Delaware LLC: Complete Formation Guide
A Delaware LLC is a limited liability company formed under Delaware law, one of the most established business-law systems in the United States. You file a Certificate of Formation with the Delaware Division of Corporations, name a registered agent in the state, and pay a filing fee. Every year afterwards the LLC pays a flat $300 annual tax by 1 June. There is no annual report for an LLC.
Key takeaways
- The state filing fee in our records is $110, and the annual LLC tax is $300, due on or before 1 June.
- Late payment carries a $200 penalty plus 1.5 percent interest per month, so do not miss the date.
- Delaware does not require members or managers to be named in the Certificate of Formation.
- Investors and lawyers know Delaware law well, which makes it the usual choice for a startup that may raise money.
- If you run the business from another state, you may still need to register there as a foreign LLC.
Why founders pick Delaware
Delaware is not the cheapest state. Wyoming and New Mexico cost less to run. People choose Delaware for legal reasons, not price. The state has a dedicated business court, the Court of Chancery, which hears disputes without a jury and has a large body of past rulings. Contracts and operating agreements written under Delaware law are predictable, which is why lawyers and investors like them.
If you never plan to raise outside money, a simpler and cheaper state may serve you better. Compare them in our Wyoming vs Delaware vs New Mexico article. If a venture round is on the horizon, you may prefer a Delaware C-Corp; see LLC vs C-Corp and our guide to forming a C-Corp.
What it costs
These are government charges. Our own fees are shown separately on the pricing page, and your registered agent bills their own yearly fee.
| Charge | Amount |
|---|---|
| Certificate of Formation filing fee | $110 |
| Annual LLC tax (due 1 June) | $300 |
| Late payment penalty | $200 |
The tax is the same for a single-member LLC that earns nothing and for one that earns a lot. Interest of 1.5 percent a month runs on both the tax and the penalty when payment is late. Fees can change, so confirm them on the Division of Corporations website before you pay.
How to form a Delaware LLC
- Pick a name. It must contain "LLC" or a similar designator and be different from existing Delaware entities. You can check availability with the Division of Corporations.
- Choose a registered agent. Delaware requires a registered agent with a Delaware street address. Read registered agent requirements by state and how to choose one.
- File the Certificate of Formation. It is a short document with the name, agent and address. Standard processing in our records is about 7 business days, and faster service is available for an extra fee.
- Adopt an operating agreement. Delaware does not require you to file it, but it governs your LLC. See our operating agreement guide.
- Apply for an EIN. Non-US founders use Form SS-4. Our EIN without SSN guide covers the steps.
- Open a bank account. See how to open a US business bank account.
We handle the state filing and agent set-up through our LLC formation service. You can also read the state page for Delaware LLC.
Privacy in Delaware
Delaware does not ask for member or manager names in the Certificate of Formation, so a public search will show the LLC name, agent and formation date but not necessarily who owns it. The same caution applies here as elsewhere: banks, payment processors and tax authorities can ask you who the owners are, and you must answer accurately.
Under FinCEN's current rules, US-formed companies do not file federal beneficial ownership reports. Our explainer on the Corporate Transparency Act covers what changed.
Taxes for a Delaware LLC owned by a non-US person
Delaware itself does not tax LLC income if the LLC has no business operations in the state, other than the flat annual tax. Federal tax depends on classification:
- A single-member LLC owned by a foreign individual is usually disregarded for US tax. It files Form 5472 with a pro-forma Form 1120 every year, even when it had no income.
- A multi-member LLC is normally taxed as a partnership and files Form 1065, and may face withholding on income allocated to foreign partners.
- Any LLC can elect to be taxed as a corporation. That changes filings and, often, the total tax.
Read how LLC taxation works for a fuller view. This is general information, not tax advice; ask a CPA about your case.
Delaware LLC and doing business elsewhere
Forming in Delaware does not by itself let you operate freely in every state. If you have an office, employees or regular operations in another state, that state may ask you to register as a foreign LLC and pay its own fees. A founder living outside the US who sells online usually does not trigger this. A founder with a US office or staff often does. Check the rules of the state where you do real activity.
Who should and should not choose Delaware
Delaware fits a founder who expects to bring in partners or investors, who wants a well-tested legal framework for the operating agreement, or who plans to convert the LLC into a corporation later. Lawyers in many countries have seen Delaware documents before, which can make due diligence smoother.
It fits less well if you are a solo freelancer with a small online business, no investors and a tight budget. The yearly tax is several times the minimum in Wyoming, and you gain little from the stronger case law if no one is likely to sue you. In that case, weigh Delaware against the cheaper states on our states page before you file.
Keeping the LLC in good standing
Good standing means the state considers your LLC current and allowed to operate. In Delaware that comes down to three habits. Pay the annual tax by 1 June. Keep a working registered agent on file at all times, and tell the state if you change agents. And keep the address the state holds for you up to date, since notices go there. If the tax goes unpaid for long, the LLC can lose good standing and eventually be cancelled, and a bank or payment processor may then freeze services until you cure it.
Pay the tax through the Division of Corporations' online system, using the LLC's file number, and save the receipt with your formation papers. If you use a registered agent, ask whether they pay the tax on your behalf or only remind you, since the difference matters when a date passes.
Common mistakes
Forgetting the June 1 tax
There is no annual report reminder for LLCs in the way many founders expect. Put 1 June in your calendar, or ask your registered agent to remind you.
Assuming Delaware is automatically cheaper
The $300 yearly tax is higher than Wyoming's $60 minimum or New Mexico's zero annual fee. Pay for Delaware only if you want the legal benefits.
Using a cheap agent that does not forward mail
Legal notices reach your LLC through the registered agent. A poor agent can cost you a default judgment. Check how they notify you.
Not planning for the IRS filing
Foreign-owned single-member LLCs must file Form 5472. Penalties for missing it are severe. Use our LLC compliance checklist.
Frequently asked questions
How much is the Delaware LLC annual tax?
It is $300 a year for the prior year, due on or before 1 June. Late payment adds a $200 penalty plus 1.5 percent interest per month.
Does a Delaware LLC file an annual report?
No. LLCs pay the annual tax but do not file an annual report. Corporations do.
Can a non-US resident own a Delaware LLC?
Yes. There is no citizenship or residency requirement. You need a Delaware registered agent.
Is Delaware better than Wyoming for an LLC?
It depends. Delaware has stronger legal precedent and investor familiarity. Wyoming is cheaper to maintain. Choose based on your funding plans.
How long does it take to form a Delaware LLC?
Standard state processing is about 7 business days in our records, and faster options cost more.
Want to compare states before you decide? Book a call or start with our LLC formation service.
