Form an LLC in Delaware

📋 Why 65% of Fortune 500 Choose Delaware

Delaware isn’t the cheapest option—it’s the smartest option if you’re building a high-growth startup. While Wyoming wins on privacy and cost, Delaware wins on credibility, legal protection, and investor acceptance.

🎯 Step 1: Choose Your Delaware LLC Name

Delaware has strict naming rules to protect its reputation as the “corporate capital”:

• Must include “LLC”, “L.L.C.” or “Limited Liability Company”
• Cannot use words like “Bank”, “Trust”, or “University” without special approval
• Cannot mislead investors (stricter than most states)
• Must be distinguishable from existing Delaware entities

Pro Tip: Check availability instantly on the Delaware Division of Corporations website.

Example: “TechVentures LLC” ✅ | “Delaware First Bank LLC” ❌ (requires banking license)

⚖️ Step 2: Get a Registered Agent (CRITICAL)

In Wyoming, you need a registered agent for privacy. In Delaware, you need one for legal compliance.

🏆 Our Recommended Solution: Northwest Registered Agent

Northwest has a physical office in Wilmington, Delaware and specializes in handling high-stakes documents for funded startups. They offer:

• ✅ Same-day document scanning & email forwarding
• ✅ Compliance alerts for the strict Franchise Tax deadlines
• ✅ $125/year (includes registered agent + mail forwarding)
• ✅ Used by Y Combinator companies and venture-backed startups

Get Your Delaware Registered Agent →

📝 Step 3: File the Certificate of Formation

⚠️ Important Terminology: Delaware calls it a “Certificate of Formation”, not “Articles of Organization” like most states.

You have two practical paths to file:

Why we recommend Option B: Delaware’s state system is intentionally difficult for individuals. They use fax machines and “Document Upload” portals rather than simple web forms. A professional service handles the “Cover Memo” requirement automatically and catches errors before submission.

⚠️ Note on Pricing: The state filing fee is approximately $110 (Delaware updated their fee structure in recent years). Expedited same-day processing adds $100, or 2-hour processing costs $1,000+ (rarely needed unless closing a funding round).

🛡️ Step 4: Get Your EIN & Operating Agreement

After Delaware approves your LLC, you need two critical documents:

1. EIN (Employer Identification Number)

Same as Wyoming. Non-residents can:

• Apply by fax – Fill out Form SS-4 and fax to the IRS (takes 4-6 weeks)
• Use a service – Northwest can get your EIN in 1-2 days

👉 Read our complete EIN guide for non-residents

2. Operating Agreement (THE INVESTOR SHIELD)

In Delaware, your Operating Agreement is sacred. Delaware law gives you near-total freedom to define your company’s rules—but that means investors will scrutinize this document.

What investors look for:

• Clear ownership percentages and vesting schedules
• Voting rights and supermajority provisions
• Drag-along and tag-along rights (for exits)
• Transfer restrictions (so founders can’t just sell their shares)

💡 Pro Tip: If you’re bootstrapping, Northwest’s free template is fine. If you’re raising Series A funding, hire a lawyer to review this specific document (budget $1,500-$3,000). This document can make or break your funding round.

💸 The $300 Franchise Tax (The Catch)

Here’s the trade-off: Delaware charges an annual franchise tax of $300, regardless of revenue.

What You Need to Know

⏰ Crucial: Delaware does NOT send reminders. Set a calendar alert for May 15th to avoid the automatic $200 penalty. If you pay on June 2nd, you owe $500 total ($300 tax + $200 penalty) plus 1.5% monthly interest.

Annual Cost Comparison

💭 Is it worth it? If you’re raising $50K+, the $300/year is a rounding error. If you’re a solo freelancer making $30K/year, Wyoming at $185/year makes more sense.

🍩 Delaware Tax Advantages (The Loophole)

Zero State Income Tax (With Conditions)

Delaware has no state income tax on:

• ✅ Intangible assets (software licenses, royalties, trademarks)
• ✅ Business conducted outside of Delaware
• ✅ Passive investment income

Translation: If you’re a SaaS company selling software to customers worldwide, Delaware won’t tax your revenue—even if you’re making millions.

⚠️ Exception: If you have a physical office or employees in Delaware, you pay state income tax (8.7% corporate rate).

Zero Sales Tax

Delaware is one of only 5 US states with no sales tax (the others are Alaska, Montana, New Hampshire, and Oregon).

This means:

• No sales tax on purchases
• No sales tax nexus complications
• Cleaner accounting for e-commerce businesses

🏦 Opening a US Bank Account

The same digital banks that work for Wyoming also work for Delaware:

1. Mercury (Most Popular for Startups)

• ✅ 100% online application
• ✅ No minimum balance or monthly fees
• ✅ Integrates with Stripe, Brex, QuickBooks
• ✅ Preferred by Y Combinator and venture-backed companies

2. Brex (For Companies with Revenue)

• ✅ Combined banking + corporate credit card
• ✅ Instant card for founders (no personal guarantee)
• ⚠️ Requires $50K+ in the bank to qualify

3. Wise Business (For International Payments)

• ✅ Multi-currency accounts (USD, EUR, GBP, etc.)
• ✅ Low international transfer fees
• ✅ Easy approval for Delaware LLCs

Documents banks will ask for:

1. Certificate of Formation (from Delaware)
2. EIN Confirmation Letter (from IRS)
3. Operating Agreement
4. Your passport + proof of address

⚖️ Delaware vs. Wyoming: The Final Decision

Choose Delaware if:

• You’re raising venture capital (angel, seed, Series A)
• You’re building a SaaS or software company
• You want maximum legal protections in disputes
• You plan to go public (IPO) someday
• You need investor credibility (Y Combinator, 500 Startups, etc.)

Choose Wyoming if:

• You’re a solo entrepreneur or small team
• You prioritize privacy and low costs
• You’re doing e-commerce, consulting, or crypto
• You don’t plan to raise institutional funding

👉 Still deciding? Compare all 50 states side-by-side

❓ Frequently Asked Questions

🚀 Ready to Build the Next Unicorn?

You have two paths to launch your Delaware LLC:

Launch Your Delaware LLC →

🏢 Trusted by Founders, VCs, and Startups Worldwide

✅ Formation in 2-5 days | ✅ Includes Cover Memo Filing | ✅ Investor Standard