We have already explored the many benefits of forming a Delaware LLC. Now it is time to bring everything together by learning how to actually set up an LLC and implementing what you learn. Remember that Delaware is a very business friendly state and the Delaware Division of Corporations (DDC) has tried to make the entire process of forming a Delaware LLC simple, quick, and helpful.
It is much more beneficial to the state to make the entire process as user friendly as possible. Corporate attorneys work very closely with the State Department and Court of Chancery. This is absolutely necessary in such a pro business climate. As a result of the simple process of incorporating, Delaware LLC and corporate law attorneys joke that they have nearly put themselves out of business. Despite the simplistic nature of the process it may still be wise to seek the advice of a corporate law attorney to be sure you are doing things correctly.
Forming a Delaware LLC can be broken down into 5 easy steps. There is a minimal amount of information that will be required and the entire process can be completed in less than a few hours. Approval may take some time, however, the DDC is known for completing the approval process very quickly.
Step #1: Determine the type of entity you will use.
The first thing you will need to do is determine the type of business you want to form. Will this be a C-Corporation, Limited Liability Company (LLC), Series LLC, Limited Liability Partnership (LLP), or Sole Proprietorship? Make sure that you understand the differences between all the different incorporation options and choose the one that best fits your current needs.
One of the more popular business types is the LLC. It has the same protection of personal assets as C-Corporation but is far leaner on rules and regulations. This makes it perfect for small businesses and start ups. I’ll elaborate on the differences between c-corporations and LLCs a little later.
A Series LLC allows one to incorporate several business ventures under a single umbrella. The various ventures will be individually protected similarly to the protection provided to your personal assets. If one of the ventures goes under, no one can go after the assets invested in your other ventures. But I’ve already shared too much about that topic. I’ll save the rest for another blog post.
The remaining steps pertain to incorporating a Delaware LLC.
Step #2: Find a registered agent for the Delaware LLC if your business will not be physically located in Delaware.
You are not required to be a resident of Delaware to establish an LLC there. You do not have to hold meetings there, you do not need to store documents there, you do not even need to ever visit the state. In fact if you are not physically doing business in Delaware you are not required to pay any income tax.
If you do not intend to physically conduct business transactions in the state you will need a registered agent. A registered agent will act as your liaison with the state. The website of the State of Delaware provides a list of registered agents that you can use. There is a small fee attached to the services.
Step #3: Reserve your Delaware LLC Name.
This step happens to be optional but is a wise move. By reserving your business name in advance you will lessen the likelihood of your incorporation application being denied. There is an additional nominal fee attached to reserving your business name but it could possibly save time later in the process. If you have done ample research and feel confident in the uniqueness of your chosen entity nomenclature, feel free to skip this step entirely.
Step #4: Register the LLC with the Secretary of State through the Delaware Division of Corporations.
Now it is time to complete all the paperwork that goes along with forming a Delaware LLC. All of the necessary forms can be completed through Delaware’s state of the art One Stop Business Registration and Licensing System. There you will find all the necessary paperwork to register your new business with the DDC.
If you prefer not to fill out all the paperwork yourself or don’t feel you understand all the terms associated with filling out the paperwork to file a Delaware LLC, use an Incorporation Service to do it all for you. If you use this link with Incorporate.com you’ll get a Delaware LLC for as little as $49 plus state fees.
Step #5: Register with other state agencies.
This can actually be done through the One Stop Business Registration and Licensing System, however, you are responsible for knowing which of the various other state agencies you will need to register your business with. The Department of Finance and the Division of Revenue will be mandatory for nearly every business. You will also need to apply for a Federal Employer Identification Number (FEIN) with the Internal Revenue Service (IRS).
Business LLCs employing laborers must also register with the Division of Unemployment Insurance and the Office of Workers’ Compensation. Even if your LLC does not currently have employees consider filing the necessary paperwork regardless. If the business grows and expands it will be much better knowing that everything is already set so that you can begin hiring immediately.
There are many other state agencies that you may need to register with. The Department of Administrative Services, the Department of Agriculture, the Department of Public Safety, and the Department of Transportation are just a few of the other agencies that may desire paperwork and a small fee from your Delaware LLC.
All of these agencies can be contacted via the State of Delaware website and the One Stop Business Registration and Licensing System provides most of the paperwork required to complete incorporation of your Delaware LLC. Be sure to do all the necessary research and to consult with a corporate law attorney so that you register in all the right places.
Setting up a Delaware LLC is quite simple. The DDC has streamlined the process to make it very simple for just about anyone to incorporate in the state. If you get stuck at any point the DDC is more than willing to provide assistance. The entire process has been set up with the end user in mind.