entity, an LLC is still responsible for its own debts and liabilities, and its members are not liable for them.
This means that in case the business fails to pay off its debts its assets can be seized but the LLC members will be protected and their personal assets will be safe. The same is the case if the LLC gets sued or completely dissolves.
Flexible Tax Structure
An LLC can choose to be taxed as a Sole Proprietorship, Partnership, or S-Corporation. This means it has the flexibility to choose any available options for tax purposes based on what serves its needs best.
A new business can start with the default tax structure of pass-through taxation and if the business needs to change or grow, it can consider other options. For example, you can opt for a S-Corp status to get tax advantages for your LLC in Delaware.
Cheap to Form and Run
Delaware LLCs are quite affordable as they don’t require a high initial investment or high ongoing maintenance costs. In fact, you don’t even need to file an annual report for your business or pay the accompanying fee that most states charge.
Delaware charges $110 for forming an LLC and a flat fee of $300 as an annual tax for all LLCs formed within the state. As for a relative comparison, forming and running an LLC in Delaware is cheaper than running a Corporation in most states.
Less Paperwork
Compared to more formal business entities like Corporations, LLCs require less paperwork and regulatory hassles to form and run. The entire process for forming an LLC in Delaware is simpler and requires fewer steps.
There are no annual report requirements for Delaware LLCs and even an operating agreement is not legally required, though recommended. Overall, running your day-to-day business as an LLC in Delaware is simply more convenient and hassle-free.
Ease of Management
Adding to the point above, managing an LLC in Delaware is also much simpler than managing a Corporation. The latter requires appointing directors, managers, and officers and following other strict management procedures.
Corporations need to follow several regulatory guidelines, such as holding shareholder meetings and taking minutes, which LLCs are not required to do. This makes forming and running an LLC in Delaware extremely easy for beginners.
Ownership Flexibility
Some business entities, like Partnerships or S-Corps have limitations on who can own the business and how many owners there can be. Limited Liability Companies in Delaware or any other state offer a lot more flexibility on this front.
LLCs don’t limit the number of members. You can form a single-member LLC or a multi-member LLC with as many owners as you want. LLC members can be individuals or organizations, with very few exceptions and limitations.
Ability to Hold Assets
A Limited Liability Company is a legal entity that’s separate from its owners for all financial and legal purposes. For tax purposes, though, it is considered a pass-through entity, and the business profits are passed directly to the owners.
This means that an LLC in Delaware can buy and hold assets, such as property, equipment, or intellectual property in its own name. This is a big advantage as it helps protect the owners from business debts and liabilities.
Ability to Enter into Contracts
An LLC in Delaware is also eligible to enter into contracts in its own name. This means that LLC members don’t need to sign contracts or enter into legal agreements in their own names. This is another way in which an LLC keeps them protected.
This lends more credibility to the business, and investors will prefer entering into contracts with a business rather than an individual. This makes it easy to get business funding and find reliable vendors and other business stakeholders.
Tailor Brands Delaware LLC Formation Services: Free + Paid Plans
Tailor Brands provides several plans for forming an LLC in Delaware, including a no-cost plan that covers only basic filing requirements. If you want additional features, various paid plans are available.
Here’s a breakdown of the plans:
Lite Plan
Tailor Brands’ Lite Plan is ideal if you’re looking for only basic filing for your LLC in Delaware with no extra features. Here’s what’s included:
- Business coaching program: This plan provides first-time business owners with introductory resources for running an LLC in Delaware.
- LLC filing: Tailor Brands handles the paperwork for your LLC in Delaware at no charge. You’re only required to pay the applicable state filing fee.
This plan is a great option if you’re looking for a budget-friendly way to establish your LLC in Delaware. You will receive reliable assistance with document preparation and filing for formation.
This plan is limited to basic features, and enhanced services to help set up and run your LLC in Delaware are not included. You’ll need to select one of the paid options to access such features.
Price: $0
Essential Plan
The Essential Plan combines the swift processing of the Lite Plan with additional features aimed at helping you set up operations for your LLC in Delaware.
- Accelerated processing: Tailor brand’s processing time for establishing your LLC in Delaware is just two business days to enable you to start operations.
- Operating agreement support: Access to resources to create a customized operating agreement to define the structure of your LLC in Delaware.
- Annual compliance notifications: Tailor Brands updates you on report submissions and filing to ensure your LLC in Delaware adheres to state laws.
- Amazon gift card: Tailor Brands offers a $30 Amazon gift card to help offset initial startup costs or purchase essential supplies for your LLC in Delaware.
Price: $199/year
Elite Plan
Building upon the Essential plan, the Elite Plan provides premium tools that can support the growth of your LLC in Delaware:
- Distinctive brand logos: Access to eight professional and customizable logo designs to boost to create a strong brand identity for your LLC in Delaware.
- One-year domain and website tools: Complimentary domain for a year and website creation tools to build an online presence for your LLC in Delaware.
- Business card and social media tools: You can design digital business cards and create branded social media posts for your LLC in Delaware.
- Increased Amazon gift card value: The Elite plan offers a $50 Amazon gift card bonus to enable you to make initial purchases for your LLC in Delaware.
Price: $249/year
Why Choose Tailor Brands to Form an LLC in Delaware
Starting a new business can be taxing, but Tailor Brands makes things easier for you. With its unmatched expertise, you’re bound to get a hassle-free experience. Here’s why you should choose Tailor Brands.
Streamlined Process
Tailor Brands offers an incredibly efficient and straightforward method to set up your LLC in Delaware. The user-friendly interface, allows you to complete your paperwork quickly, avoiding unnecessary delays.
Free Plan Available
Unlike other companies, Tailor Brand offers a free and clear pricing structure to help you establish your LLC in Delaware. You can get started with your business for free and save up on initial formation costs.
Comprehensive Tools
Tailor Brands doesn’t just help with LLC formation, it is committed to supporting your entire business journey. You’ll get different services and resources designed to help your LLC in Delaware succeed.
FAQ
To start an LLC in Delaware yourself, you simply need to fill out your application and pay a one-time state filing fee of $110. However, many new entrepreneurs find the process tedious and often enlist the services of an agency or professional.
This could cost up to a few hundred dollars, depending on the agency. However, if you choose to work with a free LLC formation service provider like Tailor Brands, you can save on this cost. You’ll only need to pay to form your LLC in Delaware if you choose to get some add-on services as well.
Please note that you’ll also need to get some licenses and permits for your LLC in Delaware. So, factor in the costs of getting these licenses in your total costs as well, before you decide to start an LLC in Delaware.
While an LLC in Delaware doesn’t need to pay state income taxes, which many states charge as a percentage of total profits, it still needs to pay an annual business entity tax.
Any domestic or foreign LLC in Delaware must pay a fixed annual tax of $300. You need to pay this before the first of June of every year. If not paid by then, you will incur an additional penalty of $200.
This is better than paying a percentage of the total profits your LLC in Delaware makes as taxes and is perfect for growing businesses as the tax amount remains fixed.
An LLC in Delaware also pays sales tax and LLC members need to pay income tax on their personal incomes.
Here are some of the key benefits of forming a Limited Liability Company:
- Personal liability protection: LLC members are not personally liable for the LLC’s debts and their personal assets are protected in case the company assets are foreclosed.
- Flexible tax structure: A multi-member member can choose to be treated as a Partnership, a Corporation, or an S-Corporation for tax purposes. Each offers its own advantages and disadvantages.
- Cheap to form and run: Forming an LLC in Delaware or any other state typically requires paying a one-time filing fee, which is minimal in most cases. The ongoing costs of running an LLC are also low.
- Less paperwork: Forming an LLC requires fewer steps and less paperwork than forming a more formal entity like a Corporation. Just filing a Certificate of Organization with the Secretary of State is enough.
- Ease of management: Unlike a Corporation, which has strict rules of management, LLCs can make their own rules that all members agree upon and lay down in an LLC operating agreement.
- Ownership flexibility: Unlike S-Corporations, LLCs don’t have an upper cap on how many members they can have. Non-residents and several organizations are also allowed to be members of an LLC.
- Ability to hold assets: An LLC, though not a formal entity like a C-Corp, still has the ability to hold assets. This makes it easy to keep the members’ personal assets separate from the business assets and property.
- Ability to enter into contracts: A Limited Liability Company can enter into legal contracts with vendors, investors, and other stakeholders in its own name. This also helps protect the owners in case of legal disputes.
If you’re planning on opening an LLC in Delaware, then you need not worry as it’s a great choice for most small and mid-sized businesses.
Here are all the steps you need to take to form an LLC in Delaware:
- Choose a name for your business: Select a unique and easy-to-remember name for your LLC in Delaware that effectively represents your business. Make sure you follow the naming conventions of the state of Delaware.
- Reserve your name and secure a domain: In case there’s a delay in registering your LLC in Delaware, you can always reserve your chosen name. You need to pay a filing fee of $75 to reserve it for 120 days.
- Appoint a Delaware registered agent: Hire a resident agent with a physical address in the state of Delaware. Or you can choose to be your own registered agent for your LLC in Delaware if you are ready for the responsibility.
- Create a Delaware LLC operating agreement: Though it’s not mandated by the state of Delaware, we still recommend that you create an operating agreement for your LLC in Delaware. This will enable the smooth functioning of your new business.
- File your Delaware Certificate of Formation: Fill out the form and file your LLC application (called Certificate of Formation in Delaware) with the Secretary of State’s office to get your LLC in Delaware registered.
- Get a federal Employer Identification Number: Apply for an EIN by filling out and filing the application with the federal government. This is important because the Internal Revenue Service uses this to identify your LLC in Delaware.
- Open a business bank account: Every business must have a separate bank account in its own name, so get one for your new LLC in Delaware. This will ensure that your personal finances remain separate from business finances.
- Get business licenses and permits: Your new LLC in Delaware may require multiple permits before it can conduct business. These may include federal, state, and local licenses, so find out the requirements and obtain these.
- Choose your tax structure: If you have a multi-member LLC in Delaware, you can choose if you want to be taxed as a Partnership, S-Corp, or C-Corp. Each has its own set of pros and cons, so choose carefully depending on your needs.
- File for a DBA: If you think the official business name of your LLC in Delaware is too long or unmarketable, then you can choose an assumed name by filing for a DBA. Opt for a short and memorable name to market your business.
- Get a website: Hire a professional to create a user-friendly and SEO-friendly website for your new LLC in Delaware. As a small business owner, this is the best investment you can make to generate business leads organically.
- Stay in good standing with the state: Follow all the legal guidelines and regulations at both federal and state levels. Pay your taxes on time and ensure you stay in good standing with the state to maintain your LLC status.
Follow these steps for forming your LLC in Delaware and get started on the right foot.
It typically takes 2-3 weeks to get your application processed and receive your Certificate of Formation for an LLC in Delaware, if you file online. Filing by mail would take 3-4 weeks, in general, as it takes time for your application to reach the authorities.
If you want to get the application for your LLC in Delaware processed faster, you can opt for expedited processing options that the Delaware Division of Corporations provides. 24-hour expedited processing costs $50 and same-day processing costs $100 extra on top of your filing fee.
Form an LLC in Delaware for Free with Tailor Brands
Tailor Brands is your best option to quickly and successfully start an LLC in Delaware, that too without paying any service charges or exorbitant fees. Use this free service and start your LLC in Delaware today.
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