How to Start a Business in Delaware (A 16-Step Guide)

If you have chosen Delaware as the place to start your business and are puzzled about what to do first, you can use this guide as your starting point. 

Considering this guide covers the entire process step-by-step, you can expect to get all relevant information — from choosing a name for your new business to securing funding and hiring employees.

We’ll walk you through the 16 steps needed to start a business in Delaware and clarify how to:

  • Develop your business idea,
  • Evaluate the business potential of your idea,
  • Choose your legal business entity,
  • Choose a name for your business,
  • Reserve and register your business name in Delaware, 
  • Make a clear business plan,
  • Secure the funding,
  • Choose an appropriate location,
  • Register your business in Delaware,
  • Obtain federal and state tax IDs,
  • Get the necessary licenses and permits,
  • Open business banking and credit accounts,
  • Get insurance for your business,
  • Hire employees,
  • Build an internet presence,
  • Choose the right business software.

The guide also includes an FAQ for starting a business in Delaware. 

Additionally, we’ve prepared a handy list of resources for further reading in case you decide to have a go at starting your own business in the First State.

How to start a business in Delaware - cover

Is Delaware a good state to start a business? Key takeaways

The State of Delaware is the second smallest state in the US and also one of the least populous ones. Based on the estimated data provided by the US Census Bureau, Delaware’s population is 1,018,396 as of July 1, 2022. 

Therefore, it might seem odd that it ranks 3rd among all US states in the business environment subcategory, according to the latest U.S. News Business environment ranking report

The same source has published a list titled The 10 Best States for Business, where states are classified based on their corporate friendliness. Delaware ranks 3rd, right after Massachusetts and California.

Delaware’s pro-business environment has turned the state into a business mecca. Its General Corporation Law, very little red tape, and flexible business formation statute have made Delaware the domicile for 68.2% of Fortune 500 companies as per the Delaware Division of Corporations 2022 Annual Report.

The same report states that 313,650 business entities — out of 1.9 million incorporated in Delaware — were formed in 2022. 

A favorable tax climate is one of the reasons why businesses choose Delaware. Let us have a closer look at tax scores as well as cost of living scores that can help you determine whether to embark on a new business venture in this state. 

Tax scores in Delaware

When it comes to taxes, Delaware’s state individual income tax rate is graduated and ranges from 2.20% to 6.60%. This means that your tax increases along with your income. 

If you take a look at the 2023 State Business Tax Climate Index, you can see that Delaware ranks 16th in overall score compared to other US states.

The table below displays tax scores for Delaware in different tax categories and its US ranking.  The maximum score is 10 — higher scores imply lower taxes and vice versa. 

Delaware’s tax score and US ranking
Overall ranking 5.3216th
Individual taxes3.8144th
Corporate taxes2.4150th
Sales taxes8.982nd
Property taxes6.284th
Unemployment insurance taxes5.992nd

As you can see, in terms of corporate income tax rate, Delaware takes the last place among all US states. According to the Tax Foundation, Delaware’s corporate income tax rate is 8.7%. The state also imposes gross receipts tax which adds considerably to such bad ranking.

On the other hand, Delaware has no state or local sales tax. The reasons behind Delaware not scoring a perfect 10 are both an annual business license payment required for all businesses and gross receipts tax levied on the sellers and service providers. Also, excise taxes on alcohol, gasoline, and cigarettes reduce chances for the best score in the sales taxes category.

Cost of living score in Delaware

If you are considering starting a business in Delaware, you might also want to know whether it is affordable to live there.

The table below shows how Delaware ranks in all relevant cost of living categories when compared to other US states.

Delaware’s Cost of living score and USA ranking*
Cost of living index102.6*31st
*Scores above 100.0 indicate cost above the national average

As you can see, the Cost of Living Index in the US for 2023 clearly shows that Delaware is below the baseline 100 score in two categories — housing and utilities. The baseline is taken as the national cost of living average, and the fact that these 2 categories are below the baseline is a great indicator of a less expensive lifestyle in the state. 

If you choose to move to Delaware and want to make an informed decision, you can use the Cost of Living in Delaware Index Calculator, found on the Delaware Prosperity Partnership website, which will compare the cost of living between the city you want to move from and the city you prefer to move to in Delaware. You also need to insert your current base salary to get the exact calculation.

Delaware has several advantages for starting a business, and you can find them listed in the following lines.

Advantages of starting a business in Delaware

One of the first advantages of starting a business in Delaware is its location at the heart of the East Coast. Delaware is situated halfway between New York City and Washington D.C., the business and political capitals of the US respectively. 

Thanks to its strategic position, the State of Delaware offers effective transport infrastructure and provides easy access to the largest consumer market. Its road and rail network reaches 50 million people within 250 miles. Also, Delaware has a leading North American port for perishable cargo and serves as a regional aviation hub.

Next, Delaware has a full range of industries which you can find your niche in. Some of the most prominent industries in the State of Delaware are:

  • Manufacturing and logistics,
  • Business and finances,
  • Food and agriculture,
  • Science and technology, and
  • Education and healthcare.

Finance and insurance are the biggest industries in Delaware as reported by Forbes in their list of best industries in every state in 2022.

Another advantage for businesses in Delaware is the workforce. According to Forbes’s list of the best states to start a business in 2023, Delaware ranks among the top 10. More importantly, it is ranked 1st in the workforce category.

Also, the Delaware General Corporation Law (DGCL) is a flexible and continually updated business formation statute. The institution that has played a major role in writing the US corporation case law is Delaware’s Court of Chancery, a more than 230-year-old business court.  

A well-established legal tradition and an ample supply of lawyers enable efficient procedures for business combinations and transactions. 

All these factors contribute to the efficient business climate Delaware has to offer. Legal, governing, and corporate tax regulations, along with its diverse workforce and industries, make Delaware a great place for business. 

No wonder top companies such as Amazon, Google, and American Express are incorporated here. 

💡 Plaky Pro Tip

If you are interested in checking out tax and cost of living scores in other US states, as well as finding out how to start a business in some of them, feel free to explore our list of guides for starting a business in different US states:

How to start a business in Delaware in 16 key steps

According to the Delaware Small Business Economic Profile for 2022 published by the US Small Business Administration, Delaware has 93,686 small businesses, which make up 98.5% of businesses in the state.

If Delaware is your ideal place to start the business of your dreams, be ready for a lot of planning, filling in forms, obtaining funding, etc.

To avoid taking one step forward, two steps back, make sure you carefully read through all the steps before you start putting them into practice.

Step #1: Develop your Delaware business idea in detail

It’s great if you have an idea about the kind of business you want to build. But, alas, having an idea is far from enough. 

To turn it into reality, you might want to ask yourself the following questions:

  • What are the reasons behind your idea to start a particular business?
  • Are you passionate about that business, and is it something you are qualified to do?
  • Do you have an original product or service, or do you want to offer a more refined version of an existing one?
  • Is there a strong demand for such a product or service?
  • Are people willing to pay for it?
  • Are you planning to hire employees?
  • Do you need office space?

Don’t rush with your decisions. Put on your thinking cap and take time to consider every aspect of a potential business. Additionally, you can conduct some research on current trends and competition. 

Here is a list of some popular and profitable business ideas, from those requiring minimum or modest investment to those requiring considerable investment.

Business idea suggestions for Delaware

For those of you who aren’t planning to invest much into your new business, these ideas might be the right choice:

  • Online survey job,
  • Online business consultancy,
  • Tutoring services,
  • Cleaning business,
  • Financial coaching,
  • Virtual assistance service,
  • Landscape service,
  • Catering,
  • Laundry service,
  • Pet sitting, and
  • Wedding videography.

If you take into consideration Delaware’s key industries mentioned above, you can choose some of these businesses:

  • Farming,
  • Food processing,
  • Microbrewery,
  • Crop breeding,
  • Pharmaceutical manufacturing,
  • Chemical manufacturing,
  • Machinery manufacturing,
  • Legal service,
  • Accounting service,
  • Consulting service, and
  • Health care service.

Whatever choice you make, try to test the product(s) or service(s) you want to offer and research the business potential of your idea. Here is how to do it.

Step #2: Research the business potential of your Delaware business idea 

Testing the waters and checking if your business idea could be attractive to consumers will help you determine whether to put blood, sweat, and tears into it. 

You might want to start with market research and competitive analysis with the goal of answering the following questions:

  • Is there a demand for your product or service?
  • Who are your ideal customers?
  • Who are your competitors and what do they offer?
  • What changes should you make to stand out?
  • How saturated is your target market?
  • Are there any potential barriers to your business?

After performing your own due diligence, you’ll know whether there is a high enough demand for your product or service. If this is the case, you should go for it.

We’ll take a cleaning business as an example here. This type of service has a wide range of potential clients such as private and public companies, hospitals, private homes, etc.

So, bearing in mind the enormous potential this type of business has, it can definitely put food on the table. If you want to proceed further with your business idea, the next step is to choose a legal entity type for your business.

💡 Plaky Pro Tip

If you are interested in starting a small business, check out our list of best project management tools for small teams to help you organize tasks, connect your team members, and monitor the delivery process of your projects:

Step #3: Choose a legal business entity for your Delaware business

Depending on your business vision, you should give some careful thought to the type of business structure it requires. 

This step is crucial since the business entity you choose impacts not only your taxes and licensing but liability and control as well. 

Note: It’s highly recommended you consult a qualified legal professional, i.e., an attorney or certified public accountant, to check what the best structure for your business is.

You can form the following business entities in Delaware:

  • Sole proprietorship,
  • General partnership,
  • Limited partnership,
  • Limited liability partnership,
  • C-corporation,
  • Subchapter S-corporation, and
  • Limited liability company.

Entity type #1: Sole proprietorship

A sole proprietorship is a business entity owned and controlled by 1 person. It’s not a legal entity, meaning the owner and the business are the same in the eyes of the law. 

The owner is personally liable should any debts or lawsuits arise, and since the owner gets the entire profit, their business is taxed at personal income tax rates.

Sole proprietors are not legal entities and therefore they don’t file any registration documents. However, they must get a Delaware business license.

Entity type #2: General partnership

A general partnership is a type of business where 2 or more people share ownership and control as determined per their partnership agreement.

General partners are liable for all business debts. And, when it comes to taxation, each of the partners is obliged to pay tax on their share of income and loss through their individual income tax return.

Entity type #3: Limited partnership

A limited partnership (LP) represents a business structure with at least 1 general and 1 limited partner. 

General partners are the ones who run the business, whereas limited partners are usually the ones who invest in it. In a limited partnership, limited partners are only liable to the extent of their investment.

Anyway, it is recommended to reach a partnership agreement and clarify all the rules and procedures.

Limited partnerships have the same taxation rules as general partnerships.

Entity type #4: Limited liability partnership 

This entity type is typically reserved for fields such as accounting, medicine, and law. All members are encouraged to sign a partnership agreement that will determine procedures and protocols. 

Each member of an LLP pays taxes on their share of the profits, and partners cannot be held responsible for debts or liabilities caused by other partners.

Entity type #5: C-corporation

This entity type is owned by shareholders and there is no limitation on their number. The unit of ownership is a share of stock. Corporations are considered C-corporations by default unless specified otherwise by additional regulations.

Corporations are generally formed to attract investors, and they are separate entities, meaning owners and their personal assets are legally protected.

Also, corporations face double taxation — taxes are paid on the business income of a corporation, and when profits are shared between shareholders in the form of dividends, shareholders pay taxes on those dividends through their personal income tax.

Business is managed by a board of directors, but there are also other requirements that corporations need to fulfill such as creating corporate bylaws. We’ll get back to these requirements later in the article.

Entity type #6: Subchapter S-corporation

Subchapter S-corporations are, unlike C-corporations, limited to up to 100 shareholders. 

To qualify for S-corporation status, a company must meet several criteria such as being domestic and having only 1 class of stock.

S corporations are pass-through entities meaning there is no double taxation and shareholders pay tax on their share of profits only.  

Entity type #7: Limited liability company

A limited liability company (LLC) is a common business entity that offers both the benefits of a corporation — being a separate legal entity from its members — and those of a partnership where the profits belong to the owners. The owners pay tax on their share of profits.

This business structure can have 1 or more members and can be taxed as a partnership or a corporation. The important thing is LLCs require the same classification for both federal and state tax purposes.

These are the most common business entities in Delaware according to the Legal Business Structures Table published by Delaware’s Division of Revenue. 

Forms for forming these and other entities such as a Statutory Trust or Foreign corporation are found on the DOC website. 

Step #4: Name your Delaware business

One of the more exciting parts of new business formation is choosing a name for your business. 

Keep in mind that a name represents your business. You should, therefore, make it unique and easy to recognize.

The first step is to do a business name search through the Delaware entity search on the Division of Corporations (DOC) website. You can also do some Google research and see if there are any entities with the same name as the one you prefer. 

When you do a name search on the DOC website, you’ll most likely use the Entity name field. The following information is provided for free:

  • Entity name,
  • File number,
  • Date of incorporation,
  • Registered agent name,
  • Address,
  • Phone number, and
  • Residency.

Still, there are certain corporate name regulations in Delaware that you should follow when choosing a name for your business. For instance, a corporation can use words such as “society” or “company” in its name (e.g. Titan company), but cannot use the word “bank”.

Before you apply for a name reservation with the Secretary of State, make sure you check the Business Entity Name Standards and Process page and check if your business entity name adheres to the rules.  

Sole proprietorships typically operate under their owner’s name, and partnerships usually choose to have their partners’ last names included in the business name. 

However, most business entities can choose a fictitious name for their business. This name is also known as a trade name or a DBA (“Doing Business As”).

To check the availability of your trade name, visit the Trade, Business and Fictitious Names search page on the Delaware Courts website. Before doing the search, make sure you have read the Trade Name search instructions first.

Those businesses that want to trademark their business name can check if the name is available through the US Trademark Electronic Search System.

Step #5: Reserve and/or register your business name in Delaware

This step deals with the process of reservation and/or registration of a business name, fictitious name, and trademark. So, let’s see what the rules say.

Reserve a business name in Delaware

In Delaware, name reservations are effective for 120 days. You can also re-reserve, transfer, or cancel your name reservation.

The reservation fee is $75, and you can apply online or choose to fill out paper forms and send them to the Secretary of State, Division of Corporations. 

Depending on the type of your business entity, you’ll find all name reservation applications and a link for online reservations on the DOC website. If you reserve online, make sure you print your confirmation page. 

You can upload, fax, or mail your name reservation application.

Before long, you’ll be able to submit name reservation applications online on a new DOC eCorp Business Services website.

Note: Make sure you submit a Cover Memo with your paper application. If you submit your name reservation application online, this form will be automatically completed. You can find Cover Memos for all entities on the link for name reservation applications provided above. 

Register a fictitious business name in Delaware

Delaware fictitious business names also require registration. If you are sure your preferred trade name is not taken, you can complete the Registration Certificate Form. The certificate can be completed online and then printed, or you can first print it and fill it in. It’s up to you.

When the certificate is completed, it must be notarized. Then, you file the certificate at the Prothonotary’s Office found at the Superior Court in the county where your business is located. 

In addition, you need to hand in a check or money order to pay a fee of $25 to the State of Delaware.

The Registration Certificate can be delivered to the appropriate Office in person or by mail.

You can find contacts of Prothonotary Offices and other relevant information under the section Trade and Business Names on the Delaware Courts website.

Register a trademark in Delaware

To register a trademark in Delaware, you need to file a form known as Trademark/Service Mark Registration with the Secretary of State. The filing fee is $25, and the registration period is 10 years long. It is possible to renew a trademark registration for another 10-year period. 

Along with the application for registration, you should submit a specimen or facsimile of the mark in duplicate. One is attached to the Application for Registration and the other to the Certificate of Registration, which is issued by the Secretary of State and then returned to the applicant.

You can find more information and other forms at the Trademarks and Service Marks page on the DOC website. 

Bonus Step: Consider the URL domain for your Delaware business

Even if your initial budget for starting a new business doesn’t cover setting up a website, you might consider securing a domain name and saving it for the future. 

The US Small Business Administration (SBA) recommends you consult accredited registrars who will help you find available domains and register the one you prefer. 

Step #6: Make a clear business plan to start and grow your Delaware business

You’ll have a lot on your plate when you start your business. The road to success is bumpy and a good way to overcome obstacles is to make a clear business plan.

The truth is, a business plan is an optional document. But, no matter if you develop it for your personal use or your potential investors, it will serve as a roadmap to keep all important elements on track. 

The State of Delaware considers writing a business plan as one of the business’ first steps.

We suggest you take the following substeps into account when you develop your winning plan:

  • Choose a proper business plan format,
  • Make an executive summary,
  • Describe your business,
  • Specify your product(s) and/or service(s),
  • Carry out a market analysis and find your target audience,
  • Explain your business organizational structure,
  • Carry out customer segmentation,
  • Make a marketing plan,
  • Prepare a logistics and operations plan, and
  • Make a strategic financial plan.

Let’s go through each of the substeps and see what they involve.

Substep #1: Choose a proper business plan format

According to the SBA, you should make a plan that suits your business needs. The SBA suggests 2 types of business plans:

  • Traditional, and
  • Lean startup.

These 2 plans differ significantly in their structure. A traditional plan involves a lot of details on the organization, target market, funding, etc. 

On the other hand, lean startup plans summarize key elements of your business. 

In terms of length, traditional plans can have a dozen pages whereas lean plans typically have 1 page. 

You can find business plan samples for both types on the link given above and also check out the SBA Learning Centre Page that provides tutorials on how to come up with a game plan for your business.

Another helpful source is America’s Small Business Development Center in Delaware (Delaware SBDC). This Center is funded by the SBA and the State of Delaware, and it is a part of the University of Delaware’s Office of Economic Innovation and Partnerships. 

At the Center, you can get free advice as well as assistance in business planning, financial services, marketing services, etc.

Substep #2: Make an executive summary

An executive summary provides basic information on your business and the products/services you offer. 

Use this 1-page long text to explain your company’s:

  • Mission statement,
  • Legal structure,
  • Employees, and  
  • Business goals.

Also, if you’re planning to apply for funding, make sure you include financial information and projected profits. 

Substep #3: Describe your business

This substep is all about pointing out your business strengths. Describe your business in-depth and include more information on its location, employees, and products/services. 

Elaborate on the advantages of your business and explain why you believe in its success. You are strongly encouraged to include data on:

  • Industry details,
  • Long and short-term goals,
  • Consumers,
  • Experts in your team, and
  • Organizational structure.

If we go back to our cleaning business, we can say that its main advantages are high demand, low startup costs, and flexible working hours. 

Your short-term goal might be to clean homes, but in the future, you can expand your services to hotels, hospitals, or schools.

Your target market is huge because cleaning is a necessity whether it implies basic housekeeping or commercial cleaning.

Feel free to mention the experience in the cleaning business that you (if you start as a sole proprietor) or your employees have. 

And finally, explain your organizational structure and state how the job is done, who does what, etc.

Substep #4: Specify your product(s) and/or service(s)

This is where you specify your product(s) or service(s) and describe their characteristics in more detail. 

You can make a list of products, state what they are made of and what the production process is like. 

In case you offer services, explain what these services include and the equipment you use.

In the cleaning business, you usually need a professional vacuum cleaner, different rags and mops, as well as various cleaners. 

Describe what you do and what your service includes. If you have any cleaning packages, feel free to state what they involve.

Substep #5: Carry out a market analysis and find your target audience

A market analysis is a compulsory part of your business plan and represents a great way to identify:

  • Industry trends,
  • Market gaps,
  • Your competitors,
  • Your potential customers, and
  • Market potential of your business.

The results of this analysis will help you think of the best ways to tailor your business offer, market your business, and outperform your competitors.

For example, if you offer natural cleaning products or leave flowers in every home after the service, you’ll definitely stand out from the rest.

Substep #6: Explain your business organizational structure

This substep depends on the business entity you have chosen. Sole proprietorships don’t have as complicated an organizational structure as corporations have. 

The point here is to explain what responsibilities people have within a particular company and describe their respective roles. 

You can include each employee’s resume in the appendix of the plan because the expertise of your employees might prove significant in attracting potential investors.

If you have a professional cleaning service, you might be the only employee, or you might be the manager and have employees working for you.

Substep #7: Carry out customer segmentation

Customer segmentation helps you classify your customers according to the services they ask for, the frequency of those services, and their preferences.

To satisfy your customers and meet their needs, you need to know how they behave, what they love about the service, and what demographic group they belong to. 

For instance, a cleaning business is an affordable service that isn’t seasonally dependent and has a huge market potential. 

One of the ways to segment your customers is according to the type of property you are hired to clean:

  • Private homes,
  • Hotels,
  • Restaurants,
  • Schools,
  • Hospitals,
  • Offices, etc.

As the number of customers gets bigger, you’ll be able to refine your customer segmentation and place them into different groups.

Substep #8: Make a marketing plan

The future of your business depends on the way you promote it. Therefore, when you prepare a strategic marketing plan, pay attention to the needs of your customers and think of ways to attract and retain them.

Finding the right tactics isn’t easy, and depending on your budget, you can either do the promotion yourself or consider hiring professionals.  

Make use of your market analysis and customer segmentation to decide on the marketing strategy. It might be based on one or more of the following:

  • Product,
  • Price,
  • Place,
  • Packaging,
  • Promotion, etc.

You can also check how your competitors promote their business, and determine how to outshine them.

Substep #9: Prepare a logistics and operations plan

This substep includes information on the way you are going to organize your business. 

If your company makes certain products, explain the entire procedure — from the point you order the necessary materials to the point you deliver the products. Also, include the information on suppliers, vendors, and partners.

If you provide services, describe how your customers can reach you and what your services include. 

It is important to list all licenses and permits your business needs.

In a cleaning business, you can have different cleaning packages and state what these include such as all rooms cleaning, basement cleaning, restoration cleaning, etc. You can list what each of these refers to and what equipment you use.

Substep #10: Make a strategic financial plan

The fact is, you can’t avoid dealing with finances whatever business you start with. No matter if you are a sole proprietor or you start an LLC, you need to make a strategy for obtaining funds.

If you are planning to apply for funding with banks, investors, or the state, bear in mind you should check eligibility requirements and calculate the following:

  • Start-up costs,
  • Earning projections for the first year (you can include monthly and quarterly financial outlook as well), and
  • Earning projections for the next 3–5 years.

Feel free to include charts showing these projections and explain how you are going to invest the funds and return them on time.

It’s great if you can rely on your own savings, however, there are other funding options to consider, especially if you are dreaming big from the start.

Step #7: Secure funding for your Delaware business

There are several funding options to consider to get your Delaware business off the ground:

  • Bootstrapping,
  • Friends and family loans,
  • Partnership,
  • Delaware’s incentives and credits,
  • SBA loans, 
  • Crowdfunding, or
  • Investors.

Funding option #1: Bootstrapping

Bootstrapping is a type of funding that implies the investment of personal capital in your new business. 

Some of the benefits of this setup are:

  • Being the sole decision maker, 
  • Having no pressure to return loans, and
  • Being the only one in charge of the business profit and losses.

The truth is, it is risky to invest your own money, but, as your business grows, chances are you will soon regain the money you have spent.

Funding option #2: Friends and family loans

Loans from friends and family are another funding option worth considering. If you want to avoid business credits and applications for funding, you can turn to those who know you best and who are willing to invest in you.

You can (hopefully) agree on more favorable repayment conditions, but feel free to suggest signing a written agreement on the repayment terms to avoid any potential disputes.

Funding option #3: Partnership 

Another handy option for funding your business is forming a partnership. 

Joining finances with someone implies that you’ll share ownership and control with that person, and it is preferable to sign a partnership agreement to be on the safe side. This way, you agree on obligations, ownership, and control. 

Funding option #4: Delaware’s incentives and credits

Delaware’s Division of Small Business offers diverse funding programs intended for businesses whatever stage they are in.

These state incentive programs and tax credits help businesses grow, gain new capital, and hire. 

Some of the incentive programs are:

  • Delaware Strategic Fund — a primary funding source that provides grants and low-interest loans to projects of interest for the state’s economy,
  • EDGE Grants — grants intended for small businesses and obtained through a competitive selection process (grants vary from $50,000 to $100,000), 
  • Delaware’s State Small Business Credit Initiative-Funded Programs (SSBCI) — various funding programs aimed at providing financial help to small and early-stage businesses, especially those in less developed regions,
  • Delaware Technical Innovation Program (DTIP) — refers to providing transition grants to those companies that have completed Phase I and applied for Phase II of 2 federal programs i.e. Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), and
  • Workforce Training Grant — grants available to companies that need specialized training in the amount of up to $100,000 per project. 

You can find more information on these and other incentive programs at the Incentives and Credits page on the Division of Small Business website. 

When it comes to tax credits offered by the State of Delaware, you need to turn to the Division of Revenue. Some tax credits administered by this institution are:

  • New Business Facility Tax Credit, 
  • Research and Development Tax Credit,
  • Green Industries/Brownfield Tax Credit, and several others.

You can find more information on Delaware tax credits on the Division of Revenue website.

Funding option #5: SBA loans

The SBA also provides financial assistance to small businesses. They offer 3 types of loans: 

  • 7(a) loans — a common funding option aimed at small businesses with special requirements (maximum loan amount is $5 million),
  • 504 loans — long-term loans in the maximum amount of $5.5 million intended for purchases such as new facilities, equipment, or land and the improvement of existing facilities or landscaping, and
  • Microloans — loans of up to $50,000 provided through SBA funding intermediaries, i.e. nonprofit community-based organizations.

Funding option #6: Crowdfunding

Crowdfunding implies obtaining smaller amounts of money, i.e. donations from a large number of investors.

A typical way to start a crowdfunding campaign is online, through platforms such as GoFundMe, Kickstarter, or Indiegogo. 

Bear in mind it’s easier to attract investors with a unique idea, product, or service so make sure you check if what you’re offering is suitable for crowdfunding.

Funding option #7: Investors

Many businesses seek investors to fund their projects, equipment, training, etc. There are 2 types of investors — angel investors and venture capitalists.

Angel investors are mostly wealthy individuals who invest small amounts of money in up-and-coming startups. Also, angel investors can be LLCs, corporations, and partnerships. 

This type of investment often gets income tax credits in return.

On the other hand, venture capitalists (VCs) are typically companies that are ready to invest large sums of money in exchange for equity stakes.

Except for the funding, you also get mentorship, knowledge, and staff to help you grow your business.

Still, be aware that this type of investment involves a greater say in business management, unlike angel investors who rarely get involved in any business operations. 

Some angel investors and VCs in Delaware are Delaware Crossing, First State Innovation, and Leading Edge Ventures.

These are some of the most common ways to secure funding. Feel free to check other options that might suit your business idea such as commercial bank loans or federal grants

Step #8: Choose an appropriate location for your Delaware business

You might start an online business and work from the comfort of your home, but if you decide to open a restaurant or a grocery shop, a good location is everything. 

When searching for a perfect location for your business, there are several factors to think about:

  • Zoning requirements,
  • Cost of rent and utilities,
  • Building infrastructure,
  • Branding,
  • Nearby competitors,
  • Foot traffic in the area, and
  • Proximity to ports, rails, major roads, and airports.

Delaware has 3 counties to choose from and each has features ideal for different industries: 

  • New Castle County — home to Wilmington, the largest city in the state, and global companies such as DuPont, J.P. Morgan, and Adesis,
  • Kent County — this county offers great opportunities for growth thanks to the Kent County Emerging Enterprise Development Center and the fact that the state capital city, Dover, is situated here, 
  • Sussex County — this county is proud of its tourism industry, fast-growing R&D, and agriculture. Georgetown is the heart of the county.

Delaware Prosperity Partnership can help businesses search for the right property in Delaware

Step #9: Register your business in Delaware

Once you have a business name, convenient location, and enough capital to kick off, you are ready for the business registration step.

The State of Delaware requires all entities doing business here to obtain a Delaware business license. This requirement also applies to those businesses located in Delaware but conducting business out of the state. 

The application for the license is done through the Delaware Division of Revenue. You can fill in and submit a Nexus questionnaire if you are in doubt whether you are subject to licensing and taxation or not.

By creating an account with Delaware One Stop — the registration and licensing portal for businesses operating in the State of Delaware — you can start with your business license registration. This portal also enables adding, renewing, changing, and modifying all licenses an entity might have.

Make sure you check a comprehensive List of Division of Revenue licenses and tax rates to see how much you need to pay depending on your business category.

Another important segment within the registration process is the appointment of a registered agent who must have a physical address in the state. This is obligatory for all entities, even the ones with no offices or business activities located in Delaware, in which case, they are represented by the registered agent. 

The DOC provides a List of Delaware Registered Agents on their website. Businesses physically located in Delaware have the right to act as their own registered agents.

You’ll also need to apply for a Federal Employer Identification Number (FEIN), also known as EIN, in case you are planning to:

  • Hire employees,
  • Open a bank account,
  • File a tax return, and/or,
  • Apply for business licenses.

The application for an EIN (otherwise known as an FEIN) is submitted through the Internal Revenue Service (IRS) website, and it is a free service. 

Let’s now go through the unique registration requirements for each business entity.

Register a sole proprietorship in Delaware

As we have already mentioned in the entity description, sole proprietors, unlike other legal entities, are not required to register with the Division of Corporations.

Sole proprietors are allowed to keep their own name or get a fictitious name. 

In case they are planning to have a separate bank account for their business, they need to get an FEIN. 

Also, they must get a business registration license and check if they need any federal or city/county licenses. We’ll deal with this later in the article.

Register a general partnership in Delaware

The State of Delaware, unlike most other states, requires general partnerships to file a formal document. 

General partnerships (GPs) are regulated by Delaware’s Revised Uniform Partnership Act. Under Subchapter I, General Provisions, the Act explains the point of a partnership agreement. While not legally required, it’s a key document determining the responsibilities and ownership of each partner as well as the operating principles of the partnership.

The most important document in the formation process is the Statement of Partnership Existence. You can file the Statement online via the One Stop portal or by mail to the Division of Corporations. The fee is $200, payable to the Secretary of State. 

Along with the Statement, you should submit a Cover Memo. All forms regarding the entity in question are found online on the Corporate Forms and Certificates for a General Partnership page.

You can also find state filing fees and prices for expedited services in the Division of Corporations Fee Schedule.

General partnerships in Delaware are not obliged to file an Annual Franchise Tax Report, but they must pay an annual tax of $300.

Register a Limited Partnership

Limited partnerships (LPs) in Delaware are regulated by the Limited Partnership Act of the State of Delaware.

When you register a limited partnership in Delaware, you need to submit the Certificate of Limited Partnership. The filing fee is $200, payable to the Secretary of State. After submission, you’ll receive a stamped “Filed” copy of the document. 

If you would like to have a certified copy, you can get it for an additional $50 fee. You can file the Certificate online via the One Stop portal, or by mail to the Division of Corporations.

Along with the Certificate, you should submit a Cover Memo. All forms regarding the entity in question are found online on the Corporate Forms and Certificates for a Limited Partnership page.

You can also find state filing fees and prices for expedited services in the Division of Corporations Fee Schedule.

The same as GPs, limited partnerships in Delaware are not required to file an Annual Franchise Tax Report, but they must pay an annual tax of $300.

Register a Limited Liability Partnership

This entity type is formed and regulated in accordance with the Limited Liability Partnership Act

To register a limited liability partnership (LLP), you submit the Statement of Qualification of Limited Liability Partnership. The filing fee is $200 per partner. Checks are payable to the Secretary of State. You can file the Certificate online via the One Stop portal or by mail to the Division of Corporations.

There is also a Cover Memo to fill in along with the Statement. All forms related to LLPs are found online on the Corporate Forms and Certificates for a Limited Liability Partnership page. 

All filing fees and prices for expedited services are provided in the Division of Corporations Fee Schedule.  

Register a C-corporation in Delaware

When forming a Delaware corporation, you should know that corporate laws in Delaware are created to provide maximum flexibility. Therefore, it is recommended to hire a professional in order to explore options available for your particular business.

As stated before, corporations must appoint a registered agent with a Delaware address where documents can be delivered. 

To check regulations regarding corporation law, you can visit the Delaware General Corporation Law page. 

The most common type of C-corporations are stock corporations. To register this entity type, you need to file the Certificate of Incorporation for Stock Corporation

The minimum filing fee is $109, meaning its amount depends on the authorized stock written in the Certificate. Stock corporations must present the number of authorized shares and their par value in the Certificate. Depending on this number, the filing fee can exceed the minimum. You can file the Certificate online via One Stop portal, or by mail to the Division of Corporations.

You’ll receive a stamped “Filed” copy of the submitted certificate. A certified copy is $50. When the formation of a corporation is approved, you get a confirmation of your corporation’s existence. 

Please check state filing fees and prices for expedited services in the Division of Corporations Fee Schedule. You can find filing fee calculators for stock entities on the DOC website.

Another document to file along with the Certificate of Incorporation is a Cover Memo. Please find this and other forms — including forms for different types of corporations allowed in Delaware — on the Corporate Forms and Certificates for a Corporation page on the DOC website. 

Corporations file Annual Reports and pay Franchise Tax for the previous year no later than March 1 every year. The filing fee for the Annual Report is $50. The minimum Franchise Tax rate is $175. Find more information on the Annual Report and Tax Instructions page on the DOC website.

Register a Subchapter S-corporation in Delaware

S-corporations are not separate business entities but rather corporations that differ in the way they are taxed — corporations apply to get an S-corp tax status. 

So, you have to follow all the procedures and form a corporation and then submit Form 2553, Election by a Small Business Corporation with the IRS. 

Please read the Instructions for Form 2553 first. 

Bonus steps in the formation of corporations in Delaware 

When you have received your FEIN/EIN and the confirmation of your corporation existence, plus you have appointed a registered agent, you can proceed to the following steps:

  • Prepare corporate bylaws, 
  • Appoint board directors, and
  • Hold a Board meeting.

Corporate bylaws are not filed with the state. They represent an internal document determining how corporations operate. They regulate how to hold meetings, elect directors, and solve potential disputes. Bylaws are usually kept in a corporate records book.

The person who signed the Certificate of Incorporation, i.e. the incorporator, appoints initial directors who fit the bill until the first shareholder meeting. The shareholders elect new board members at the meeting.

The incorporator has to fill in an Incorporator’s Statement with the names and addresses of the initial directors. The Statement is kept in the corporate records book and not filed with the state.

The first board meeting is a productive one since they choose officers, adopt bylaws, and set the fiscal year. They can also approve the issuance of shares of stock. All the decisions and later updates must be recorded in corporate minutes.

Register a limited liability company

Limited liability companies (LLCs) in Delaware are regulated by the Limited Liability Company Act

To register an LLC, you need to submit the Certificate of Formation of a Limited Liability Company and pay a filing fee of $110. If you file by mail, make sure your check is addressed to the Secretary of State. 

After filing the Certificate, you get a stamped “Filed” copy of it, and if you need a certified copy, there is an additional fee of $50. You can file the Certificate online via the One Stop portal or by mail to the Division of Corporations.

Remember to include a Cover Memo, which you can find along with other LLC related forms on the Corporate Forms and Certificates for a Limited Liability Company page.

You can check state filing fees and prices for expedited services in the Division of Corporations Fee Schedule.

As is the case with GPs and LPs in Delaware, LLCs don’t need to file an Annual Franchise Tax Report, but they must pay an annual tax of $300. 

It is recommended LLCs have an internal document known as the Operating Agreement that will regulate how an LLC is managed. It includes information such as the ownership structure, responsibilities of each owner, tax structure, etc.

The agreement is not something you need to file with the state, but it can help LLCs prove their liability with banks or partners.  

Step #10: Obtain federal and state tax IDs

Regular tax payment is one of the requirements imposed on all Delaware businesses. 

It is highly recommended to discuss tax issues with a registered agent to avoid missing important due dates and avoid penalties.  

 The state institutions in charge of business taxes are:

  • Delaware Division of Corporations, and 
  • Division of Revenue.

The Division of Corporations is responsible for payments of annual Franchise Tax whereas the Division of Revenue handles the following business taxes:

  • Corporate,
  • Withholding, and
  • Gross Receipts.

We have already mentioned the requirement of filing an Annual Report and payment of Franchise tax in our registration step. 

When you pay an Annual Franchise Tax, you actually pay for the privilege of doing business in the State of Delaware. All corporations incorporated in Delaware are required to file an Annual Franchise Tax Report and pay the tax. Notifications for payment are sent to registered agents.

Bear in mind that it is required to file Annual Reports online on the Division of Corporations website. 

The same link provided above is used to pay annual tax for LLCs, LPs, and GPs. This payment is due on or before June 1st. Find more information on the LLC/LP/GP Franchise Tax Instructions page. 

The information on how to calculate Franchise Taxes is found on the DOC website. 

You can also find useful information on Franchise Taxes on the Division of Revenue website. 

Corporate, withholding, and gross receipts tax

A payment of a Corporate Income Tax is mandatory for all corporations doing business in Delaware. Corporations incorporated in the state but not conducting business here do not pay this tax.

Delaware corporations use Form 1100 to file Corporate Income Tax Return. Please check the options for filing and paying on the Filing Corporate Income Tax page. 

Sellers of goods or services pay a gross receipts tax on the total gross revenues of their business and the rates range from 0.0945% to 0.7468%. You can use Tax Tip to determine the rate for your business type. 

You can check the due dates for gross receipts tax for 2023 for both monthly and quarterly filers. This tax is paid via the Delaware Tax Portal

An obligation for all employers in Delaware is tax withholding. Employers deduct a certain amount from paychecks of their employees to pay withholding tax to the state. The amount taken from wages depends on how employees fill in Form W-4 or Form W-4A (for exemptions). 

It is necessary to register an account on the Delaware One Stop Portal to be able to open a withholding account. 

The state determines due dates for tax withholding, and these apply to monthly, eight-monthly, and quarterly filers.

To find out more about withholding regulations and employer’s duties, please check Delaware’s Employer’s Guide

The Division of Revenue provides Business Tax Forms for 2022–2023 for different types of business.

More information on filing Delaware state taxes is available on Delaware One Stop.

Step #11: Get the necessary licenses and permits for your Delaware business

The State of Delaware requires all businesses to get a business license, which we have discussed in the registration step. 

However, depending on how specific your business is, you might need some additional state licenses, certificates, or permits.

To be on the safe side, make sure you check the Index of State of Delaware Business Licenses and Registrations and see if there are some additional requirements for your particular profession. 

The Division of Professional Regulation provides information on how to apply for a professional license.

There are businesses required to get a federal license or permit. The SBA provides a list of business activities administered by a federal agency. The list includes:

  • Agriculture,
  • Alcoholic beverages,
  • Aviation,
  • Firearms, ammunition, and explosives,
  • Fish and wildlife,
  • Commercial fisheries,
  • Maritime transportation,
  • Mining and drilling,
  • Nuclear energy,
  • Radio and television broadcasting, and
  • Transportation and logistics.

Local licenses and permits are another type of requirement some professions might need. Counties, cities, or towns might impose their own regulations, and therefore, you should contact the appropriate institutions.

To check the local demands of counties and cities/towns across Delaware, visit the County, City & Town Licensing and Permits page. There you’ll find contacts and information on building permits, zoning, plumber licensing, etc.

Step #12: Open banking and credit accounts for your Delaware business 

To avoid a potential mishmash of your business earnings and expenses and your private money, you should consider opening a business bank account

There are several good reasons to do this:

  • It helps you keep track of your profits and losses.
  • It protects your personal assets in case of any lawsuits — a separate business account ensures liability protection for your private funds. 
  • It helps you build your company’s credit profile.
  • It allows direct customers’ payment to your business.

To open a business account, you need a(n) FEIN/EIN (sole proprietors can use their Social Security Number).

Take time to shop around for the bank offer that suits your business needs. Check the benefits your business gets and consider factors such as interest rates, transaction fees, minimum account balance fees, etc. 

Step #13: Get insurance for your Delaware business

You are probably familiar with the famous saying “Better safe than sorry”. Therefore, one of the top priorities for employers should be to purchase insurance for their business assets.

The Delaware Department of Insurance has issued a Small Employer Guide where they list types of business insurance:

  • Commercial liability insurance — provides coverage for bodily injuries, property damage, personal and advertising injuries.,
  • Business automobile policy — provides coverage for vehicles that are damaged or stolen and cases when a business vehicle takes part in an accident caused by a driver of that vehicle,
  • Property insurance — provides coverage in case of any loss or damage to business property including the building, inventory, machinery, etc., and
  • Workers’ compensation insurance — provides coverage in case of injuries at work or work-related illnesses; income benefits and medical expenses are included in the policy.

Delaware employers are given the opportunity to get discounts on workers’ compensation premiums by enabling safety at work. This program is known as the Workplace Safety Program. 

According to the Small Business Guide, employers who pay at least $3,161 annually for workers’ compensation insurance and have their business running for at least 3 years are eligible for the program. 

These types of insurance are not the only ones that exist. The Guide offers links to other state institutions and insurance providers where you can find more information. 

In addition, you can always turn to the SBA website where you can find useful advice on how to get business insurance.

Step #14: Hire the employees you need  

The Delaware Department of Labor offers many employer services and programs to help businesses find skilled workers by providing training on posting suitable job openings and doing candidate screening.

By creating an employer account on Delaware JobLink, employers can:

  • Post job ads,
  • Look for resumes of potential employees,
  • Receive emails notifying you of new jobseeker resumes, and
  • Get help in listing your job openings.

The Division of Employment and Training can help employers take part in or host a job fair. The Division helps with finding a venue, marketing, and networking.

There are dozens of employer programs that can help find workers such as:

  • APEX — provides opportunities to people with a criminal background by guiding them through the pardon or expungement process,
  • On-the-Job Training (OJT) Program — includes specialized training that employers provide to employees with the aim of upgrading employees’ job skills,
  • Forward Delaware — focuses on job seekers looking for training and employers connecting with qualified workers,
  • Apprenticeship and Training — combines on-the-job training with classroom/lab instruction. The program is known as “earn while you learn” and Registered Sponsors must employ apprentices.

Step #15: Build a strong internet presence

Nowadays, whatever information we need, we simply google it. 

Businesses worldwide have recognized the importance of internet presence, and the following lines will show you how you can advertise your company online.

Substep #1: Create a Google business account

The first means to reach a wider audience is creating a Google business profile

You can easily share your business information such as your phone, address, and working hours.

Also, you can add information about your products and services and allow customers to leave reviews.

If you like, you can leave business-related photos and even add your business to Maps, so people can easily find you.

Substep #2: Create a business website

This might not come at the starting point of your business, but you should definitely consider creating a website when you are sure you’ll have the means to maintain it. No one likes to see websites that are not updated. 

A compelling website presents your company brand and gives you some advantage over competitors. You can share information about:

  • The company,
  • Employees, 
  • Products/services, 
  • Prices, 
  • Promotions,
  • Discounts, etc.

Also, you are free to design your website the way you like using website builders such as GoDaddy, WordPress, or Zyro. 

The other option is to contact a marketing agency to help you with the design.

Step #3: Create social media profiles

Are you considering using social media for promotion? Why not! According to Top Social Media Statistics and Trends of 2023 published by Forbes, 77% of small businesses use social media to connect with their customers, and 90% of social media users follow at least 1 brand on some of the platforms.

This type of business promotion has experienced a massive increase, so it’s up to you to choose a social platform and advertise your products/services.

Make sure you choose a platform or platforms mostly used by your target audience. Maintain online activity, post regularly, and communicate with your followers. This is a modern way of building your business reputation.

💡 Plaky Pro Tip

To find inspiration for writing catchy posts on social media, check out our social media content calendar to find ideas and advice on how to build your social media presence:

Step #16: Choose the right business software

Projects, papers, and meetings on the one hand and tasks, documentation, and due dates on the other — so many issues to think about when you manage a business. This is why businesses often use some kind of project management software.

Project management software allows users to organize tasks, teams, and project data, i.e. it enables project collaboration and keeps everyone in sync. 

While keeping track of projects, these platforms also provide a real-time record of all project activities through the activity log. 

Another useful feature of this type of software are project management templates that can be customized to suit different business areas such as marketing, HR, software development, etc.

If you are looking for a cost-effective solution that covers the above-mentioned features and many more, try out Plaky

Plaky project management software
Managing projects in Plaky project management software

💡 Plaky Pro Tip

To see how Plaky compares to popular tools for project management, check out the links below to get a side-by-side feature list:

FAQ about starting a business in Delaware 

In this section, we will cover some of the most frequently asked questions about starting a business in Delaware. 

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

The price of starting a business includes name reservation, which costs $75 plus $25 in case you want to have a fictitious name. Also, the filing fee to register a trademark is $25. 

Depending on your business entity, registration prices differ as well as business taxes companies pay. 

For instance, if you form a general partnership, you need $200 for registration and $300 to pay annual tax. In addition, there is a fee for business licenses and professional licenses. The annual fee for a business license for most professions is $75, whereas fees for professional licenses vary in price.

If you need to rent a space for your business, buy equipment and machinery, plus employ workers, the overall price gets higher.  

What is required to start a business in Delaware?

Name reservation is the first step on the list. 

All business entities are required to get a state business license. A great number of businesses apply for a professional license, and some also need to get a federal business license. 

Another obligation is to pay business taxes. 

Businesses should get an EIN, buy insurance, and open business accounts. If businesses are not home-based, finding the right location is also on the list.

Can anyone start a business in Delaware?

Yes, you don’t have to live in Delaware to be able to do business there. It is important to appoint a registered agent with a physical address in the state to represent you. 

How much does a business license in Delaware cost?

The price depends on the business you conduct. Most businesses pay $75 per year. You can check the prices at the Detailed List of Division of Revenue Licenses and Tax rates

Is Delaware tax-free for business?

It is true that Delaware doesn’t impose state or local sales tax. 

However, Delaware does have other business taxes levied on businesses such as: 

  • Franchise Tax, 
  • Corporate Income Tax, and 
  • Gross Receipts Tax. 

Delaware business resources for further reading

This guide wouldn’t be complete without additional resources you can refer to for further research. Whatever your business requirements are, you can find reliable information on the following websites:

  • Business First Steps — provides useful links that can be of help when you write your business plan. Not only does it include links toward Delaware state institutions and Chambers of Commerce, but it also provides links toward business incubators across Delaware.
  • Delaware Corporate Law Facts and Myths — a page dedicated to dispelling certain myths of Delaware corporate law.
  • Delaware Division of Revenue — offers information on taxation including what you need to pay and file and forms you need to submit for taxation purposes.
  • Delaware Division of Corporations — another useful state website providing information on how to form a business entity, registered agents, and Delaware corporate laws. You can also find corporate forms and fees here.
  • Delaware Prosperity Partnership — a website of a non-profit state economic development agency offering information on potential business sites, funding opportunities such as incentives and tax credits as well as the cost of living in Delaware.
  • Delaware Department of Labor — provides information on labor law, services for workers and employers, and industrial affairs. 
  • U.S. Small Business Administration (SBA) — offers a collection of valuable and informative business guides and provides a learning platform for small businesses. It also includes information on funding programs and local assistance.
  • Internal Revenue Service (IRS) — one of the US government websites where you can find forms and instructions on filing federal taxes.

Starting a business in Delaware — Conclusion\Disclaimer

We hope this guide helped you understand the steps you need to take to start a business in Delaware.

Bear in mind that this guide is not an official document and we are not authorized to provide legal advice whatsoever. 

We strongly recommend hiring a registered agent to help you with all the details related to your specific business needs. Also, make sure you turn to official Delaware government websites for any forms, due dates, and fees you need.

Please note that this guide was written in Q3 2023 and might not include potential amendments to the laws and regulations of the State of Delaware adopted after this period.

Plaky is not responsible for any losses or risks incurred, should this guide be used without further guidance from legal, tax, or other advisors.

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