Delaware is a top choice for businesses of all sizes and industries that want to incorporate, and hundreds of thousands of businesses form in the state each year. Delaware’s popularity comes from its business-friendly environment, favorable tax laws, privacy protections, and well-respected Court of Chancery, which handles business-related legal matters and draws from a long history of corporate case law.

Below, we’ll explain how to start a business in Delaware, including how to choose the best business structure for your goals, name your business, register it, and maintain compliance with Delaware laws.

What’s in this article?

• Why start a business in Delaware?
  
• How to start a business in Delaware
  
• How much does it cost to start a business in Delaware?
  
• Ongoing compliance obligations
  
• How Stripe Atlas can help
  

Why start a business in Delaware?

Delaware offers a particularly business-friendly legal environment, compared to many other states in the US. At its core is the Court of Chancery, a specialized court that handles corporate disputes with speed and expertise. Delaware's General Corporation Law is flexible, well established, and consistently updated, which gives founders and investors a high degree of predictability and legal protection.

Beyond its legal advantages, Delaware offers tax benefits that make it attractive even for businesses that operate entirely elsewhere. There’s no state corporate income tax on revenue earned outside Delaware, no sales tax, and no tax on intangible assets such as trademarks and patents. Investors and venture capitalists are also deeply familiar with Delaware’s corporate structures, which can simplify fundraising and due diligence.

How to start a business in Delaware

To start a business in Delaware, you must follow several key steps.

Choose your business structure

Your business structure will affect your legal obligations, tax responsibilities, and more. The options include the following:

• Sole proprietorship: This structure is the simplest and involves one individual who owns and operates the enterprise. It offers full control but also comes with full personal liability.

• Partnership: If several people own and operate your business, a partnership structure might be the right choice. This divides responsibilities and liabilities among partners.

• Limited liability company (LLC): An LLC is an option for many small and medium-sized businesses. It offers liability protection to its owners, known as members, while providing operational flexibility and pass-through taxation.

• Corporation: Corporations are more complex structures that offer liability protection but have more regulatory requirements. An S corporation (S corp) provides pass-through taxation, while a C corporation (C corp) is taxed at the corporate level and then again at the shareholder level.

Name and register your business

The next step is to register your business with the Delaware Division of Corporations. Every company must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to file taxes. You'll also need to register with the Delaware Division of Revenue by applying for a business license if you plan to have a business location, hire employees, or generate sales in the state. Additionally, check with local government entities to confirm you have the necessary local permits for any physical business locations.

Create a short list of business name ideas, then check the name’s availability in Delaware. Your business name must be distinct from other names registered in the state, and you can use the Division of Corporations’ name search tool to confirm your choice isn't already in use. Delaware also has naming guidelines that vary by business structure. LLCs must include “Limited Liability Company” or an abbreviation such as “LLC” in their names, while corporations must include a word such as “Corporation,” “Incorporated,” “Company,” or an abbreviation (e.g., “Corp.,” “Inc.,” “Co.”).

Afterward, register your business entity. Depending on your business structure, you'll need to submit different documents to the Division of Corporations—typically articles of organization for LLCs and articles of incorporation for corporations. Once your documents are approved, the state will issue a certificate that confirms the legal existence of your business. This certificate is required for business activities such as opening bank accounts and applying for licenses.

Another important step is registering the trademark. Trademarks can be registered at the state level through the Division of Corporations or at the federal level through the US Patent and Trademark Office (USPTO)—federal registration offers broader protection across the US and internationally. Before you apply at either level, search to confirm your trademark isn't already in use. Be aware that Delaware trademarks are valid for 10 years and must be renewed. If your business involves inventions or original creative works, you might also want to explore patent or copyright protection through the USPTO and US Copyright Office.

Obtain licenses and permits

At the state level, Delaware requires businesses in certain professions or industries to obtain specific licenses or permits, and the Delaware government's website provides resources and information on state business licensing. You should also check with local city or county governments to determine whether there are additional local licensing requirements.

If your business involves regulated professions, you might need professional or occupational licenses, which are common in industries such as healthcare, legal services, and construction. Depending on your business activities or location, special permits might also be required.

Once you have your licenses and permits, stay on top of your reporting and compliance obligations for each one. Licenses and permits have expiration dates and must be renewed periodically so keep track of these dates to avoid lapses that could disrupt your business operations.

Choose your business location and registered agent

When you evaluate locations, start by assessing your business's core needs, such as customer access, supply chain logistics, and employees’ commutes. Conduct market research to analyze the dynamics of different areas. Consider the full cost implications of each location, including rent, utilities, taxes, and potential renovation expenses.

Accessibility and visibility are also important factors, particularly for businesses that rely on foot traffic. Check local zoning laws to ensure your chosen location is zoned for your business type. If your company doesn't align with the current zoning laws, you might need to apply for a variance or conditional-use permit. Finally, be aware of any planned developments or zoning changes in the area that could affect your business later on.

Delaware requires every business entity to have a registered agent—a person or another business that agrees to accept legal papers on behalf of your business. The agent must have a physical address in Delaware.

Draft internal documents

You need to prepare a few internal documents before you start your business. An LLC operating agreement should cover the company's business purpose and duration, as well as provide a full accounting of all members, their ownership percentages, contributed capital, and responsibilities. It should also define the management structure—whether the LLC is member-managed or manager-managed—along with the roles and decision-making powers involved.

Corporate bylaws should define the corporation's structure, including the roles of directors and officers. They should address the frequency, scheduling, and notice requirements for board meetings, including how decisions are made and documented, as well as the procedures for annual shareholder meetings (e.g., notice requirements, voting processes). The bylaws should also cover the process for issuing stock—including any rights or preferences of different classes of shares—and outline the requirements for maintaining corporate records such as minutes and financial documents.

A partnership agreement should specify each partner's capital contribution and the process for making additional contributions, as well as how profits and losses will be allocated among partners. It should also establish the business's decision-making process and outline the procedures for admitting new partners, handling withdrawals, or dissolving the partnership.

Set up banking, taxes, insurance, and compliance

Next, get your business set up with a bank account and other important requirements.

Open a business bank account
Consider both national banks and local Delaware banks when you choose where to open a business bank account. This account separates your personal and business finances. And consider opening a business savings account to manage surplus funds. If your business accepts credit card payments, set up merchant services by comparing fees, services, and equipment costs to find the best fit for your business.

Set up payroll
Decide whether to manage payroll in-house or outsource the responsibility to a payroll service provider. Outsourcing can simplify managing employee paychecks and benefits while helping with tax withholding compliance. You'll need to collect and maintain the necessary employee documentation for payroll, including W-4 forms for tax withholding and I-9 forms for employment eligibility verification. Assess the requirements for withholding federal, state, and local taxes from employee wages, deposit payroll taxes, and file required reports with the IRS and the Division of Revenue by the assigned deadlines.

Manage taxes
Be aware of the taxes your business could be subject to, such as income tax, sales tax, and employment taxes. Delaware doesn’t impose income tax on businesses that operate outside the state, but it does impose an annual franchise tax on corporations calculated based on the corporation's shares and their value. The state charges LLCs a different annual fee, which isn’t based on shares or value.

Keep detailed records of all business transactions, receipts, expenses, and income. Sole proprietors, partners, and S corps that are expected to owe $1,000 or more when they file their tax returns should make estimated tax payments to the IRS quarterly. Delaware also requires estimated tax payments for certain business structures.

Select necessary insurance plans
Determine which types of insurance your business needs. Here are the ones available in Delaware:

• General liability insurance covers financial losses from bodily injury, property damage, and lawsuits.

• Professional liability insurance (also known as errors and omissions insurance) protects businesses that provide professional advice or services from losses due to errors, negligence, and malpractice.

• Property insurance covers loss of or damage to your business property.

• Business interruption insurance compensates for income lost when operations must temporarily halt.

• Workers' compensation is legally required if you have employees in Delaware. Depending on your industry, you might also need cyberliability insurance for data breaches or industry-specific coverage such as product liability, equipment breakdown, or commercial auto insurance.

Maintain compliance records
Corporations in Delaware are required to file an annual report with the Delaware secretary of state that includes information about the corporation's officers and directors and the business's address. LLCs and other noncorporate entities don’t have to file annual reports. All businesses must keep meeting minutes that detail decisions and discussions from official meetings and these records must be stored securely.

Corporations are also required to maintain detailed stock ledgers that record all issuances, transfers, and cancellations of stock, including the date, parties involved, and number of shares. All operational licenses and permits should be stored in a centralized file with notes on expiration dates and renewal requirements, and comprehensive employment records must be maintained for each employee, detailing their employment agreement, tax withholding information, and any relevant performance or disciplinary records. Businesses must also notify the state promptly about any pertinent changes to business operations, such as a change in registered agent.

In addition to state requirements, companies in Delaware might need to comply with local (city or county) and federal regulations, which could include additional filings, taxes, or compliance measures. Consider working with a Delaware attorney to review your documents and practices for compliance with state and federal laws.

How much does it cost to start a business in Delaware?

The exact cost of starting a business in Delaware depends on your business structure and needs. State filing fees are required when you register your business with the Division of Corporations. LLCs pay a $110 filing fee for their certificates of formation, while corporations pay a minimum of $109 to file their certificates of incorporation, with the total varying based on the number of authorized shares. Delaware also requires every business to maintain a registered agent with a physical address in the state, which typically costs between $50 and $300 per year if you use a professional registered agent service.

Beyond starting costs, businesses should plan for ongoing state fees. Delaware corporations are subject to an annual franchise tax, which is calculated using one of two methods—the Authorized Shares Method or the Assumed Par Value Capital Method—and can range from $175 to thousands of dollars depending on the corporation’s size. LLCs and limited partnerships, by contrast, pay a flat annual tax of $300.

Ongoing compliance obligations

Once your business is up and running, comply with Delaware's ongoing requirements. Corporations must file annual reports with the Delaware secretary of state by March 1 each year, accompanied by the franchise tax payment, which can range from $175 to significantly more depending on your corporation's size and structure. LLCs and limited partnerships aren’t required to file annual reports but must pay their $300 annual tax by June 1 each year. All businesses should also keep track of the expiration dates on any state, local, or federal licenses and permits they hold, as failing to renew them on time can result in fines or disruptions to your operations.

Beyond taxes and filings, Delaware requires every registered business to continuously maintain a registered agent with a physical address in the state. If your registered agent changes, you must notify the Division of Corporations. It's also good practice to schedule periodic internal reviews of your compliance records—including meeting minutes, employment records, and stock ledgers for corporations—to ensure everything is current and accurate. Businesses that undergo big changes (e.g., adding members, changing their structure, relocating) might also need to update their state registrations accordingly. When in doubt, work with a Delaware attorney or compliance service to ensure nothing is missed.

How Stripe Atlas can help

Stripe Atlas sets up your company’s legal foundations so you can fundraise, open a bank account, and accept payments within two business days from anywhere in the world.

Join 75K+ companies incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z, and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You’ll choose your company structure, instantly confirm whether your company name is available, and add up to four cofounders. You’ll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers, and then e-sign all your documents. Any cofounders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your EIN. Founders with a US Social Security number, address, and cell phone number are eligible for IRS expedited processing, while others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g., copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at $100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal income taxes. Atlas will file it for you—whether you are a US or non-US founder—with USPS Certified Mail and tracking. You’ll receive a signed 83(b) election and proof of filing directly in the Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world’s leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution, and tax compliance.

A free year of Stripe Payments, plus $50K in partner credits and discounts

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance, and operations from industry leaders like AWS, Carta, and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you’ll access additional Stripe benefits, including up to a year of free payment processing for up to $100K in payment volume.

Learn more about how Atlas can help you set up your new business quickly and easily, or get started today.