How to form an LLC in Delaware

Delaware is the most famous state to form an LLC in the U.S. — but for legal infrastructure reasons, not tax reasons. The Delaware Court of Chancery is a 200-year-old business court that hears commercial disputes without juries, presided over by judges who specialize in corporate law. That predictability is why most VC-backed startups, holding companies, and Fortune 500 entities are formed in Delaware. Forming an LLC costs $110 to file the Certificate of Formation with the Delaware Division of Corporations, with 1–2 business day standard processing (1-hour, 2-hour, and same-day expedited tiers available for higher fees). The annual cost is the flat $300 LLC franchise tax, due every June 1 — there's no annual report for LLCs (only corporations file annual reports). Delaware has no state sales tax, and out-of-state Delaware LLCs that don't do business in Delaware pay no Delaware income tax.

Why form your LLC in Delaware

Delaware’s Court of Chancery hears business disputes without juries and has 200+ years of corporate case law. That predictability is why most VCs and large-cap companies form here — not because of taxes, but because of legal infrastructure.

• Delaware Court of Chancery — 200+ years of corporate case law, no juries, specialist judges
• Industry standard for VC-backed startups and holding companies
• Strong creditor and asset-protection statutes
• No state sales tax
• No state income tax for LLCs not doing business in Delaware
• Same-day, 2-hour, and 1-hour expedited filing options

Best fit for: Holding companies · Finance · Startups raising VC

How to form a Delaware LLC in 7 steps

1. 1

   Search the Delaware business name database

   Use the Delaware Division of Corporations name search to confirm availability. The name must include "Limited Liability Company", "L.L.C.", or "LLC". Reserve a name for $75 (held 120 days) if you need time before filing.

2. 2

   Appoint a Delaware registered agent

   Mandatory — you must have a Delaware-based registered agent at all times. You cannot serve as your own agent unless you have a Delaware street address. Commercial Delaware registered agents typically charge $50–$300/year. This is the single biggest reason out-of-state Delaware LLCs have ongoing costs.

3. 3

   File the Certificate of Formation

   File online or by mail with the Delaware Division of Corporations for $110. Standard processing is 1–2 business days. Expedited tiers: 24-hour ($50), same-day ($100), 2-hour ($500), 1-hour ($1,000). The Certificate is short — name, registered agent, and that's essentially it.

4. 4

   Draft an Operating Agreement

   Delaware LLC Act explicitly favors freedom of contract — your Operating Agreement can override most default rules. This flexibility is one of the main reasons sophisticated entities form in Delaware. Always have a written agreement; oral agreements are technically valid but court-tested ones are written.

5. 5

   Apply for an EIN with the IRS

   Free at irs.gov, takes 10 minutes online. Required to open a business bank account, file federal taxes, and (if applicable) register with your home state.

6. 6

   Register as a foreign LLC in your home state (if applicable)

   If you formed in Delaware but do business in another state, that other state will treat your Delaware LLC as a "foreign LLC" and require you to register and pay its fees too. This is the often-missed cost — California will charge the $800 franchise tax, New York will require publication, Texas will charge $750, etc.

7. 7

   Calendar the June 1 franchise tax payment

   Delaware LLC franchise tax is a flat $300 due every June 1 regardless of revenue or activity. Pay through the Delaware Division of Corporations portal. Late payment incurs a $200 penalty plus 1.5% monthly interest. The franchise tax is not a tax on income — it's a tax on the privilege of being a Delaware LLC.

File directly with Delaware Division of Corporations →

Delaware LLC taxes & compliance

No state sales tax. No income tax for LLCs whose income is earned outside Delaware. The catch is the mandatory $300 annual franchise tax plus registered-agent fees of $50–$300/year.

Ongoing compliance checklist

• Delaware LLC franchise tax — flat $300, due every June 1
• No annual report required for LLCs (only corporations file annual reports)
• Delaware registered agent service — typically $50–$300/year
• Foreign LLC compliance in your home state (if applicable)
• Federal income tax (Form 1065 multi-member, Schedule C SMLLC)

Registered agent rules

Required — must have a Delaware registered agent. This is the single most common reason out-of-state founders pay annually.

Hidden costs new Delaware LLC owners forget

• Flat $300 annual LLC franchise tax — due June 1 every year
• Required Delaware registered agent — $50–$300/year (you can't serve as your own unless you have a DE address)
• Foreign LLC qualification in your home state — fees vary, $50–$800
• Late franchise tax: $200 penalty + 1.5% monthly interest
• Series LLC certificate of designation: $200 (if you use Delaware's Series LLC structure)
• No publicly searchable member info — but registered agent address is public

Should you use a formation service in Delaware?

You can absolutely file directly with the Delaware Division of Corporations for the $110 state fee. The reasons most Delaware owners use a service anyway are (1) registered-agent privacy — keeping their home address off public filings — and (2) calendar reminders for ongoing compliance.