How Much Does an LLC Cost in Delaware? (Formation Fees)
If you're an entrepreneur based in Delaware, forming an LLC is a great idea because the state offers extended tax benefits and protection for all its LLCs.
As a Mergers and Acquisitions specialist and a degree holder in tax law, I helped multiple individuals and businesses form LLCs and establish joint organizations.
To help you budget your business funds well, we sat down with business experts in the state and spent weeks researching the costs of forming an LLC in Delaware.
As you think about creating an LLC, enlisting the services of a professional Delaware LLC company can help prevent missteps that might extend the time it takes to start your LLC.
Quick Summary
- An LLC in Delaware costs \$90 to file the Certificate of Formation and \$75 for the state business license.
- Upon approval of the business, additional expenses you may need to cover include licenses and permits, registered agent service, franchise tax, and other documents.
- According to Delaware Division of Corporations data, over 200,000 certificates are issued annually, cementing the state's status as a key hub for business incorporations and compliance documents.
- Most of my clients that have established LLCs in Delaware have successfully grown their business through agricultural exports.
Cost to Start an LLC in Delaware
When forming an LLC in Delaware, you have to factor in the mandatory costs and optional expenses associated with establishing the business.
1. LLC Formation Filing Fee (\$165 - Mandatory)
An LLC in Delaware costs \$165. This amount covers submitting the Certificate of Formation for your LLC (\$90) and state business license (\$75).
The standard processing time for LLCs is 10 business days. To expedite the process, I availed of the \$100 same-day approval period. Other accelerated options include \$50 for 24-hour turnaround, \$500 for 2-hour delivery, and \$1,000 for 1-hour processing.
2. Registered Agent Service Fee (\$80-\$300 Annually - Optional)
While incorporating your LLC, you must select a Registered Agent in accordance with Delaware department of law. There is no extra charge if you serve as your LLC's registered agent yourself or choose a trusted third party to do so.
The alternative is to work with a professional registered agent service, and you'll pay between \$80 to \$300 a year for this, depending on the service you hire.
3. Name Reservation (\$75 - Optional)
You may spend \$75 to reserve a name for 120 days if you already have a business name and don't want it to be available for use by other business owners before you finish creating your LLC in Delaware.
Name reservations can be sent to the Delaware Division of Corporations via mail order or online [1]. According to the Delaware Division of Corporations, this process attracts over 10,000 applications annually, highlighting the competitive nature of business naming in the state.
I always advise clients to verify that their LLC name is available in Delaware before reserving the name and ensure it complies with state regulations.
Expenses Following the Approval of Your LLC
Apart from the basic paperwork filing fees, here are other LLC filing fees in Delaware.
1. Business License (\$25-\$75 - Mandatory)
The Division of Revenue mandates that all LLCs in Delaware obtain a state business license that costs \$75 for one business location and an extra \$25 for each location your LLC operates.
The state business license lasts one year from the day the LLC was incorporated, that's why I had to remind clients to renew it before it expires.
"In Delaware, all businesses, including LLCs, must obtain and annually renew their business license through the Delaware Division of Revenue, with an option to renew for three years after the first year without any discount."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
2. Professional Licensing (Depending on the Profession - Mandatory)
According to Delaware law, everyone who wishes to practice their profession or run a company in the state must first get a license from the Division of Professional Regulation.
The cost of this filing fee varies from one profession to another.
3. Franchise Tax (\$300 - Mandatory)
All Delaware LLCs must pay an annual franchise tax of \$300 to the Secretary of State of Delaware to keep their good standing.
Because this annual franchise tax is not based on the business entity revenue, all business owners must pay it even though they do not conduct any commercial activity with their holdings.
When your Delaware LLC is incorporated, you must pay this tax in full by March 1 each year. I ensure that my clients pay the franchise tax on time since late payments are subject to a \$200 penalty fee and interest from the Delaware Secretary of State.
4. Operating Agreement (\$100 - \$200 - Optional, but Recommended)
The conditions regulating the limited liability company, its interests, operations, administration, and clauses controlling the rights and duties of its members are laid out in a Delaware LLC Operating Agreement.
While operating agreements aren't required in Delaware, establishing one to lay out how the LLC should be handled is still a good idea. In the absence of one, state laws apply.
You can draft an LLC operating agreement for \$0 or hire an expert to create it for you for anything between \$100-\$200.
5. Doing Business As Name (\$25 - Optional)
You must register a DBA if your LLC operates under an assumed name other than the one stated on your certificate of incorporation.
I had to pay the \$25 DBA registration fee to the country where the business is located.
6. Certified Document Copies (\$50 + \$2 per additional page - Optional)
A certified copy is a legal document copy that proves the validity of official documents that you filed with the Delaware Secretary of State.
Each certified copy in Delaware costs \$50 and an extra \$2 for each additional page.
Certified copies of the Certificate of Formation or a Certificate of Status, are helpful for opening a business bank account, requesting foreign qualifications, or attracting potential investors.
7. Certificate of Good Standing (\$50 - Optional, but Recommended)
A Certificate of Good Standing, also known as a Certificate of Existence, is a legal document that shows an LLC is compliant with the state and has paid all fees and taxes.
You can get a certificate of good standing from the Delaware Division of Corporations which costs \$50 [2]. According to data provided by the Delaware Division of Corporations, over 200,000 certificates are issued annually, underscoring the state's pivotal role as a premier destination for business incorporations and compliance documentation.
Most of my colleagues, investors, and other clients prefer to do business with LLCs that have a certificate of good standing.
Check our guide to see when the LLC taxes are due in Delaware.
8. Employer Identification Number (\$0 - Optional, but Recommended)
After creating a Delaware LLC, the next step is to apply for an EIN number. An LLC must have a Federal Tax ID number to perform commercial activities in the US legally.
An EIN is also required when opening a bank account or signing up for business loans [3].
You can apply for an EIN online for free on the Internal Revenue Service website, or you could also hire a professional service that costs \$50-\$100.
9. Trademark Registration (\$35 - Optional)
Registration of a trademark for your company products or services is a good idea if you wish to safeguard your brand name and logo and prevent competitors from using them.
When I had to register a trademark, I paid the \$35 filing fee which is renewable in 10 years.
FAQs
What is the Penalty For Paying Taxes Late In Delaware?
The penalty for paying taxes late in Delaware ranges from 1% to 25% of the amount due per month of back taxes.
What Payment Methods Can I Use To Pay Delaware's State Fees For Filing My LLC?
The payment methods you can use to pay Delaware's state fees for filing your LLC include checks, electronic checks, credit, or debit card.
References:
- https://corpfiles.delaware.gov/llc-nameres.pdf
- https://corp.delaware.gov/directweb/
- https://www.sba.gov/blog/what-ein-why-it-important
Aw, this was an extremely nice post. Spending some time and actual effort to generate a great article… but what can I say… I procrastinate a whole lot and don’t manage to get anything done.
I decided to act as my own registered agent to save money, but now I’m rethinking it after reading about the convenience of professional services. The annual costs seem worth it
The section on the absence of state income tax in South Dakota really caught my attention. It’s such a big incentive for entrepreneurs—thanks for pointing that out.