How to form an LLC in Delaware – Benefits&Costs

An LLC can be a handy tool for any business. LLCs are the most popular form of doing business, as they provide an owner with limited liability. Single-member LLCs are also easy to establish.

Delaware is one of the most accessible states to form an LLC, and it is possible to do so without establishing a physical presence in Delaware by filing via mail or online.

This short guide will give you all the basics of forming your own single-member LLC in Delaware.

What Is a Delaware LLC?

A Delaware LLC is a unique business entity. It is similar to a corporation in that the company owners are protected from liability for debts and other obligations through the use of a corporate veil.

It is also similar to a partnership or sole proprietorship. There is no legal distinction between the business itself and its owner for tax purposes, allowing the owners to operate under their tax statuses.

Who May Establish Delaware LLCs?

Any person or entity in the world may create a Delaware LLC, and any person or business entity in the world upon starting an LLC can be its owner.

There are no specific requirements for doing so in Delaware, with only an “agent” (the member of the LLC who has been authorized to represent the company) being required to file a formation document with the Secretary of State’s office.

Key Elements of an LLC

There is no single document that is considered a “Delaware LLC.” The only filings you need to make are with the Delaware Division of Corporations. Those documents are simply the signed Articles of Organization, which provide certain basic information about the business entity.

These include:

  • The date and time of business formation;
  • The name of the company;
  • The home state in which it is formed and its purpose.
  • The name of the agent authorized to represent the company.

How to File an LLC Application in Delaware?

Anyone authorized by the owner may file the LLC Articles of Organization with the Delaware Division of Corporations. This can be done in two ways:

You can file online at Delaware’s Division of Corporations website here: https://www.corp.delaware.gov/filing_online/.

You can mail the appropriate documents to this mailing address:

Division of Corporations, Corporation Service Center

PO Box 1450

Dover, DE 19903-1450

The cost for doing so is $50.00 per year or $600.00 per year for Unlimited Filing. This is a one-time fee that covers all filings in the current year and fiscal year.

Save your payment stub or mail order charge receipt with the Articles of Organization documents as proof that you have completed the filing process.

If you choose to file via mail, you must also send a cashier’s check or money order for the appropriate amount to the address above.

What Happens After the Filing Process?

The application will be processed by the Delaware Division of Corporations in approximately two weeks.

A Certificate of Formation will then be sent to the registered agent (which is typically whoever has filed on behalf of the company).

This Certificate can then be filed with all banks or other financial institutions as proof of existence.

Types and Uses of Delaware LLCs

There are two types of Delaware LLCs: standard and multi-member. The standard Delaware LLC allows for one member, and the multi-member Delaware LLC allows for more than one member.

It is important to note that both of these legal structures are formed by filing just one document with the Delaware Division of Corporations.

The members of a standard LLC may be foreign as well as domestic, and the members of a multi-member LLC must be foreign or domestic.

Who Can Be an LLC Member?

There are no restrictions on who can own a limited liability company within Delaware.

Individuals, foreign entities (including corporations), and even other Delaware LLCs may all be members of a single-member LLC.

The 5 Steps to Form an LLC in Delaware:

If you wish to form your own Delaware LLC, then the following five steps are all that you need to take before the entity is created:

Step 1: Name your Delaware LLC

Name your LLC, whatever you wish. The name must be absolutely unique and cannot be used by any other entity in the United States or Delaware.

Check with your lawyer before choosing the name of your new company if you do not already have one in focus.

Find the perfect name for your business.

To find the perfect name for your business, follow these steps:

  1. Search the internet to see if there are any similar names already in use.
  2. You may want to search your state and the federal trademark database, as well as any business-related search engines.
  3. Check with your lawyer to see whether there are any additional searches you should make.
  4. Think of potential variations on your name; it is important not to choose a name that sounds too similar to another company’s, so try minor alterations such as adding suffixes or changing the spelling slightly.
  5. Think of names that are widely popular.

Name requirements:

  • Must be at least one character long
  • Must not include the words “corporation,” “company,” or any abbreviations of these words
  • Must not include the word “limited” or any abbreviation of it (such as LLC, Ltd., LLC, etc.)
  • Must not have the word “bank” or an abbreviation of it at the end, such as Bank, Inc. or Associates Inc.
  • Must not have the word “trust” or an abbreviation of it at the end (such as Trust, Inc. or Trustees Inc.)
  • Must not have an ampersand (&), percent sign (%), comma (,), exclamation point (!), at-sign (@), or any other punctuation in it

Step 2: Appoint a registered agent in Delaware

A registered agent is a person responsible for receiving official correspondence from state and federal government agencies, keeping the business current with its state filing requirements, and filing Tax Information Statements on behalf of the company.

The best candidate for this position is usually a lawyer or notary public who is well-versed in LLC creation.

You may also hire an office management service to act as your Delaware registered agent if you prefer.

Find the perfect registered agent service for your company.

To find the perfect registered agent for your company, follow these steps:

  1. List three candidates, and check their references;
  2. Ask them for a list of past clients;
  3. Compare the candidates on their fees, past performance, and experience in your field of industry.
  4. Check with the Better Business Bureau to see if there are any complaints against them.
  5. Finally, meet with your shortlist and check that they have effective business systems in place to handle your business.

Registered agent requirements:

  • Must be at least 18 years of age
  • Must reside in Delaware or have a valid Delaware address on file with the Division of Corporations
  • Must pass a background check
  • Must be willing to accept correspondence for your company (emails and faxes)

Step 3: File a Delaware Certificate of Formation

The certificate of formation is a single form that will create your limited liability company and solicit the appropriate information from every member in it. The forms are available online, but it is also possible to have your lawyer complete them for you.

Rules of filing a certificate of formation:

The following information must be included in the certificate of formation to create a Delaware LLC:

  1. The company name and street address of your company, including the state and zip code.
  2. The names of all members.
  3. A description of the funds available to start the business.
  4. The business purpose for which the company was formed.
  5. If a multi-member LLC is being formed, the percentage of each member that will be contributed to the company.
  6. If a foreign entity is included, it must provide proof that it has been approved in its home country to form limited liability companies.
  7. A signed copy of each member’s identification documents and proof of residencies, such as utility bills or tax filings if you are an alien member.
  8. An indication of whether the members will have a standard or multi-member LLC, with signatures from all members.

Step 4: Create an operating agreement

The operating agreement is an important document that outlines the rules and regulations that will govern your LLC, including:

  • How the company will be structured.
  • The possibility of merging with other LLCs or converting to a corporation.
  • Who will perform specific duties once you incorporate
  • How the management structure will be handled, specifically how the members have a say in how the business is run and who makes key decisions.
  • Rules for how profits will be distributed.
  • Who will oversee any employee relations problems?
  • How the company may transfer its assets to another entity through a buyout or sale, and how you intend to deal with liabilities related to such transactions.
  • The number of members your company may have and what portion each member owns, as well as individual members’ responsibilities in the LLC’s operation.
  • The duration of your LLC’s lifespan and how you will handle any succession planning if your business is ever sold or dissolved.

Step 5: Apply for an EIN

The EIN (Employer Identification Number) is a nine-digit number that serves as proof of the company’s existence. It is one of the basic documents your LLC will need to operate in the US and every other country where you are doing business.

An EIN does not create a legal identity for your LLC, but it does establish that you have been legally authorized to form a company in a specific jurisdiction. Each state has a different way of issuing an EIN, but most will have an online application system, and they will issue you the number immediately.

To get an EIN, follow these steps:

  1. Fill out the online IRS form with all the information requested;
  2. Double-check that you’ve entered all the information and that you have typed in the correct characters. Before submitting this form, send a copy to your LLC’s legal representative as well.
  3. As soon as you get your EIN, record it for your records. Print it out and place it in a secure location, such as a filing cabinet or safe deposit box.
  4. The EIN is very valuable to your company, so take all reasonable steps to protect your company’s identity.

Delaware LLC Advantages and Disadvantages

There are many advantages to forming your company in Delaware, especially since the state’s business laws are very favorable towards LLCs.

Advantages:

  • Because of Delaware’s popularity as a corporate tax haven, the state has very low taxes. This means that Delaware is very favorable to foreign investors who want to create an LLC because capital gains taxes are lower than in other states.
  • Delaware’s laws are well suited to LLCs. The business is easy to form, and the state allows you to make changes later on if your business structure needs updating or adapting.
  • If you elect for manager-managed status, your company will have fewer organizational requirements than other LLCs.
  • If you decide to have your company managed by members, you will be able to use Delaware’s very flexible company laws.
  • The state authorities in Delaware are very efficient. If your LLC needs to file paperwork, it will most likely be processed quickly.
  • Delaware allows your LLC to form as a “foreign” LLC. This means that if you are a business based outside of the US but wish to establish an LLC in the country, you can do so through Delaware.
  • Delaware’s flexible company laws make the state a very attractive one for start-up companies.
  • If you decide to form a Delaware LLC, your management team will be limited to only three people, with no overlapping members.

Disadvantages:

  • US citizens who wish to operate through a Delaware LLC should not have more than one LLC in any state since each member must be a resident of Delaware. If you are a resident of Delaware and form an LLC with other people, those other people must also be Delaware residents.
  • If you make a choice to have your company managed by members, there will be very strict rules governing how that business is run. The members will have to deal with long and detailed meetings.
  • The rules that govern how a multi-member corporation is run can be complex and time-consuming. There might also be legal disputes that arise over decisions made by the board of managers.
  • Delaware does not have a very long shelf life for your LLC. The company will dissolve if you don’t form an ongoing relationship with your other members.
  • If you elect to administer your business through a manager, the manager will need to be licensed and authorized by the state authorities of Delaware. Because of this regulation, most managers in Delaware are individuals who have been in the business for years.
  • Delaware has more than just one company structure available to you; there are six different structures that can be chosen from.
  • The company laws in Delaware do not allow you to form your own operating agreements. Delaware law requires that your LLC submit to its default operating agreement, which is full of detailed and complicated rules.
  • If you are filing for a foreign LLC, you will need to file an annual statement, and all foreign companies have state fees associated with them. These can be very expensive.

How much does it cost to start a Delaware LLC?

The cost to form a Delaware LLC will vary, depending on how you decide to form your business.

If you form your company with a lawyer or an attorney-drafting service, the cost will be between $1000 and $2000.

  1. If you file the paperwork yourself, the cost will be between $500 and $1500.
  2. If you are forming your company with the help of a friend or family member, and you are managing it together, your cost will be between $250 and $1000.
  3. If you start an LLC using a lawyer, the cost is generally between $200 and $1,500.
  4. If you draft the paperwork yourself, without the help of a lawyer or attorney drafting service, the cost will be around $100 to $250.

Please note that there are other costs involved with starting any kind of business in Delaware.

These may include, but are not limited to:

  • State filing fee.
  • Costs for incorporating your business into the state.
  • Costs for foreign LLCs and other LLC structures.

The amount of these costs will depend on how you go about starting your business, the kind of LLC you choose, and the form of business organization that is chosen.

How long does it take to start a Delaware LLC?

Depending on the structure of the company, and the state in which it is forming, it can take anywhere from a couple of days to several months to get started with a Delaware LLC.

The reason that it can take so long is that Delaware has strict requirements for all businesses, including LLCs, making sure all companies meet specific regulations.

Separate Your Personal and Business Assets

A Delaware limited liability company should be set up as a separate legal entity from its owners for tax advantages and other legal reasons. The personal assets of the owners, including their home and personal bank accounts, should not be used to pay for the LLC’s expenses.

Personal assets that are associated with running the business, such as a home office or vehicle used for business purposes, are acceptable uses of personal assets in a Delaware LLC.

  1. Opening a business checking account:

All LLCs must have a bank account to pay employees, suppliers, and vendors, receive rent or investment income, pay taxes and other financial obligations, etc. A business checking account is one of the easiest ways to access your business funds because you can write checks against it almost as soon as you open it.

In order to open a business bank account, you will need to provide your LLC’s EIN number when you open the account.

The bank will likely require you to show them your LLC’s official Certificate of Organization (which you can obtain from the Delaware Division of Corporations) and your LLC’s “Statement of Registered Agent” (which is simply a signed appointment of registered agent form, in your LLC’s name, which you can obtain from the Delaware Division of Corporations).

2. Opening a business credit card account:

Business credit cards are convenient and offer some benefits over a business checking account.

Business credit cards offer increased privacy in that your competitor cannot see when you are making purchases on your credit card.

Additionally, business credit cards allow you to earn rewards, such as cashback or frequent flier miles, which can be very valuable to a small business owner.

In order to qualify for a business credit card, you must have an active EIN number.

3. Hiring a business accountant:

A professional, experienced accountant can help you with financial and tax matters that might be confusing to a new business owner. The cost of hiring an accountant will vary depending on their level of experience and what services they require. While it may seem expensive to hire an accountant, it’s well worth the peace of mind that comes with having someone professionally manage your finances.

4. Hiring a business lawyer:

A good business lawyer will help you avoid common legal problems and make sure you are following the laws and regulations that govern your business structure in Delaware. Additionally, a professional can help ensure that your LLC has the best possible chance of succeeding in Delaware.

When hiring an attorney, you will want to make sure you hire one who specializes in business law. Many lawyers handle both personal and business matters, but you may find that your personal lawyer is not the best choice to help with your LLC’s legal issues.

5. Hiring a business coach:

The more money and time you invest into your business, the more likely it is to succeed. There will be many questions and decisions to make, so you will need a business coach to help you navigate the legal issues and other considerations that will affect your business.

A coach can also help you with marketing strategies, hiring employees, and growing your business.

Get Business Insurance for Your Delaware LLC

An LLC must have business insurance in order to operate legally. This insurance covers your business’s financial assets against the business risks. The following are the most common forms of business insurance coverage:

Covered Business Policies: These policies typically cover your liability and property damage liability but may also cover other risks associated with your business. These policies can include property, product, or commercial auto insurance, casualty and theft coverage, general liability coverage, and other types of coverage.

Annual Business Insurance Premium: Premiums vary depending on your industry and other factors. In Delaware, you can expect to pay between $500 and $1,000 annually for general liability coverage.

In order to qualify for business insurance, you must have an active EIN number.

Create Your Business Website

A business website is a great way to promote your business and share information with customers, clients, and other interested parties. If you have a small budget, you may want to start out with a free website and see if your business can support the cost of a paid site.

CafePress: CafePress offers professional-looking websites for small businesses at no cost.

Reddit: Reddit offers free websites designed specifically for new businesses. The site offers helpful tools for building your website and a large community of users that can help you understand how to set up and use a website.

Send Out a Press Release

A press release is a good way to get the word out about your new business and attract business from customers, clients, and other interested parties.

Business journalists, newspapers, and other media outlets are always looking for interesting stories, so a well-written business press release could be the start of your company’s media relations.

Business news sites such as Entrepreneur Magazine also publish free articles aimed specifically at helping small business owners.

Delaware LLC Business Permits and Licenses

You must obtain business permits and licenses in Delaware in order to legally operate your business.

Some common Delaware business permits include:

  1. Annual Business License: You must obtain business licenses from both the city and county where you operate your business. In order to qualify for a license, you must have an active EIN number.
  2. Boiler Permit: You may need a boiler permit if you own a restaurant or other commercial establishment that has a gas-powered boiler in addition to other equipment.
  3. Certificate of Occupancy: You must obtain a certificate of occupancy from your local building inspector if you are operating a business on land that is not owned by you.
  4. Conditional Use Permit: A conditional use permit allows your business to operate in a development or commercial zone, usually in exchange for annual payments to the municipality.
  5. E-Commerce Business Certificate: If you plan to sell products online and will be collecting sales tax, you must obtain a business certificate from the Delaware Division of Revenue.
  6. Firearms Permit: You may need firearms to permit if your business includes firearms or ammunition for hunting purposes.
  7. Food Service License: If you plan to run a restaurant or other food establishment, you will need a food service license from the Delaware State Department of Health and Social Services.
  8. General Business License: In most cases, you will need a general business license in order to operate a retail store in Delaware.
  9. Housekeeping Permit: If your business involves cleaning premises, you will need a housekeeping permit from the Delaware State Department of Health and Social Services.
  10. Land Use Permit: You may need a land use permit if your business involves construction, demolition, or land development.
  11. Lease Permit: If your business plans to rent space by the day, week or month, you must obtain a lease permit from the Delaware State Department of Health and Social Services.
  12. Sign Permit: In some cases, you may need a sign permit to display a business name and logo on any of your properties.
  13. Sales Tax Exempt Certificate: You must obtain a sales tax exempt certificate from the Delaware State Department of Revenue if you are selling goods online that will not be subject to sales tax.
  14. Specialty Permit: A specialty permit allows you to operate your business in a development or commercial zone, usually in exchange for annual payments to the municipality.
  15. Tax Certificate: If you intend to collect sales tax from customers, you must obtain a certificate of conformity from the Delaware State Department of Revenue.
  16. Trash Collection License: You may need a trash collection license if your business involves collecting garbage and recycling or disposing of hazardous materials.
  17. Violation of Business Permit: In some cases, you may need to be served a violation of business permit notice and pay a fine if your business violates the terms of its permit.

As a small business owner, you must comply with Delaware’s labor laws in order to keep your employees happy and productive.

Creating and maintaining work schedules and providing vacation time are crucial for running a healthy operation. Allowing employees to take vacation time provides an employee with time off during which he or she can relax, recharge or resolve personal matters.

Delaware LLC Tax Filing Requirements

All Delaware LLCs are required to have an EIN number and file annual reports with the Secretary of State. These unique numbers, assigned by the IRS, are required to be included on all correspondence as well as on your business’ Delaware LLC annual report.

The Delaware State Department of Revenue requires that every company be registered with the department before you can collect sales tax. Failure to register can result in fines and penalties; failure to pay up will result in the cancellation of your state sales tax license.

Delaware Sales Tax

For businesses located in Delaware, there are two different types of sales tax: state and county.

State Sales Tax

Delaware’s sales tax is 5.6 percent, which can be reduced to 3.6 percent for qualifying companies that meet certain criteria. The state sales tax is applied to retail sales and services in the state, including:

Utilities such as electricity and telephone are subject to an additional 1 percent local service charge.

Gasoline is exempt from the state’s general 6% sales tax rate but is subject to a different 14.7-cent per gallon excise tax.

Leases and rentals are also subject to state taxation, which is why Delaware requires businesses that sell or rent property or land in the state to charge the applicable gross receipts tax on all transactions.

County Sales Tax

All property located within Delaware’s nine counties is subject to the 6% county sales tax, which cannot be reduced. In addition, Delaware also collects a 2% hotel/motel tax on the rental of hotel rooms or rooms in motels.

Delaware Employer Taxes

The first type of Delaware employer tax is the wage withholding obligation tax, due on the last day of the month on any wages earned by employees. These obligation taxes are calculated based on the employee’s total wages and earnings.

The second type of Delaware employer tax is the withholding tax for employee trust funds that fall under federal, state, and local retirement plans. Employers are required to withhold a percentage of each employee’s paycheck in a trust fund that may or may not be subject to federal taxes.

Delaware Gross Receipts Tax

This tax is determined on the gross receipts of your company, including the sale of goods or sales of real property.

Due Date: Annually by July 1.

Rate: 3.6% ($500,000 or less); 6% ($500,000 — $1 million); 8.7% over $1 million).

The tax must be withheld from sales, or it will be considered a failure to pay tax.

Federal LLC Tax Filing Requirements

For every Delaware company that elects to be taxed as an S corporation, the annual report must include the information listed below.

LLCs are subject to an additional federal tax on the net profits of each business. This additional tax is equal to 3 percent of any profits greater than $250,000 and 10 percent for companies with profits over $1 million.

Due Date: Annually by April 15.

Total Payroll: This is the total payroll of your company for the year.

Shareholders’ Equity: This represents the number of shares held in your corporation.

For Profit or Non-Profit Status: This is determined by the IRS and indicates whether or not this company is operating at a net loss.

If you are not a for-profit business, then it will be taxed as an S corporation with an additional franchise tax of 3 percent on any profits.

State Income Tax

The Delaware state income tax is a personal income tax that is applied to the taxable income of each individual taxpayer.

These taxes are required to be withheld from your employee’s wages and reported on their W-2 forms. You must also include this amount in your gross receipts tax and wage withholding obligations.

The state income tax does not apply to businesses that operate exclusively online or over the telephone; however, they may elect to be taxed in this area by submitting a form with the Delaware Department of Revenue.

Self-Employment Tax (Social Security and Medicare Tax)

As an employer of people, you are required to deduct Social Security and Medicare taxes from your employee’s wages.

The calculation of this tax is based on the total amount paid to employees, including salaries, wages, and commissions.

This is determined by multiplying your income by 15.3 percent; any excess expenses can be deducted from this number.

This tax must be withheld from your employee’s wages, and no employment taxes are due on this amount.

Hiring Employees in Delaware

The state of Delaware is home to 2.9 million people who are employed by a range of industries, including manufacturing, healthcare, and tech.

Incorporated in 1836, the first significant industries in Delaware included shipbuilding, railroads, and carpet manufacturing; however, its economy has evolved over time and today boasts a thriving business community that is active in research and development. This is thanks to the Delaware Technology Park, which houses more than 1,500 businesses that rely on partnerships with more than 60 universities across the country.

8 Tips for Hiring Employees

It is possible to hire employees within the first few months of operation, but be sure that you are following all of the laws and regulations applicable to hiring staff members.

You will need to register with the Delaware unemployment insurance division and pay quarterly contributions for each employee.

The following steps will guide you through the process of hiring employees:

  1. Notify the Delaware Division of Corporations:

You must notify the Division of Corporations within 30 days after having your employees hired.

The notification will include your LLC’s EIN number, name, address, and other relevant information that the Delaware Division requires.

2. Create an Employment Contract:

An Employment Agreement is a contract between you and your employee – it serves as a binding agreement between you both that outlines the terms of employment, including pay and benefits.

You are fully responsible for all terms of this employment agreement.

3. Register your Employee with the Delaware Division of Corporations:

You must register your employee with the Delaware Division of Corporations within ten days after they start working for you.

4. Collect Pay and Social Security Taxes:

You must report all wages to the Delaware Division of Corporations within ten days, including any federal taxes withheld.

5. Pay Employee Taxes:

You must pay the employee’s federal, state, and local taxes within two weeks of paying the employee.

You must also file an Employer’s Quarterly Report for each quarter in which an employee worked for you. The report includes information about your business and the status of your employees.

6. File a Payroll Tax Return:

You must file a Payroll Tax Return with the Delaware Division of Corporations within ten days after the end of each quarter in which you paid or withheld wages to your employees.

7. Register your Employee Benefits:

You must register your benefits with the Delaware Division of Unemployment Insurance within ten days after they are provided to an employee.

8. Update your LLC’s Records:

Whether it be by an increase or decrease to your business’ ownership or a change of address, you must update your LLC’s records with the Delaware Division of Corporations as soon as possible to ensure that all information is up-to-date.

Get Help Starting a Business in Delaware

If you are interested in starting your business in Delaware, consider asking professional Delaware business advisors such as the Delaware Association of Venture Capitalists (DAVCO) for their guidance.

The Delaware Association of Venture Capitalists is a non-profit organization that seeks to provide guidance to entrepreneurs who wish to start new businesses in the state.

The main goal of DAVCO is to connect entrepreneurial leaders with experienced venture capitalists who will help them develop their businesses and raise the capital needed for growth.

The Delaware Association of Venture Capitalists also provides training and educational courses throughout the year in order to help entrepreneurs learn about the industry and the process of developing a new business. They also offer assistance finding funding for start-up ventures.

The Delaware Association of Venture Capitalists accepts members from across the state and does not require annual filing fees; however, it is necessary to request membership.

Membership in DAVCO offers exclusive benefits such as networking opportunities with experienced business leaders, access to a wealth of industry information through publications, and an opportunity to take advantage of several workshops and educational classes.

Delaware Foreign LLCs

A Delaware foreign LLC is a Delaware LLC that is established in another state, with its business and affairs conducted solely in that state.

The Delaware law governs the formation of these types of LLCs, and such an LLC must be treated like any other Delaware-incorporated business for all purposes (such as taxation), with a few exceptions.

If a foreign LLC is owned by one or more nonresidents of Delaware, that LLC will be able to conduct business only in the state where it was incorporated. It may not carry on any business activities in Delaware, and it may not hold real estate in Delaware.

The registered agent for use with this type of LLC must be located within the state of Delaware.

The main reason for incorporating an LLC outside of Delaware is to avoid having to register in multiple states within which multiple limited liability companies are established.

If the LLC conducts business in Delaware, it must register with the Delaware Secretary of State and establish a registered agent in Delaware.

How to Obtain a Certificate of Good Standing in Delaware

If a Delaware LLC is not yet registered, the registered agent may request a Certificate of Good Standing from the Delaware Secretary of State.

In most cases, this document will be issued within four business days. This certification is required in order for the LLC to be eligible to open a bank account or qualify as a business entity for selection on business entities available to file taxes (if some other state where the LLC is incorporated does not have sufficient information on file).

A Certificate of Good Standing is not an actual certificate of incorporation, state business license, or amendment to the articles of incorporation. It is a document from the Delaware Secretary of State that confirms only that the entity has an active EIN and does not require any other actions from a Delaware-based agent.

The following sections are prima facie evidence that a Delaware LLC was formed:

  • The entity’s name and legal address are in Delaware.
  • A certificate of formation from the state registering office or a copy of an official document filed with the state in which the LLC is chartered.
  • A copy of the articles of organization and certificate of good standing, if applicable.

A business that is incorporated in Delaware needs to be registered in that state. If the property is transferred between entities, a Delaware Corporation Trust Tax Return needs to be filed for each transfer, whether the transfer was made within or outside the state using a Delaware Limited Liability Company (LLC).

Conclusion

To sum up, Delaware LLCs are generally different than other states in that they have LLC operating agreement, a registered agent, and corporate benefits such as limited liability.

Although Delaware is one of the most business-friendly states when it comes to incorporation, it is important for business owners to understand all the distinctions between state LLCs and corporations from other states.

Since Delaware has such a strong reputation in the business world, its economic contributions to the economy continue to grow and diversify. Delaware’s economy has benefited from its rise in technology and the success of many major companies, including:

“Delaware has long been a hub for the world’s banking and finance industry. Hundreds of banks and financial institutions are headquartered in Delaware, including 12 of the 30 largest banks in the United States.” – 2013 Delaware Economic Contributions Report

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