Why Incorporate in Delaware?
The State of Delaware has implemented several incentives and tax credits that may help businesses secure new capital or keep more revenue. Your corporation may be able to take advantage of these incentives, provided it meets the qualifying criteria.
For example, the Angel Investor Tax Credit provides a refundable tax credit for qualified investors in innovative, Delaware-based small businesses.
For most entrepreneurs looking to start a larger business, creating a Delaware corporation may be the best choice. As a corporation, your business is able to buy and trade stock, and when it comes to excess profits, corporations offer more flexibility than an LLC. A corporation is allowed to pass income and losses to its shareholders, who report taxes on an individual tax return at ordinary levels.
Is an LLC Better Than a Corporation?
It all depends on your business goals. For smaller businesses, limited liability companies are usually a better option. An LLC is easier to set up, and you receive many of the same benefits as a corporation, but with less regulation.
Learn more about forming a Delaware LLC so you can decide which business entity is right for you.
Benefits of Forming a Delaware C Corp
It offers you numerous advantages including, but not limited to:
- The strongest form of liability protection possible by insulating your personal assets and finances from business debts, obligations, damages, bankruptcy or other liabilities
- Several options to create, buy, sell or transfer stock, including publicly
- The ability to issue more than one type of stock
- The ability to raise more funds by issuing more stock
- The ability to sell stock to investors inside and outside the U.S.
Benefits of Forming a Delaware S Corp
It offers several advantages similar to those provided by a C Corp including, but not limited to:
- Options for creating, transferring and selling stock, though not as many as a C Corp
- The capacity for up to 100 shareholders
- Simpler rules than those applicable to C Corporations
- Easy transfer of ownership simply by selling your stock
- The possibility of saving money by allowing you to pay less self-employment tax
In this guide, you’ll find information on naming your corporation, getting a Registered Agent, the fees you’ll need to pay, business taxes and much more. We also cover what you'll need to register your corporation and how you'll interact with the Secretary of State (Delaware SOS).
Start a Business in Delaware Checklist
To help you along the way, use our Starting a Business checklist to keep track of everything you need to do to get your business up and running.
How to Form a Delaware Corporation Yourself in 6 Steps
Step 1 - Choose a Unique Business Name and Complete a State Corporation Search
Step 2 - Provide an Official Business Address for Your Corporation
Step 3 - Assign a Registered Agent
Step 4 - File Your Certificate of Incorporation with the Delaware SOS
Step 5 - Get an Employer Identification Number (EIN) from the Internal Revenue Service
Step 6 - Write Bylaws
1
Choose a Unique Business Name and Complete a State Business Search
Every Delaware business must have a unique name that hasn't already been claimed by another business in the state. If you’re having trouble coming up with a name, try using our Business Name Generator to gather ideas. You'll need to follow a few naming rules, which you can read about in detail on the Delaware Corporation Names page.
Once you’ve decided on a name, you’ll need to make sure it’s available in Delaware. To learn whether another company in the state is already using your desired business name, use our tool to do a Delaware entity search.
You can also carry out a name search on the Delaware Corporations Division website.
2
Provide an Official Business Address for Your Corporation
Every corporation within Delaware must have a designated address. That may be your home address (if you’re running the company from your residence), a building where your office is located or any physical address of your preference. The address can be outside the State of Delaware and can be a P.O. Box.
You may also be able to use a virtual mailbox for your business address. Incfile can provide you with a Delaware virtual mailbox where we'll receive your mail and scan it for your online review. This can be especially convenient if you run a home-based business and don't want your home address published as part of your public business record.
3
Assign a Registered Agent
Someone who receives official correspondence and is responsible for filing reports with the Delaware SOS is known as a Registered Agent. Every Delaware corporation is required to have a Registered Agent.
You can fill this position, assign another manager in your business or use a Registered Agent service. If your Registered Agent in Delaware is a person, they must have a physical street address in Delaware and must be present during business hours to receive important documents on behalf of your company.
You'll appoint your Registered Agent when you file your Delaware Articles of Incorporation form with the Corporations Division.
All of Incfile’s business formation packages include Registered Agent service. It’s free for the first year and just $119 per year after that. You can also access a digital dashboard to view any document we've received on your behalf.
4
File Your Certificate of Incorporation with the Delaware SOS
Once you've gathered all the information for your corporation, you’ll need to file a form with the Delaware SOS Corporations Division. Once they process the filing, you will have officially created your business.
Here’s what is required by the Corporations Division:
- The exact name of the corporation
- The name and street address of the Registered Agent
- The total number of authorized shares for the corporation and the par value assigned to such stock
- The name and mailing address of the incorporator for the corporation — the corporation itself cannot be the incorporator
Your Certificate of Incorporation can be uploaded online via the state's digital portal. You can also mail the form to the Office of the Corporations Division, or Incfile can file it on your behalf. The Delaware Corporation filing fee is $89.
File by Mail
Delaware Division of Corporations
401 Federal Street – Suite 4
Dover, DE 19901
You only need to file your Certificate of Incorporation in Delaware once, but you'll also need to file an annual report with the Delaware SOS by March 1 of each year following the calendar year in which your Certificate of Incorporation becomes effective.
Corporate taxes and the DE franchise tax, which are also due at the time of filing of the report, are based on the stock listed in the Certificate of Incorporation. Incfile can remind you about this every year, or we can do it for you if you have us handle the paperwork.
What are the fees and requirements to incorporate in Delaware?
| State Fee | State Filing Time | Expedited Filing Time |
| $139 | 5 Weeks | 2 Business Days |
| State Fee | $139 | |
| State Filing Time | 5 Weeks | |
| Expedited Filing Time | 2 Business Days |
Delaware Franchise Tax Report
Frequency
Annually
Due Date
March 1st
Filling Fee
$1395
Get an Employer Identification Number (EIN) from the Internal Revenue Service
The IRS requires an EIN to identify your business. You use this number when filing and paying taxes, when submitting payroll information and payments for your employees and for opening a business bank account. You can obtain one directly from the IRS, or Incfile can get one for you as part of the Delaware corporation formation process.
6
Write Bylaws
A set of rules that govern how a corporation will be run, bylaws detail how many directors the corporation will have, whether the board of directors will have annual meetings and what the voting requirements are, among other things.
Some states, including Delaware, require companies to create bylaws. Although you are required to have bylaws, you do not need to file them with the Corporations Division — simply store them and follow them. Regardless of whether your state requires them, we always think it's a good idea to write bylaws to protect your business from any future changes and events.
Delaware Corporation Types
C Corporation
When you file to start a corporation, by default, it's a C Corp. This is the choice for large businesses that will trade shares in the stock market.
A Delaware C Corp will offer you several liability protections, but it will also be required to adhere to numerous strict rules and regulations. It will also likely have a substantial amount of administrative overhead and won't enjoy as many tax advantages as other corporation types.
Learn more about C Corporations.
S Corporation
Technically, an S Corporation isn't a business entity the way LLCs and C Corporations are. It's a tax filing status. An LLC or a C Corporation can be an S Corporation. It's just a matter of filing a form with the IRS.
The main reason to file as an S Corp is to save money on self-employment taxes. To get an idea of how much money you might save, use our S Corp Tax Calculator.
If you want your Delaware C Corp to be treated as a Delaware S Corp, file the IRS Election by a Small Business Corporation form, also known as Form 2553 or an S Corp Election form.
Consult with your tax advisor or accountant to determine whether this is your best option.
Learn more about S Corporations.
Compare S Corp vs. C Corp to learn the benefits and drawbacks of both and decide which one will best suit your needs.
Professional Corporation
Some states, including Delaware, allow certain occupations to form Professional Corporations. The Delaware Code outlines professional services as:
"... the personal services which come within this chapter are the personal services rendered by architects, certified or other public accountants, chiropodists, chiropractors, doctors of dentistry, doctors of medicine, optometrists, doctors of osteopathy, doctors of podiatric medicine, professional engineers, veterinarians..."
The Delaware Code defines in Title 8, Chapter 6, § 603 a few of the professions permitted to form a Delaware Professional Corporation. These include, but may not be limited to:
- Accountants
- Architects
- Chiropractors
- Dentists
- Professional engineers
Check with the Delaware Corporations Division to confirm whether your business should and can be a Professional Corporation.
Close Corporation
Put simply, a Close Corporation is one that has a limited number of shareholders and isn't publicly traded.
Usually, Close Corporations are exempt from corporate requirements, such as having a board of directors and holding annual meetings. Per the General Corporations Law Title 8, Chapter 1, Subchapter 14, § 351, a Delaware Close Corporation can be managed by shareholders rather than by a board of directors.
A Close Corporation is often chosen by family-owned businesses to prevent non-family members from establishing or claiming any ownership of the company.
Foreign Corporation
If your business operates in another state and you want to expand into Delaware — or vice versa — you’ll need to form a Foreign Corporation.
Learn more about Delaware Foreign Corporation registration.
Nonprofit Corporation
Charitable organizations can incorporate as nonprofit corporations. This means all the profits they generate are donated to the organization supported by the charity, minus administrative costs.
A nonprofit corporation is also exempt from federal and state taxes, allowing more of the profit to benefit the charity.
Note: Everything in this guide applies to for-profit corporations and mostly to C Corps and S Corps. Items listed as requirements for forming a corporation may or may not also apply to nonprofits.
Limited Liability Company
Depending on the kind of business you want to start, or your personal circumstances and goals, a limited liability company (LLC) may be a better option. For example, you may not need the options to buy and sell stock. Or you may simply want to build a small business with a few employees or even just yourself.
A Delaware LLC is usually a better option for a smaller business. It's easier to set up, but it still offers you certain advantages you'd get from a corporation. You can even have your LLC treated as an S Corporation for tax purposes to save you money.
Regardless of which direction you decide to go, we can help you with your Delaware business registration.
Learn more about limited liability companies.
Sole Proprietorship or Partnership
These are the simplest types of businesses to set up. That's because there's no real setup to do. If you don't choose to form a separate business entity, by default, you'll have either a sole proprietorship (just you) or a partnership (you and one or more other people).
Neither of these options provides you with any special benefits or liability protections and can leave your personal assets vulnerable. For these reasons, we don't recommend them.
Compare business entity types to decide which one is best for you.
Helpful Resources from the State of Delaware
More Information in This Guide
You’ll find more insight and guidance on the other pages of this guide,
including:
How to search the state business registry and find the right name. Includes information on naming rules, assumed names, reserving a corporation name and more.
How to appoint, change and search for Registered Agents. Also includes the duties they fulfill and the rules they’re required to follow.
Details the various fees you’ll need to pay and the state and federal requirements you’ll need to meet. Includes details about Employer Identification Numbers (EINs), state and federal business licenses, Franchise Tax Reports and more.
Covers the various taxes you’ll have to pay to the state and federal governments. Includes details about state taxes, such as sales and franchise, and federal taxes, such as income and self-employment.
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