67% of Fortune 500 companies incorporate in Delaware. LLC formation: $90 filing fee, 1-2 week processing. Must include "LLC" or "Limited Liability Company" in name. Annual franchise tax: $300.
Why Delaware for LLCs
Despite not operating in Delaware, businesses choose it for: Flexible corporate law. Business-friendly Court of Chancery. Strong legal precedents. Privacy (officers/directors not public record). Easy maintenance. No sales tax (though you pay sales tax where you operate).
Delaware LLC Name Requirements
Must include designator: "Limited Liability Company", "LLC", or "L.L.C.". Cannot include: Corporation, Incorporated, Corp., Inc. (wrong entity). Bank, Trust, Insurance (without license). Cannot be same/similar to existing DE entity. Cannot imply government affiliation.
Distinguishability Standard
Delaware Division of Corporations determines if names are "distinguishable". Factors considered: Spelling differences. Additional/different words. Different designators (LLC vs Corp). Result: More lenient than states like California. "Blue Ocean LLC" might coexist with "Blue Oceans LLC". Still risky if trademarked.
Searching Delaware Business Names
Official database: Delaware Division of Corporations.
Search Process
Enter desired name without designator. Check variations: Plural/singular. With/without spaces. Common misspellings. Review results for: Active entities. Reserved names. Withdrawn/void entities (name may still be reserved). Note: Search doesn't show federal trademarks (check USPTO separately).
Name Reservation
Secure name before filing LLC.
Reservation Details
Cost: $75. Duration: 120 days (4 months). Form: Application for Reservation of Name. Filing: Online via Delaware Division of Corporations portal. Renewal: Can extend with new reservation. Use when: Preparing operating agreement. Securing financing. Coordinating multiple founders. Not ready to file but want to lock name.
Delaware Speed: Name reservation: 24 hours typical. LLC formation: 1-2 weeks standard. Expedited: $100 same-day. $50 24-hour. Plan accordingly if launching soon.
Delaware LLC Filing Process
File Certificate of Formation with Delaware Division of Corporations.
Filing Methods
Online: Fastest, $90 fee. Mail: Check/money order, $90 fee. Expedited options: Same-day: +$100. 24-hour: +$50. 2-hour: +$500. 1-hour: +$1,000.
Required Information
LLC name with designator. Registered agent: Delaware address required. Must be: Delaware resident, OR Delaware corporation authorized to act as agent. Commercial services available ($50-300/year). Organizer information (person filing). Optional: Management structure. Effective date. Membership details.
Registered Agent Requirement
Delaware requires registered agent with Delaware street address.
Registered Agent Options
Commercial service (recommended if not in DE): Harvard Business Services ($50/year). Northwest Registered Agent ($125/year). Incfile ($125/year). Delaware resident friend/family (free but risky). Your own Delaware office (if you have one). Agent receives: Service of process. Official state correspondence. Tax notices.
Delaware Franchise Tax
Annual requirement separate from formation.
Tax Details
Amount: $300 minimum annually. Due: June 1 every year. Late penalty: $200 + interest. First payment: Due June 1 of year AFTER formation. Example: Form LLC December 2025, first tax due June 1, 2026. Calculation: Flat $300 for most LLCs. No revenue-based tax (unlike California). No gross receipts tax.
Foreign Qualification
Delaware LLC operating in other states must foreign qualify.
When Required
Physical office/location in another state. Employees in another state. Substantial ongoing business activity. Bank accounts (sometimes triggers requirement). Not required for: Occasional sales. Remote employees (debatable). Attending conferences. Banking alone (usually).
Foreign Qualification Process
File in state where operating business. Requires: Certificate of Good Standing from Delaware ($50). Registration in operating state ($50-500). Registered agent in that state. May need DBA if name taken. Results in: Paying both states' annual fees. Filing annual reports in both states. Compliance in both jurisdictions.
Delaware vs Home State
Should you form in Delaware or your home state?
Form in Delaware If
Seeking VC funding (investors prefer Delaware). Planning to go public eventually. Operating in multiple states. Need flexible operating agreement. Want strong legal precedents. Privacy important (officers not public).
Form in Home State If
Small local business. Operating in single state only. Want to minimize costs. Don't plan to raise VC funding. Simplicity preferred over flexibility. Avoid: Dual filing fees. Foreign qualification. Two sets of annual reports.
Cost Comparison (5 years): Delaware LLC operating in California: DE formation: $90. DE annual tax (5 years): $1,500. CA foreign qualification: $70. CA annual tax (5 years): $4,000. Total: $5,660. California-only LLC: CA formation: $70. CA annual tax: $4,000. Total: $4,070. Premium for Delaware: $1,590 over 5 years. Worth it if: Raising VC. Going public. Multi-state. Not worth it if: Local service business.
Delaware Operating Agreement
Not filed with state but legally required.
Purpose
Governs LLC operations. Member rights and responsibilities. Profit/loss distribution. Management structure. Dissolution procedures. Transfer of membership interests. Delaware advantage: Maximum flexibility. Can override default state rules. Courts respect operating agreement terms.
Annual Report Requirement
Delaware LLCs must file annual report.
Report Details
Due: June 1 annually. Fee: Included in $300 franchise tax. Information required: Member/manager names and addresses. Registered agent information. Business address. Late penalties: $200 plus interest. Eventually: Administrative dissolution. Can file online via Delaware Division of Corporations.
Name Change After Formation
Change LLC name post-formation.
Amendment Process
Check new name availability. File Certificate of Amendment. Fee: $100. Processing: 1-2 weeks (expedite available). Update: Operating agreement. EIN with IRS. Bank accounts. Licenses/permits. Contracts. Foreign qualifications (if any). Costs: $100 filing fee. $50-500 updating materials. Professional time/legal fees.
Trademark Considerations
Delaware LLC formation doesn't provide trademark protection.
Protection Needed
Delaware registration: Only prevents identical name in Delaware. No protection in other states. No protection against similar names. Federal trademark (USPTO): Protects nationwide. Prevents confusingly similar use. Costs $250-350 per class. Takes 8-12 months. Always check USPTO before: Choosing LLC name. Filing formation documents. Launching business operations. Prevents: Cease and desist letters. Forced rebranding. Legal fees. Lost brand equity.
Trademark Lens checks: Delaware business name database. USPTO federal trademarks. Domain availability. Social media handles. Shows all conflicts before $90 filing fee spent.
Delaware Advantages Summary
Pros: Flexible LLC statutes. Strong legal precedents. Business-friendly courts. Privacy protection. Fast formation (1-2 weeks). Easy maintenance. VC/investor preference. Cons: $300 annual franchise tax. Foreign qualification needed in operating state. Dual compliance (if foreign qualifying). More expensive than single-state. Registered agent required in Delaware. Best for: Startups. Multi-state businesses. VC-funded companies. Future public companies. Not ideal for: Local service businesses. Single-state operations. Cost-sensitive small businesses. Prefer simplicity over flexibility.