GUIDE TO FORM A NEW BUSINESS ENTITY

Delaware is known for being one of the most business-friendly states in the U.S., offering flexibility and a variety of options for structuring your business. This guide will walk you through the key steps of forming a new business entity in Delaware, based on the guidelines from the Delaware Division of Corporations.

8 Key steps to establish new business entity

Let’s explore the eight essential steps to form a new business entity in Delaware.

Step 1: Choose your business entity type

When forming a business in Delaware, the first and most important step is to choose the right business entity type. This decision will impact your legal and tax obligations. Delaware offers several types of business entities, including:

• Corporations

• Public Benefit Corporations

• Limited Liability Companies (LLC)

• Limited Partnerships (LP)

• Statutory Trusts

• General Partnerships (GP)

However, sole proprietorships do not need to file with the Delaware Division of Corporations, and unincorporated nonprofit associations have the option of making certain filings but are not required to do so. Choosing the right entity is crucial as it will influence aspects like liability protection, taxation, and management structure.

While Delaware provides a variety of entity options, it's important to consult with an attorney, a Certified Public Accountant, or a trusted business formation consultant to make the best choice for your needs. At G2B, we offer expert business formation services to help guide you through this critical decision, ensuring you’re set up for success right from the start.

Step 2: Obtain a registered agent

Delaware law requires every business entity to have a registered agent within the state. A registered agent can be either an individual resident or a business entity authorized to operate in Delaware. The agent’s role is to receive legal and official documents on behalf of the business.

The registered agent must have a physical street address in Delaware. If your business is physically located in Delaware, you may act as your own registered agent. Otherwise, you will need to select a third-party registered agent. A list of authorized Delaware registered agents can be found on the Delaware Government website.

If you choose a third-party registered agent, ensure they are informed and ready to receive important documents for your business.

Step 3: Name reservation

While not mandatory, reserving your business name in Delaware can prevent others from using it while you complete your formation process. The Delaware Division of Corporations allows you to reserve a name for up to 120 days. This process can be done online using Visa, MasterCard, American Express, or Discover.

After reserving your name online, make sure to print your confirmation page. Alternatively, you can submit a written application via mail, fax, or by uploading it directly to the Delaware government office.

Step 4: File certificate of incorporation/formation

Once you have your business name and registered agent, the next step is to file the necessary documents with the Delaware Division of Corporations. Depending on your entity type, you will need to submit a Certificate of Incorporation (for corporations) or a Certificate of Formation (for LLCs and other entities).

Delaware provides sample forms with detailed instructions on how to complete them. These forms are available in PDF format on the Delaware government website and can be filled out and submitted either online through the Document Filing and Certificate Request Service or by mail. If you choose to mail your documents, be sure to include a cover sheet with your name or entity name, return address, and phone number.

Step 5: Submit completed certificate for filing

Your completed certificate can be submitted using Delaware’s Document Filing and Certificate Request Service or by mailing it to the main office. It is important to pay all filing fees upfront when submitting your request.

The filing process can take a few business days depending on the method of submission and the workload of the Delaware Division of Corporations.

Step 6: Beneficial ownership reporting

As of January 1, 2024, the Corporate Transparency Act (CTA) requires certain business entities to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This is a mandatory step to ensure transparency and to prevent financial crimes such as money laundering. Make sure to comply with these requirements during your business formation process.

Step 7: Certified copies and certificate of status/good standing

After forming your business entity, some financial institutions or legal entities may require a Certificate of Good Standing or certified copies of your incorporation documents. These documents prove that your business is legally compliant and in good standing with the state of Delaware.

You can order these certificates at the time of your filing by indicating your request in the comments section of the Document Filing Sheet. Alternatively, you can request them at a later date through the Delaware Division of Corporations.

Step 8: Annual taxes and reports

All corporations incorporated in Delaware must file an Annual Report and pay a franchise tax. For domestic corporations that are exempt from the tax, the only requirement is to file the Annual Report, with a filing fee of $25. Non-exempt domestic corporations must file both the Annual Report and pay a franchise tax. The filing fee for these corporations is $50.

Both the report and the franchise tax must be submitted by March 1st of each year. Failing to do so may result in penalties, so it’s crucial to stay on top of these deadlines. At G2B, we provide annual compliance services to ensure that your business stays in good standing with the Delaware Division of Corporations.

Building a business in Delaware not a complicated process

Forming a business entity in Delaware offers numerous benefits, from legal protections to tax advantages. However, understanding the rules and regulations is essential to ensure a smooth process. By following the steps outlined above, you can successfully navigate the requirements for forming a new business entity in Delaware. With the right planning and expert advice, your new Delaware business entity can be up and running in no time!

If you need assistance at any stage, G2B offers comprehensive services to guide you through the entire process, ensuring that your business is compliant with all state regulations from day one. Let G2B be your trusted partner, guiding you through every stage of the Incorporation process in Delaware with reliability and dedication. Contact G2B today to achieve your goal of expanding your business to Delaware!