The Formation of a Limited Liability Company (LLC) in Delaware would strategically benefit many entrepreneurs, business owners, and even international business investors, owing to the pro-business laws, flexible structure, and privacy policies the state provides.
Whether you wish to develop a U.S. based eCommerce brand or plan to launch a tech startup, the formation of an LLC in Delaware is considered the, “golden standard”.
In this extensive guide, I will take you through the entire process along with the reason to start an LLC in Delaware with legal requirements, and other administrative details that every business owner must be informed about.
Why Choose Delaware for Your LLC?
Delaware is famous as the go to state to create an LLC as well as a Corporation. This is not just some rumor that is going around for some hype purposes. In fact, there are federally acknowledged benefits that differ for both U.S citizens and non U.S citizens. Here’s some of the reasons:
1. Business Friendly Laws:
Delaware provides you with one of a kind court services to address your issues. The Court of Chancery deals with business disputes and is extremely efficient at it. Businesses do not use juries which makes the proceedings much easier. Judges, who are known as Chancellors, are also known for their incredible skills in corporate law. This allows for faster solutions and trustworthy legal decisions.
2. Anonymity And Privacy:
Delaware as a state does not allow the members or managers of the LLC to disclose their names publicly. This feature is astonishing for business owners Wishing to keep the ownership undisclosed.
3. No Minimum Capital Requirement
Delaware is more flexible than other legal jurisdictions because it does not impose any minimum charges for starting an LLC. You can establish your business without any significant initial investment.
4. Favorable Tax Policies
- No income tax levied on LLCs that do business outside Delaware
- No sales tax collected in Delaware
- No tax levied on trademarks or patents.
5. Global Recognition
Delaware is known to have well developed business laws. In relations to doing business with Delaware entities, investors, banks, and venture capitals are familiar with Delaware corporate structures and this may facilitate ease in funding and expansion.
Step-by-Step Guide to Starting an LLC in Delaware
In this part of the document, we describe how a US citizen, a foreign citizen residing outside of the US, or a digital nomad LLC can set up an LLC in Delaware without physically going to the state.
Step 1: Choose a Name for Your LLC
The first step which is also the easiest task to accomplish is to ensure that you have an LLC title that no other LLC company is registered under in Delaware.
✅ Conditions for an LLC Name in Delaware:
- Includes the phrase “Limited Liability Company” or its abbreviations “LLC” or “L.L.C.”
- Shall not include any word suggesting a linkage to a governmental monitoring agency “FBI”, “Treasury”.
- Name should not be identical to any other active registered entities in the state of Delaware.
🔍 Instructions for determining the availability of a name:
Delaware Entity Name Search tool helps in confirming if the desired name is already taken or not. Consider matching domain name if there are plans for online dealings.
📝 Pro Tip:
If you want to hold off on filing, you can reserve your name for up to 120 days for a small fee.
Step 2: Designate a Delaware Registered Agent Manager
A Delaware registered agent picks up any legal and government documents regarding Delaware LLC.
✅ Considerations:
- Users must register in Delaware with a street address.
- Must be present during usual office hours.
- Cannot make use of a P.O. Box.
Physically based registered agents are only permitted if they have a business address in Delaware. Most business owners buy professional registered agents at a rate of $50-150 annually.
🛡️ Importance:
A business could lose its good standing status or miss important milestones if a legal document is not forwarded or a registered agent is unreachable.
Step 3: Submit the Certificate of Formation
Delaware requires the filing of a Certificate of Formation with the Division of Corporations to create an LLC.
🧾 Required Information Includes:
- The name of the LLC
- Name and address of the registered agent
- (Optional) Purpose, duration, and date of formation and emergence of the LLC in question.
📤 How to file:
- Online via the Delaware Document Upload Service
- By mail to:
Delaware Division of Corporations
401 Federal Street, Suite 4
Dover, Delaware 19901
💵 Filling Fee: $90 (2025)
The estimate is 3-5 business days for standard processing but expedited services are available.
Step 4: Draft an Operating Agreement
An operating agreement is not required for a Delaware based LLC but it is vital for an internal governance document.
What It Covers:
- Roles and responsibilities of members and managers
- Voting procedures and decision-making rules
- Profit-sharing and capital contributions
- Procedures for adding/removing members
- Rules for dissolution or exit
Why Its Important:
An Operating Agreement reduces chances of conflicts by providing internal controls within members of the LLC. It may be needed by banks or investors for either account opening or credit extension.
Even solo members of the LLC will find it handsomely on this document in order to differentiate business assets and personal assets.
Step 5: Obtain an EIN from the IRS
An Employer Identification Number (EIN) is a number that identifies your business for tax purposes. It’s issued by the IRS, which is similar to how people have Social Security Numbers- so does each company have one.
Why You Need an EIN:
- To open a business bank account in any US state.
- If you intend to hire.
- For filing taxes at the federal level.
- When applying for business credit.
How to Apply:
- For citizens of the United States: Apply online at the IRS EIN Portal.
- For non citizens: Must fill out Form SS-4. Submitting it by fax or mail. Foreign individuals do not have access to the online system.
Delays aren’t uncommon, but the IRS usually provides an EIN same day for applications made online. If you’re submitting it through fax or mail, expect it to take a few weeks.
Step 6: Stay Compliant with Delaware Annual Requirements
As soon as you form your LLC, ensure that you do not lose good standing with the LLC by meeting its ongoing obligations in a timely manner.
🧾 Annual Franchise Tax:
- Flat fee of $300
- Due by June 1 each year
- No annual report is required for LLCs (unlike corporations)
🏢 Registered Agent Maintenance:
- Keep your Registered Agent and their address current.
Failure to pay the franchise tax or maintain an agent will lead to losing good standing and incurring penalties, or the worst losing the LLC all together.
Step 7: Open a U.S. Business Bank Account
Having a business bank account for a company helps in personal liability protection as well as building business credit while separating personal finances from the business.
📄 What You’ll Need:
- Certificate of Formation
- EIN (IRS letter)
- Operating Agreement
- Valid identification (passport or driver’s license)
- Proof of Address (for non-US residents, a utility bill or similar may be required).
Some US banks require in-person visits while others like Mercury and Relay allow international founders to remotely open business accounts.
Steps That Are Optional But Recommended
🔒 Submit a BOI Report (FinCEN Requirement)
According to the Corporate Transparency Act, starting January 1, 2024, Limited Liability Companies (LLCs) must submit a report of beneficial ownership information (BOI) to FinCEN within 90 days of formation.
The report incorporates:
- The personal information of all beneficial owners
- Details of the company applicant
- Identification (passport, driver’s license, etc.)
Non-compliance penalties can be severe – up to $500 for each day of violation.
📜 Apply for Business Licenses
If your LLC is going to operate in Delaware or the rest of the United States, you might require:
- State and local business licenses
- Sales tax permits
- Foreign qualification if the business is outside of Delaware
Need Expert Help Starting Your Delaware LLC?
Bizstartz has been helping entrepreneurs from all over the world start and maintain their Delaware LLCs. We specialize in assisting with EINs, providing registered agent services, and BOI reporting and banking services.
These are some of the services we offer:
✅ Formation of a Delaware LLC
✅ Providing Registered Agent Services
✅ Assisting in Filing for an EIN Application (for domestic and foreign founders)
✅ Drafting Operating Agreements
✅ Filing BOI Reports
✅ Opening a Business Bank Account in the U.S.
✅ Sending Reminders for Annual Compliance
✅ Receive Personalized Service For Your Delaware LLC Today.
📞 Or schedule a no-cost initial discussion with our specialists.
Frequently Asked Questions (FAQs)
Is A Foreigner Able To Apply For A Delaware LLC?
Of Course. The state of Delaware is very foreigner friendly as it does not restrict ownership. There is no requirement of citizenship or even a US address.
Is There A Requirement Of Having An Address And Social Security Number From The US?
Not At All. LLCs may utilize the address of a registered agent and SSNs for obtaining EINs are not mandatory, only an application through Form SS-4 is the requirement.
Does Delaware have advantages over other states regarding LLCs?
Delaware is best suited for holding companies, online businesses, and startups where privacy and legal flexibility is a concern. Delaware is not the only business-friendly state.
If you operate a business in another state, such as California or New York, you’d have to register your Delaware LLC there as well, adding more costs and paperwork.
