Formation Service
Delaware LLC

5 Steps to Form a Delaware LLC

Step 1.) Choose a Business Name

You can name your Delaware LLC anything that you want. However, your business name has to be unique. Your LLC name cannot conflict any business entity already registered in Delaware.

IncNow‘s Incorporation Specialists can check your preferred business name in the Delaware Secretary of State’s database for you.

Also keep in mind that your LLC name must include one of the following endings: 

• LLC, 
• L.L.C., or 
• Limited Liability Company

Step 2.) Choose a Delaware Registered Agent

Delaware law requires you to appoint a Delaware Registered Agent for your LLC. If you are not located in Delaware, you can appoint a company, like IncNow, to be your Registered Agent in Delaware. 

What Is A Delaware Registered Agent?

The purpose of a Delaware Registered Agent is to receive important legal notices and documents, called “Service of Process”, on behalf of an LLC. These include official court filings, like lawsuits and subpoenas, as well as important state tax notices.

A Delaware Registered Agent is required to do the following:

1. Have a physical mailing address (not a P.O. Box) in the State of Delaware, and
2. Be available between 9:00 A.M. and 5:00 P.M., Monday through Friday.

If you want to form a Delaware LLC, but are not located in Delaware, you will need to appoint a Delaware Registered Agent service, like IncNow to act as your agent.

Why is a Delaware Registered Agent Important?

Your Delaware company needs a Delaware Registered Agent to forward you any legal notices, like a summons or subpoena, that are served on your company. These types of legal documents are important and often require fast responses. A Delaware Registered Agent must forward any legal documents to you in a timely manner so that your company avoids penalties or judgments.

Step 3.) File a Delaware Certificate of Formation

Forming a Delaware LLC requires filing a Certificate of Formation with the Delaware Secretary of State’s office. The Certificate of Formation is the document that brings a Delaware LLC into existence by creating a public record.

What is Included on a Delaware Certificate of Formation?

The Certificate of Formation for a Delaware LLC includes:

• The name of the LLC,
• The name and address of the Registered Agent, and
• The signature of an authorized individual.

Delaware does not require LLC owners or managers to list their names or addresses on the Certificate of Formation.

How Do You File a Delaware Certificate of Formation?

IncNow will sign as the authorized person and file a Certificate of Formation with the Delaware Secretary of State to form your Delaware LLC. Once your LLC is filed, we forward the officially stamped Certificate of Formation to you via email and priority mail. 

Upon special request, we can include the names of members and/or managers on the Certificate of Formation.

Step 4.) Prepare and Sign an LLC Operating Agreement

An LLC Operating Agreement is the internal company document that details how an LLC is structured. IncNow’s “Complete LLC” and “Now LLC” packages include a ready-to-sign LLC Operating Agreement. IncNow’s LLC Operating Agreement is prepared by experienced Delaware attorneys and is customized to the needs of your business. 

What is an LLC Operating Agreement?

An LLC Operating Agreement is a private contract between an LLC’s Members. In the Operating Agreement, the members agree on the ownership structure of the LLC as well as how decisions will be made within the company. 

The LLC Operating Agreement should be written and signed by all the existing members of the LLC. 

A well-prepared LLC Operating Agreement should include the following:

• The names of the LLC members; 
• Each member’s individual ownership percentage; 
• Each member’s management responsibilities in the LLC;
• The names of any third-party managers;
• Each member’s voting privileges in the LLC; 
• Each LLC member’s initial capital contribution; and, 
• Procedures for adopting changes to the Operating Agreement. 

The LLC Operating Agreement should include provisions addressing aspects of the business that could lead to disputes between members. These include provisions addressing the transfer of ownership interest in the LLC. A well-prepared LLC Operating Agreement should act like a prenuptial agreement that protects the interests of the individual members in the event of a falling out. 

Does My Delaware LLC Need an Operating Agreement?

Delaware law requires Delaware LLCs to have an Operating Agreement. However, Delaware does not require the LLC Operating Agreement to be written. 

It is recommended that you have a written and signed LLC Operating Agreement. A formal written Operating Agreement provides several benefits for an LLC, including:

• Proof of ownership in the LLC;
• Better liability protection for members; and,
• A clear decision-making structure.

Having a formal written Operating Agreement can also make your LLC appear more credible to banks or other businesses. 

Does a Single-Member LLC Need an Operating Agreement?

Even a single-member Delaware LLC should have an Operating Agreement. A single-member LLC Operating Agreement is a contract between the LLC and the sole member that clearly establishes that the member cannot be found personally liable for the debts of the business. 

Why is the LLC Operating Agreement Important?

The LLC Operating Agreement is both the start and end points for resolving most legal disputes concerning an LLC. If you have business partners or plan on engaging with other businesses, you want the protection of a strong Operating Agreement. 

Most business owners form LLCs thinking that they want to protect their personal assets from hostile business creditors. However, the truth is that most attacks on a company’s assets come from the inside, in the form of business partner disputes.  

The LLC Operating Agreement establishes the company’s ownership structure and clearly defines how the LLC is run. LLC members can better protect themselves from personal liability by signing and adopting a well-prepared LLC Operating Agreement. 

Do I Need to File My Delaware LLC Operating Agreement?

Delaware does not require LLC members to file the LLC Operating Agreement with the state. The LLC Operating Agreement is a private document that does not need to be made public.

The LLC members should keep a signed copy of the Operating Agreement with the company’s records, along with any other important documents. 

Step 5: Obtain an EIN Number

A Delaware LLC can obtain an Employer Identification Number (EIN) after the company has been formed. An LLC needs an EIN number in order to pay US federal taxes, hire employees in the US, and open business bank accounts. 

IncNow can obtain an EIN number for your LLC. Our Incorporation Specialists complete and submit the Form SS-4 application to the IRS on your behalf. 

What Is an EIN Number?

An “Employer Identification Number”, or EIN, is a unique number assigned by the IRS to identify a business entity, like an LLC. Think of an EIN number like a social security number for a business.

An LLC needs an EIN number to pay federal taxes as well as perform other important functions, such as opening a business bank account and tracking payroll. An EIN number also enables a business to legally hire employees, apply for business licenses and permits, and apply for certain business-related tax benefits.

How Do You Obtain an EIN for an LLC?

An LLC can apply for an EIN number through the IRS website or by mail. Applying for an EIN requires completing the IRS Form SS-4. 

Completing the Form SS-4 for an LLC requires providing the following information:

• The legal name of the LLC, as well as any trade names (DBAs);
• The name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of a responsible party;
• The LLC’s mailing address; 
• The LLC’s nature of business or industry; 
• The number of members in the LLC; and, 
• The LLC’s accounting period and tax year. 

In addition, you will need to provide the type of tax designation that the LLC elects. The IRS’ “Check the Box” provisions allow LLCs to choose whether they will be taxed as a pass-through entity, a C-Corporation, or an S-Corporation.

Top 10 Reasons to Form a Delaware LLC

1. Strong Protection for You and Your Business:

By setting up a Delaware LLC, you’re creating a strong shield between your personal assets—like your house or car—and any business debts. If your business can’t pay its bills or gets sued, this shield helps to keep your personal assets safe.

Delaware has a unique rule known as the “Charging Order.” The Charging Order is a solid barrier, preventing your creditors from seizing control of your business. Business creditors can only claim a portion of your LLC’s profit distributions, but they can’t acquire any controlling interest or liquidate your company. This rule offers an additional layer of financial protection for your business.

2. Best-in-Class Legal Security:

The legal protections that Delaware provides for your company, including keeping your personal assets separate from business liabilities, are some of the most robust protections available in any U.S. state.

The state where you form your company is the one that will govern its affairs. You can choose to shop around for the best state laws that benefit yourself and your business the most.

3. Opportunity to Operate Globally:

With a Delaware LLC, you can run your business from anywhere—whether that’s across different U.S. states or even other countries. Plus, there’s no need for a bank account or physical office in Delaware. You just need a Delaware registered agent, like IncNow, to handle your official notices and legal mail.

4. Control and Flexibility in Running Your Business:

Delaware allows you to arrange your business as you see fit. This means you can be the owner and the manager of your LLC. Running an LLC involves less requirements and paperwork compared to a corporation. For example, you do not need to pick a board of directors or hold an annual meeting for an LLC.

5. Legal Protection for Managers:

In Delaware, your LLC Operating Agreement can help protect business managers from legal issues, giving them the freedom to take strategic risks for the benefit of the business.

6. Attractive Tax Benefits:

If your Delaware LLC operates outside of Delaware, you won’t have to file a Delaware tax return. Plus, choosing to have your LLC taxed as an S-Corporation could potentially save you thousands in self-employment taxes.

IncNow’s Tax Tips

7. Fast Approvals and Filings:

Delaware is known for its quick business paperwork processing. The Delaware Secretary of State’s office can even expedite filings to be completed within one hour.

8. Broad Range of Business Uses:

A Delaware LLC is a versatile business tool. It can be used for anything from a one-person consulting firm to a multi-million dollar commercial enterprise.

Delaware LLCs are an ideal choice for:

• Solo Entrepreneurs: Delaware LLCs are ideal for self-employed individuals, providing liability protection and credibility.
• Real Estate: Use a Delaware LLC to manage and protect property investments, from individual properties to large portfolios.
• Online Businesses: If you’re running an online store or service, a Delaware LLC provides the legal protection and flexibility you need.
• Professional Services: Whether you’re in marketing, accounting, or consulting, a Delaware LLC offers a formal business structure and liability protection.
• Creative Ventures: Artists, writers, and musicians can use a Delaware LLC to protect their works and limit personal liability.
• Hospitality Businesses: Restaurants, cafes, and food trucks can benefit from the liability protection offered by an LLC.
• Event Management: Organizing events involves handling contracts and potential liabilities, making a Delaware LLC a smart choice.
• Retail: Whether it’s a physical storefront or an online shop, a Delaware LLC can provide a solid legal foundation.
• Import/Export: A Delaware LLC offers a credible structure for international business transactions.
• Tech Startups: A Delaware LLC is a good starting point for launching a tech-based business, providing both legal protection and operational flexibility.

9. Quick Resolution of Business Disputes:

Delaware has a separate court just for business disputes called the “Court of Chancery”. Delaware’s Court of Chancery is known for resolving issues efficiently and effectively, saving business owners valuable time and resources. There are no jury trials in the Court of Chancery, so Court’s expertise is brought to bear in the decision of every case before the Court.

The Delaware court system can act very quickly. Sometimes, the whole process, from start to finish (discovery and motions to trial decisions), can be over in two months. Written decisions from the Court of Chancery are the standard, and are often 100 pages long. This well-reasoned process avoids arbitrary outcomes. Even appeals to the Delaware Supreme Court can be expedited. The Delaware judges do their homework and read all the pleadings carefully before hearings and trials.

10. Business-Friendly Laws:

Delaware’s laws are known for being pro-business. They are stable yet evolve gradually over time, giving you more predictability and peace of mind. 

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