Delaware LLC Formation Requirements

These guidelines for forming a new business entity in Delaware can help you get started.

Incorporating a business could be the smartest decision you will ever make but it all depends on two main factors: your type of business and the location of your incorporation. Unknown to many, most Fortune 500 companies are incorporated in Delaware. Aside from the instant benefits of protection from property seizure and tailored tax payment schemes, you also enjoy the perks of working with business-friendly state corporation law and an unbiased court trial in case your company gets involved in a lawsuit. Other advantages also include a cheaper filing fee as compared to other top states in the US like California and Texas, and it has the most flexible laws on employment conditions. If you wish to incorporate in Delaware, you need to follow these guidelines.

Formation Requirements

  • You do not need to establish a physical address or office in Delaware to incorporate your company. Many companies use a PO Box or a postal address for clients to use whenever they need to send something. The PO Box can be addressed in Delaware but your main office should be in the location of your operation.
  • The state government does not require an incorporation applicant to maintain a bank account in Delaware. Instead, they are required to pay a $90 annual fee to Agents and Corporations, Inc. who acts as the statutory agents in receiving copies of legal documents for cases filed against your company. As an alternative, you can ask for referrals or requests for mail forwarding services or for bank accounts.
  • There is no minimum capital requirement when you decide to incorporate in Delaware.
  • In terms of taxes, Delaware state government requires all businesses applying for incorporation to file an Annual Franchise Tax Statement not later than June 1 amounting to $250. This is non refundable and non transferrable.
  • You need to secure your Employer Identification Number or EIN before you can apply for incorporation. An EIN is also a requirement when you open a business bank account as well as when remitting taxes in behalf of your company and your employees. On the other hand, Delaware does not require any state tax identification number.
  • You do not need to disclose all personal information involved in your company like names of the officers or directors and personal assets of the major or minor shareholders as Delaware implements anonymity on its corporations.
  • If you wish to incorporate in Delaware but your operations are outside of the state, you need to contract a Delaware registered agent to do the processing for you and to receive documents relevant to your company.
  • Although Delaware is corporation-friendly, it employs skilled agents that check on the background of the company and ensure that the company is legitimate and does not participate in any illegal acts.

Incorporating in Delaware is easier and cheaper if you will compare it to other states. Most Fortune 500 companies have their corporation enlisted in Delaware and so far, their businesses are running competitively.