What Does It Cost to Form a Delaware LLC?

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Delaware's favorable legal environment for businesses makes it an attractive and popular state in which to start an LLC, also known as a limited liability company. The fees for filing and licensing an LLC are affordable, and filing for LLC status is easy to do through the Delaware Division of Corporations website or by mail.

Why Form an LLC in Delaware?

According to Harvard Business Services, forming an LLC in Delaware offers more flexibility to businesses than doing so in any other state. A Delaware LLC is beneficial in multiple scenarios, including holding real estate, operating a family-owned business, estate planning and owning intellectual property. An LLC can also cover a business' assets, such as multiple-unit buildings or fleet vehicles. It can be used to create a joint venture between two individuals or companies, and to make it easier to attain government licenses or contracts.

Having a Delaware LLC has several benefits. They include:

  • Custom structure and rules: LLC members draft the business' rules and place them in an LLC operating agreement, which can be tailored to suit the needs and preferences of the LLC. This is known as freedom of contract.
  • Protection of assets against creditors: If someone files a legal judgment against an LLC member, creditors cannot acquire any of the business' assets or attack the LLC itself.
  • Statuary limitation for personal liability: LLC members are not liable for the business' debt if it fails.
  • Beneficial tax treatment: The IRS taxes an LLC in several ways – as a sole proprietor, a partnership, an S corporation or a C corporation.
  • Minimal effort to create: Forming and maintaining an LLC in Delaware is easy. There are no meetings or votes required, just an inexpensive filing fee. After the initial payment, there is an annual franchise tax and registered agent fee. These are also inexpensive.
  • Privacy: The state does not require owner information in order to file or maintain an LLC.

Cost of Filing an LLC in Delaware

In Delaware, filing an LLC costs $90, with a $300 Delaware franchise tax fee paid annually by June 1. This franchise tax fee is standard for all LLCs regardless of age, gross sales and activity. Even inactive LLCs must pay this fee. If a company fails to pay by June 1, it receives a $200 penalty. The state has zero tolerance for late payments and automatically adds this penalty to the LLC's franchise tax notice.

Those who don't operate their company in Delaware don't have to file state income tax reports or accounting data. Out-of-state companies are also not responsible for paying Delaware income tax.

Choosing a Registered Agent for an LLC

Delaware requires LLCs to have a registered agent for service of process. A registered agent is an individual or business authorized to accept legal documents on behalf of the LLC in case of litigation and has a physical street address in the state. An LLC that has a physical location in the state may also be its own agent. Businesses looking for a Delaware registered agent can find them listed on the Delaware Division of Corporations website.

Registered agent fees differ from company to company. For example, Harvard Business Services charges about $50 annually for an agent. By comparison, Legal Zoom costs $159 annually, but does not include that fee in the formation package; instead, it bills the LLC after its formation. The Company Corporation includes the first six months in its formation package fee and allows the LLC to opt-in for an extra six months at $100. After that, the annual fee is $235.

Choosing the LLC's Name

Delaware law requires LLC names to include the words Limited Liability Company or one of two abbreviations: L.L.C. or LLC. The name of the LLC cannot be similar to other business entity names already on file with the state. Applicants can check for available names on the state's business name database. The LLC name can contain member names as well as these terms:

  • Club.
  • Foundation.
  • Fund.
  • Institute.
  • Society.
  • Union.
  • Syndicate.
  • Trust.

An LLC can reserve a name for 120 days on the Delaware Division of Corporations name reservation page with a $75 fee. Businesses can print out an Application for Reservation of Limited Liability Company Name and file through U.S.P.S. mail. When doing day-to-day business in Delaware, the LLC does not have to use its official name; it can use a fictitious business name, or DBA. It must register the fictitious name with the county where it does business and also file a Registration of Trade, Business & Fictitious Name Certificate with that county's Superior Court clerk. A DBA requires a $25 filing fee.

Additional LLC Fees

In addition to the initial incorporation filing fee, the annual franchise tax fee and the yearly registered agent fee, businesses may have additional expenses for an LLC. If, for example, they need certified copies of business documents, they can order these through the Department of State for a $50 fee, plus an additional $2 per page.

An LLC may also need a Certificate of Good Standing, which verifies the legal formation and proper maintenance of a business. An LLC must be compliant, meaning it follows all the license requirements of local, federal and state governments. Applicants can find Delaware licensing requirements on the state's One Stop website. A certificate of good standing requires a $50 fee for a short form certificate and $175 for a long form certificate.

Filing an LLC Certificate of Formation

The state of Delaware accepts an LLC Certificate of Formation request online or by mail. When filing, applicants must complete and submit two forms: a cover letter with the business' information and the certificate of formation application itself. The Delaware Division of Corporations has sample formation documents online with instructions and fees. Applicants can fill them out and submit them using the agency's Document Upload Service. Those who need help to complete the forms can contact the agency by calling 302-739-3073 with questions.

Those choosing mail also must complete a cover letter and can download a PDF fillable cover sheet for this purpose. They can mail the letter and the certificate of formation to the Division of Corporations, John G. Townsend Building, 401 Federal Street, Suite 4, Dover, Delaware 19901. Applicants must pay the LLC filing fee upon submission of the request.

If everything is accurate, and the applicant includes the state filing fee, it can take between 10 and 15 business days to process an LLC request. However, it can take up to four weeks in the months of March, June and December, as these are peak processing periods in Delaware. The state has expedited service year-round for an additional fee and will return all requests via regular First Class mail unless the applicant provides the agency with Federal Express or a UPS account number.