Perhaps you are hoping to form a Delaware LLC. People assume how to start an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in Delaware.
On this page, you’ll learn about the following:
Delaware LLC Cost of Filing
Here are the costs involved in forming an LLC in Delaware.
Cost of Filing Formation Certificates
The Delaware Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the Delaware Secretary of State.
Delaware Domestic LLC
- By Mail: Fill out the application form, and send it to Delaware Division of Corporations 401 Federal Street Suite 4 Dover, DE 19901 Costs $90
- Franchise Tax $300 (Annual) can be done online.
Delaware Foreign LLC
- By Mail: Fill out the application form, and send it to Delaware Division of Corporations 401 Federal Street Suite 4 Dover, DE 19901 Costs $200
- An additional certified copy costs $50
- Franchise Tax $300 (Annual) can be done online.
Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.
Delaware LLC Formation Service or Registered Agent Fee
You need a registered agent to form an LLC in Delaware, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.
Business Permits and Licenses
The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the Delaware Department of Revenue for regulatory boards or agencies requiring licensing.
Delaware Business Privilege Tax and Annual Report
Once you have your EIN or Employer Identification Number, apart from filing sales tax, once the company has completed its 2.5 months as an LLC in Delaware, it needs to pay a Business Privilege Tax (BPT). This is a requirement for all LLCs formed in Delaware.
LLCs need to pay the tax before the third week of April, i.e, 15 April, and it can vary from 0.00025% to 0.000175% according to the net worth of the LLC. The exact rate will be obtained on the basis of the income of the previous taxable year. The minimum amount that the business will have to pay for this tax is $100.
Delaware Taxes to Be Paid By The LLCs
Delaware is said to be the tax shelter state of the United States. The reason behind this is it has flexible taxation for the Limited Liability Companies. Firstly, the state does not have any Sales Tax. No, tax is imposed on the businesses based on Sales within the Delaware boundary. The state has Franchise tax and corporate income tax for the businesses.
Delaware Franchise Tax
Franchise Tax in Delaware is paid annually on 1st June every year. Failing to pay on time, the LLCs can be fined $200 plus 1.5% interest upon the penalty. The amount of Franchise Tax is $300 and has to be paid by all LLCs irrespective of the size.
Franchise Tax does not mean one has to have a Franchise business. It is a general business tax every LLC and corporation in Delaware has to pay annually.
Corporate Income Tax
LLCs have the advantage of passing through income taxes. Hence, in Delaware, no LLCs have to pay corporate income taxes. However, the members have to pay income taxes separately according to their profit.
On the other hand, S Corporations do not have to pay any federal taxes. They have more tax benefits than LLCs. If an LLC wants, it can be filed as S Corporation by filing an IRS. In that case, the LLCs have to pay corporate income tax.
Cost Comparison Among States
Delaware is surrounded by states like Pennsylvania, Maryland, New Jersey, and Virginia. Here’s LLC cost comparison among the neighboring states of Delaware,
|Annual Fee/Biennial Fee
|$70 (Every 10 years)
|New Jersey LLC
- Delaware Name Reservation: $75 for online filings or by mail
- Doing Business As (DBA): $25 for online filing or by mail
- Certified Document Copies: $50 + $9 per page.
- Certificate of Good Standing: $50
- Business Domain Name and Website: depend on your preference, but domain name could be as low as $2.99/yr at NameCheap, and web hosting is at least $30/mo at Kinsta.
- Online workspace: at least $4.20/mo for GSuite.
- Business Insurance: would vary depending on insurance type–whether general liability insurance or professional liability insurance–and coverage.
- Dissolution of Delaware LLC: $200
It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.
It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.
The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.
How Much Does It Cost to Maintain an LLC in Delaware
To maintain an LLC in Delaware you will need to pay an annual fee of $300 along with sales tax, business privilege tax, franchise tax, corporate income tax and federal taxes.
One of the most notable costs of maintaining an LLC in Delaware is the annual franchise tax, regardless of whether the company is active or generates revenue. It is important to reiterate that every LLC is obligated to pay the franchise tax. While the formula for calculating this tax can seem complex, it mainly relies on two key factors: authorized shares and par value. Therefore, LLCs with more authorized shares and a higher par value tend to face higher franchise tax obligations.
An additional cost to take into consideration for Delaware LLCs is the Registered Agent fee. Delaware law mandates that every LLC must appoint and maintain a registered agent, who acts as the point of contact between the LLC and the state. Registering an agent requires a fee, and it is critical to select a reliable and trustworthy entity that can fulfill their responsibilities effectively.
Moreover, LLCs are required to file an Annual Report with the Delaware Division of Corporations. This report confirms and updates the essential information about the company, such as ownership and contact details. There is a fee associated with filing the annual report, and although it might seem like a minor cost, it can accumulate over the years. Business owners should include this recurring cost when budgeting for the LLC’s maintenance.
On the operational side of maintaining an LLC, other costs may arise. These can include expenses related to business licenses and permits necessary for operating legally within Delaware as well as complying with local, state, and federal regulations. Professional services such as accounting, legal counsel, and tax preparation should also be taken into account to ensure compliance and eliminate potential risks.
Furthermore, while not strictly a cost, business owners must be diligent about maintaining accurate and up-to-date records for their LLC. Proper record-keeping is essential for staying compliant with regulations, preparing tax filings, and protecting the owners’ limited liability status. Documenting transactions, contracts, minutes of meetings, and financial records are part of proper record-keeping practices that can contribute positively to long-term business success.
In conclusion, maintaining an LLC in Delaware comes with a range of costs that need to be carefully evaluated. The franchise tax, registered agent fee, filing annual reports, and other operational expenses can add up over time. Being fully aware of these costs will allow business owners to budget and plan accordingly, ensuring financial sustainability. By taking these considerations into account, entrepreneurs can enjoy the considerable advantages that an LLC provides while effectively managing the ongoing expenses that accompany it. Only through comprehensive financial planning can business owners make informed decisions that optimize their chances of long-term success.
The cost of Delaware is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.