Limited liability companies are a popular structure for businesses. This is because the process to establish an LLC is simple and offers several advantages.
An LLC can provide you with more tax options compared to other business structures. It has a simple default tax structure where you can report profits or losses on your personal tax returns. It can also protect your personal and gross assets while boosting your brand’s return on investment.
If you’re planning on creating an LLC in Delaware, you’ll need to learn the important fees associated with the process. Read on to know more about establishing an LLC in the state and the payments you need to make with an LLC.
Forming an LLC can be a challenging task to accomplish. But, with the right resources, you can have the confidence to breeze through the process. Below is a step-by-step guide on how to establish an LLC in Delaware.
Deciding on a company name is your first step in forming an LLC. You have to use a unique name that meets Delaware naming requirements.
When choosing a name, it’s required to have the phrase “limited liability company” or “LLC” in your company name. You’re also not allowed to include words that suggest affiliation with a government agency.
Once you’ve thought of a name for your business, check if the name is available in the state. Make sure that the name isn’t used by another Delaware company.
You can also use naming tools online to help you come up with unique business names.
Before filing a Certificate of Formation, you'll need to have a registered agent.
The agent accepts legal documents, including service of process and tax notices. Your agent can be a person or a registered agent service.
The third step in forming an LLC is filing a Certificate of Formation with the Delaware Department of State. You can do this step online or you can do this by mail.
During this step, you have to decide whether your company will be member-managed or manager-managed.
After filing the Certificate of Formation, you need to write up an operating agreement. This is a legal document outlining the following:
You can adjust provisions to your LLC operating agreement. But, keep in mind not to include provisions that may conflict with Delaware law.
After making an operating agreement, you can finally get an Employer Identification Number (EIN). An EIN functions as a Social Security number for businesses.
It helps the US Internal Revenue Service (IRS) to identify and tax companies. You can apply to get an EIN with the IRS.
If you’re doing business in Delaware, you’re required to pay the Delaware Franchise Tax and the registered agent fee.
The Delaware Franchise Tax costs $300 per year. This tax is paid annually on June 1.
Regardless of a company’s age, gross sales, or activity, the $300 is a standard cost. If you can’t pay the Delaware Franchise Tax on time, you need to pay a $200 penalty.
The state has a zero-tolerance policy for late payments. The $200 penalty fee will be automatically added to your tax, regardless of the reason why you didn’t pay on time.
You need a registered agent for legal purposes to support your LLC. An agent helps you in such things as service of process, state correspondence, and tax notifications.
Having the services of a Delaware registered agent means that their annual fee is part of your annual compliance cost.
As an LLC business owner, you need to pay your annual Delaware Franchise Tax. Every February, the state will send your registered agent a reminder to pay the annual franchise tax.
But, it’s recommended to create your own reminder in your personal calendar. This way, even if you don’t receive the reminder from the state, you won’t forget to pay.
Remember, it’s your responsibility to pay the Delaware Franchise Tax every year. You need to be able to pay even without notice from the state.
You can only pay the annual report fee online. You can use a credit card or your checking account to pay.
Below is a step-by-step guide on how to pay your Delaware Franchise Tax.
After following these steps, you will receive an email confirmation from the state. The email will notify you that you’ve paid your franchise tax fee successfully.
It’s recommended to print the email and keep it with your important business records.
There is so much to think when starting a business in Delaware, including the fees to pay. Don’t miss a thing with the help of Doola! Call us now to learn the ways we can assist you on how to pay your annual Delaware LLC fees.
Are you set on creating your own LLC in Delaware? Contact Doola today and make your new LLC compliant with Delaware laws.
Doola can guide you through the various processes involving important paperwork for your business license. We can provide everything you need to file the legal paperwork required for your company.
We can help you stay compliant with Delaware law by sending compliance reminders. This way, you’ll have an LLC that stays legal year over year.
You need to pay a late fee of $200 if you didn’t pay the $300 Delaware Franchise Tax by the due date of June 1st.
In Delaware, a single-member disregarded entity is noted as a sole proprietorship for tax purposes. This means that the LLC itself doesn’t pay taxes. The company is also not required to file a return with the state.
A multi-member LLC (MMLLC) has two or more members. Much like a single-member LLC, an MMLLC is a business entity that combines the flexibility of general partnerships and the limited liability of corporations.
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