Many business entities, including limited liability companies (LLCs), choose Delaware as a formation state due to factors such as its tax-friendly environment and pro-business laws.
The LLC incorporation process in Delaware is pretty straightforward.
The state authorities provide plentiful information on legal procedures such as state form submissions, business license applications, and LLC operating agreement conclusions.
Plus, Delaware is often considered a tax haven due to its legal tax minimization policies. Also, this state provides greater financial privacy to business owners, as the Institute on Taxation and Economic Policy explains.
This guide will examine all the startup and maintenance costs for Delaware-based LLCs.
Table of contents
- Delaware LLC formation cost: $90
- Extra Delaware LLC formation costs to account for
- Does Delaware have an annual LLC fee?
- What taxes do LLCs pay in Delaware?
- Conclusion: How much does an LLC cost in Delaware?
Delaware LLC formation cost: $90
To get started with forming an LLC in Delaware, you’ll need to pay the $90 state filing fee for your initial Certificate of Formation (referred to as Articles of Organization in other states) to the Delaware Division of Corporations if you’re creating a domestic LLC.
Foreign LLCs need to pay $200 for initial formation costs in Delaware.
Additional state fees apply if you want to expedite the filing process.
The standard processing time depends on the current volume of submissions. In busy times, it can take up to 14 business days.
To get your formation documents approved faster you can pay:
- $50 for 24-hour service
- $100 for same-day processing
- $500 for 2-hour turnaround
- $1,000 for 1-hour turnaround
The above fees are charged atop regular costs for foreign and domestic LLC formations.
If you want to request a certified copy of your LLC formation documents, you can do so online. One copy costs $50.
Extra Delaware LLC formation costs to account for
In addition to the initial LLC formation costs, which could carry additional fees for expediting the process or requesting certified copies, you should also budget for the following expenses.
Registered agent fees
One advantage to forming an LLC in Delaware is that the initial registered agent appointment fee gets bundled into the cost of a Certificate of Formation rather than being an extra expense.
Keep in mind that these State of Delaware costs differ from what a registered agent service might charge for its services.
While a business physically located in Delaware can be its registered agent, you might want to hire a professional service.
For example, if you don’t have a local street address or want professional support.
On the low end, you could hire a Delaware registered agent for roughly $100 per year. Some LLC service providers offer bundles that include initial filing support for a couple of hundred dollars.
If you already came up with a business name and want to ensure no one else takes it before you complete your LLC formation, you could pay $75 to reserve a name for 120 days.
Reservations can be done online or mailed in.
Fictitious name registration
Registering a fictitious name is necessary when you want to operate under a brand name that’s different from your registered company name.
In that case, you’ll need to file a form and pay the state’s fee of $25. The fee is charged for every country where you wish to register.
Trademark and service mark applications
For businesses who want to protect their brand’s name, logo, or other intellectual property from being used by competitors, a trademark for goods or a service mark for services application makes sense.
In Delaware, the fee for registering a trademark or service mark for ten years total is $35.
Business permits and licenses
Depending on the type of business you start, you will face varying business permit and license requirements.
First, you will need to obtain an employer identification number (EIN) from the IRS for federal tax reporting and compliance.
Then all businesses in Delaware need to apply for a general business license from the Delaware Division of Revenue. This license costs around $75 for a first business location. Subsequent branches require additional licenses.
Some industries also require extra professional licenses. For example, those involved with lending money face a $450 license fee, while a showperson license (such as for operating a live theater) costs $375.
Does Delaware have an annual LLC fee?
No. Delaware doesn’t require LLCs to file annual reports, so there’s no LLC fee in that sense.
However, all LLCs registered or formed in the state have to pay a $300 minimum annual franchise tax to remain in good standing.
What taxes do LLCs pay in Delaware?
Many new businesses are formed in Delaware due to the tax-friendly environment. But that doesn’t mean LLCs can avoid taxes altogether.
Aside from federal taxes, Delaware businesses should be aware of:
Minimum annual franchise tax. LLCs face a flat $300 annual LLC tax, payable without relation to your corporate income. It’s higher than the $175 annual franchise tax minimum for C-corporations. Though large corporations also face significantly higher income taxes due to double taxation.
Gross receipts tax. Delaware has no state or local sales tax. But there is a gross receipts tax on those who sell taxable goods or services. However, high exclusions, often starting at $100,000 per month, could enable you to avoid it.
Corporate income tax: Delaware LLCs typically don’t face the state’s corporate income tax of 8.7% unless the LLC is federally taxed as a corporation.
Employee taxes. Delaware businesses with employees on payroll will need to cover employment taxes such as unemployment insurance and state withholding tax.
Conclusion: How much does an LLC cost in Delaware?
In general, starting an LLC in Delaware is affordable.
On the low end of the scale, you’ll pay $90 for a Certificate of Formation and around $75 for a business license for a new LLC. Then there would simply be $300 in annual taxes.
At the high end of the scale, a small business might pay several hundred dollars in initial filing costs. Or even a few thousand if they need the maximum expediting and want additional services like a professional registered agent.
To some extent, it’s up to you how much you want to spend, but it’s possible to start a business in Delaware at a relatively low cost.