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 $400 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.
How much does a Delaware LLC cost?
Delaware's filing fee is $110 for the Certificate of Formation with 1–2 business day standard processing. The ongoing cost is a flat $400 annual franchise tax, due every June 1 regardless of revenue — this was raised from $300 in 2024 per Delaware Code §18-1107. Add a mandatory registered agent ($50–$300/year) since you cannot serve as your own unless you have a Delaware address. Year 1 total: roughly $259–$510. By Year 5: approximately $1,710–$2,510 in mandatory Delaware costs. One critical trap: Delaware is popular for businesses that actually operate elsewhere. If you run your business in California, you still owe California's $800 minimum franchise tax on top of Delaware's $400 — paying two states for one business.
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
Don’t want to file yourself? Northwest Registered Agent files your Delaware LLC for $39 + state fee and acts as your registered agent the first year free.
How to form a Delaware LLC in 7 steps
- 1Search 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.
- 2Appoint a Delaware registered agent
Mandatory under 6 Del. C. § 18-104 — every Delaware LLC must maintain a registered agent with a physical Delaware street address at all times, and losing your registered agent without immediately replacing one puts the LLC out of good standing. You cannot serve as your own agent unless you have a Delaware address. The Delaware Division of Corporations maintains a list of all authorized registered agents at icis.corp.delaware.gov; well-known providers include Cogent (formerly CT Corporation), Registered Agents Inc., and Harvard Business Services, with fees typically ranging from $50–$300/year. Delaware keeps no public record of LLC members — only the registered agent's name and address appear in the public filing — so your choice of RA directly determines what is publicly visible. If you switch registered agents, file a Certificate of Change of Registered Agent with the Division of Corporations ($50 fee) promptly to avoid any gap in coverage.
- 3File the Certificate of Formation
File online or by mail at corp.delaware.gov for $110. Under 6 Del. C. § 18-201, the Certificate of Formation requires only the LLC name and registered agent — member names are not disclosed on any public filing, which is a core reason Delaware is popular for privacy-minded founders and holding companies. Standard processing is 1–2 business days for online filings. Expedited tiers are available for time-sensitive situations: 24-hour ($50 extra), same-day ($100), 2-hour ($500), and 1-hour ($1,000) — the 1-hour option is expensive but used regularly by funded startups closing rounds who need entity formation documents the same morning. A common oversight: the Certificate of Formation is the only filing Delaware requires to form the LLC, but you still must pay the $400 annual franchise tax starting the first June 1 after formation regardless of whether the LLC has done any business.
- 4Draft 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.
- 5Apply 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.
- 6Register as a foreign LLC in your home state (if applicable)
If you formed in Delaware but do business in another state, that other state treats your Delaware LLC as a "foreign LLC" and requires separate registration and payment of its own fees and taxes. This is the most commonly overlooked cost of a Delaware LLC and can easily double your annual compliance burden. California, for example, charges its $800/year minimum franchise tax on any foreign LLC doing business in the state — on top of Delaware's $400 franchise tax, you are paying $1,200 per year across two states before earning a dollar. New York requires LLCs to publish notice of formation in two designated newspapers, costing $1,000–$2,000 in New York City. Texas charges a $750 foreign LLC registration fee plus its own franchise tax. Before choosing Delaware as your formation state, calculate the all-in cost including your home state's foreign qualification fees — for most solo founders and small businesses operating in a single state, forming locally is significantly cheaper.
- 7Calendar the June 1 franchise tax payment
Delaware LLC franchise tax is a flat $400 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 $400 annual franchise tax plus registered-agent fees of $50–$300/year.
Ongoing compliance checklist
- Delaware LLC franchise tax — flat $400, 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 $400 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.
Have Northwest form your Delaware LLC for $39 + state fee
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See the real 5-year cost of a Delaware LLC
Filing fee · registered agent · annual report · franchise tax — all calculated, year by year.
Open cost calculator for Delaware →Delaware's Court of Chancery: why corporations flock here
Delaware's dominance in business formation is not accidental — it is the product of over a century of corporate-friendly law. The Court of Chancery, a dedicated business court with no jury trials and judges who are corporate law specialists, resolves disputes faster and more predictably than courts in nearly any other state. This matters enormously to outside investors and venture capital firms, which is why more than 65% of Fortune 500 companies are incorporated in Delaware regardless of where they actually operate. For LLCs specifically, Delaware's Revised Uniform Limited Liability Company Act gives members sweeping contractual freedom to structure the company almost any way they choose, overriding many default statutory rules simply by writing provisions into the operating agreement. Delaware also has no state income tax on LLCs that do not conduct business inside the state, making it attractive for holding companies and IP-holding entities. However, if your LLC operates in another state, you will still owe that state's taxes and must register as a foreign LLC there — paying fees in both states. Delaware is the right choice when investors demand it or when IP structuring is the goal; for a straightforward local business, the dual-state cost rarely pencils out.
Year 1: $110 (state filing fee) + $149 (registered agent, first year) + $400 (franchise tax, due June 1 following formation year) = approximately $659. Years 2–5: $149/yr registered agent + $400/yr franchise tax = $549/yr. By Year 5, total mandatory costs reach approximately $2,855 ($659 + $549 × 4) — before any foreign-qualification fees in your home state.
Owners form a Delaware LLC thinking they have avoided all state taxes, then get hit with double compliance costs. Because Delaware LLCs that operate in another state must register as a foreign LLC there, they owe that state's filing fees, annual reports, and income taxes on top of Delaware's $400 franchise tax and registered agent fee — effectively paying two states every year for a single business.
Delaware LLC: frequently asked questions
How much does it cost to form an LLC in Delaware?
Delaware Division of Corporations charges $110 to file the Certificate of Formation. Annual cost is the flat $400 LLC franchise tax, due June 1 every year, plus $50–$300/year for a mandatory Delaware registered agent. Realistic year-one cost: $160–$410 (filing + registered agent). Ongoing yearly cost: $450–$700 (franchise tax + agent).
How long does it take to form a Delaware LLC?
Standard processing is 1–2 business days. Delaware offers four expedited tiers: 24-hour ($50 extra), same-day ($100), 2-hour ($500), and 1-hour ($1,000). Most filings are done online through the Delaware Division of Corporations.
Why do startups form LLCs in Delaware?
Three reasons: (1) the Delaware Court of Chancery — a 200-year-old specialized business court that handles corporate disputes faster and more predictably than general civil courts; (2) the Delaware LLC Act explicitly prioritizes freedom of contract, letting Operating Agreements override most default rules; (3) industry familiarity — VCs, lawyers, and accountants all know Delaware structures, which speeds due diligence and fundraising. None of those reasons are about taxes.
Does Delaware have an LLC annual report?
No annual report for LLCs. Delaware LLCs only owe the flat $400 franchise tax, due every June 1. (Note: Delaware corporations do file annual reports — but that's a separate entity type.)
Do Delaware LLCs pay state income tax?
Delaware LLCs that do not conduct business in Delaware pay no Delaware state income tax — only the flat $400 franchise tax. If your LLC does business in Delaware (has employees, offices, customers there), you owe Delaware income tax on Delaware-source income (8.7% top rate for C-corps; pass-throughs flow to owner's personal return).
Should I form my LLC in Delaware if I don't live there?
For most solo founders and small businesses: probably not. Forming in Delaware as a non-resident means paying Delaware's $400 franchise tax + DE registered agent + foreign LLC qualification fees in your home state — usually doubling your annual cost. Form in Delaware only if you have a specific reason: raising VC, multi-state holding structure, sophisticated Operating Agreement provisions, or potential M&A.
What is a Delaware Series LLC?
A Series LLC is a Delaware-pioneered structure where a single "master" LLC can have multiple "protected series" — each with its own assets, members, and liability shield, but all under one parent. Useful for real estate investors holding multiple properties, fund managers, and complex holding structures. Each protected series requires a $200 Certificate of Designation.
Is a Delaware LLC anonymous?
Delaware's Certificate of Formation generally requires the LLC name and registered agent, without listing members or managers. The operating agreement is not filed with the state. FinCEN currently exempts U.S.-formed entities from BOI reporting, but bank records, tax filings, courts, and other lawful records can still identify owners. Treat Delaware privacy as public-filing privacy rather than complete anonymity.
Delaware LLC vs corporation — which should I choose?
Delaware LLCs and corporations both offer strong liability protection, but the right choice depends on your goals. A Delaware LLC is simpler to run — it has no board requirements, flexible profit-sharing, and pass-through taxation by default, making it ideal for small businesses and real estate holdings. A Delaware C-Corporation is better if you plan to raise venture capital or issue stock options, since most investors and accelerators require a C-Corp structure. For most founders who aren't seeking institutional funding, the Delaware LLC's lower administrative burden and tax flexibility make it the stronger starting point.
How do I dissolve an LLC in Delaware?
To dissolve a Delaware LLC, you must file a Certificate of Cancellation with the Delaware Division of Corporations, which carries a $200 filing fee. Before filing, you should settle all debts, distribute remaining assets to members, and file any final tax returns with the Delaware Division of Revenue. The Certificate of Cancellation can be submitted online or by mail and is typically processed within 3-5 business days for standard service. Note that all outstanding franchise taxes and fees must be paid in full before the state will accept the cancellation filing.
Can a non-resident or foreigner form a Delaware LLC?
Yes, Delaware imposes no residency requirements on LLC members or managers, making it one of the most accessible states for non-residents and foreign nationals to form an LLC. You do not need to be a U.S. citizen or resident to own a Delaware LLC, and there is no requirement to have a physical presence in Delaware. However, if you operate your business in another state, you will likely need to foreign qualify that LLC in your home state by registering as a foreign LLC and paying that state's fees. Non-U.S. owners should also consult a tax advisor about federal filing obligations, as the IRS has specific reporting requirements for foreign-owned domestic LLCs under Form 5472.
What taxes does a Delaware LLC have to pay?
Delaware LLCs do not pay state income tax on income earned outside of Delaware, which is one of the state's most cited advantages. However, all Delaware LLCs must pay the annual $400 franchise tax to the Delaware Division of Corporations by June 1 each year, regardless of whether the LLC conducts any business in the state. If your LLC earns income from Delaware sources or has employees in Delaware, it may also owe Delaware state income tax, which is assessed at rates up to 6.6%. Single-member LLCs are taxed as sole proprietorships by default at the federal level, while multi-member LLCs are taxed as partnerships, though either can elect S-Corp or C-Corp taxation through the IRS.
Do I need a business license for my Delaware LLC?
Most Delaware LLCs are required to obtain a Delaware Business License from the Delaware Division of Revenue before conducting business in the state; the standard license fee starts at $75 per year. The license is required for nearly all business activities, including retail, services, and contracting, and must be renewed annually. In addition to the state license, your specific city or county may require a local business license or permit — Wilmington and Newark, for example, have their own municipal licensing requirements. Certain industries such as contractors, healthcare providers, and childcare facilities also need professional or occupational licenses from the relevant Delaware state agency.