How to Start a Corporation in Delaware

How to Start a Corporation in Delaware

How to Start a Corporation in Delaware

Delaware has long been the incorporation destination for businesses across the United States. The state draws thousands of new corporate filings each year because of its business-friendly laws, established court system, and tax advantages. If you are considering incorporating your business in Delaware, the process is straightforward, but understanding each step matters.

This guide walks you through the exact steps to incorporate in Delaware, from choosing a name to filing your Certificate of Incorporation and paying your first annual tax. The entire process can be completed in one to three business days, and you can handle most of it online through Delaware's official filing portal.

Why Delaware for Incorporation

Delaware incorporations are popular for good reasons. The state has a specialized Chancery Court that handles business disputes, predictable corporate law built on over a century of precedent, and no sales tax on products sold across state lines. The state also offers privacy features for your business structure that are attractive to entrepreneurs and investors.

However, incorporation in Delaware does not exempt you from federal taxes or from taxes in other states where you operate. Most states tax corporations on income earned within their borders regardless of where the company is incorporated. Consult a tax professional or CPA before filing if you operate in multiple states.

What You'll Need Before Filing

Before you file your Certificate of Incorporation, gather the following information and materials:

  • A corporate name. Your company name must be available in Delaware's records and must contain the word "Corporation," "Incorporated," "Company," or an abbreviation such as "Corp.," "Inc.," "Co." It cannot be the same as or confusingly similar to any existing Delaware corporation.
  • A registered agent. Every Delaware corporation must have a registered agent with a physical street address in Delaware. The registered agent receives legal and tax documents on behalf of your business. The agent can be an individual resident in Delaware or a business entity authorized to serve as a registered agent. If your business has a physical office in Delaware, you may serve as your own registered agent.
  • Information about your incorporators. Delaware requires at least one incorporator to sign the Certificate of Incorporation. An incorporator is the person filing the document on behalf of the corporation. The incorporator does not need to be a shareholder or director.
  • Details about your stock structure. You need to decide how many shares of stock your corporation will issue and what classes of stock you will authorize. Most small corporations authorize 1,000 shares of common stock.
  • Your business address. You will need a Delaware address for your registered agent, and a principal business address for your corporation (this can be outside Delaware).
  • Initial filing fee or expedited processing fee. Standard processing costs $109 for the filing fee alone. If you need faster service, expedited options are available for $50 to $1,000 depending on how quickly you need your certificate.

Step-by-Step Process to Incorporate in Delaware

Step 1: Verify Your Corporate Name Is Available

Before you reserve or file your name, confirm that it is available. You can search Delaware's corporate registry online at the Delaware Division of Corporations name search tool. Enter your proposed corporate name and verify that no other Delaware corporation or registered name is using it.

This search is free and takes seconds. If your preferred name is taken, you will need to choose a different one.

Step 2: Reserve Your Corporate Name (Optional)

If you want to lock in your name while you complete other preparations, you can reserve it for 120 days. The name reservation fee is $75. To reserve your name, file a Name Reservation Application through Delaware's eCorp portal at https://icis.corp.delaware.gov/ecorp2.

A name reservation is optional. You can skip this step if you are ready to file your Certificate of Incorporation immediately, because your name is protected once the certificate is filed and accepted.

Step 3: Choose and Arrange Your Registered Agent

Your registered agent must have a physical street address in Delaware and must be available during business hours to receive service of legal papers. If you do not have a Delaware office, you have two options:

  • Hire a professional registered agent service. Many companies offer this for $75 to $300 per year.
  • If you have a friend or family member in Delaware, they can serve as your agent.

Your registered agent will provide you with their Delaware street address to include on your Certificate of Incorporation. They do not need to be listed in any public filing, but you must keep their information current in your records.

Step 4: Prepare Your Certificate of Incorporation

The Certificate of Incorporation is a formal document filed under Delaware law (8 Del. C. Section 102). It establishes your corporation and sets out its basic structure. You can prepare this document yourself, use a template, or have an attorney draft it.

Your Certificate must include at minimum:

  • The corporation's name
  • The address of the Delaware registered office and the name of the registered agent
  • The names and addresses of the incorporators
  • The number of shares authorized to be issued
  • Any specific provisions about the corporation's structure, including classes of stock or voting rights

Many corporations file a basic certificate with just these elements and handle the details of stock classes, board structure, and bylaws in separate documents after incorporation.

Step 5: File Your Certificate of Incorporation Online

Delaware's Division of Corporations operates the eCorp Document Upload Service for online filings. To file:

  1. Visit https://icis.corp.delaware.gov/ecorp2 and create an account or log in.
  2. Select "File a New Document" and choose "Certificate of Incorporation."
  3. Upload your prepared Certificate document (PDF format is accepted).
  4. Pay the filing fee of $109 using a credit card.
  5. Submit your filing.

Delaware does not publish standard processing times for routine filings. The Division states that processing times vary with the volume received. In practice, most filings are processed within one to three business days at standard rates. If you need faster processing, Delaware offers several expedited tiers:

  • Priority 1 (one hour): $1,000 per document
  • Priority 2 (two hours): $500 per document
  • Same day: $100 for a new formation
  • 24 hour or next business day: $50 for a new formation

For most startups, the standard rate and two to three day turnaround is sufficient.

Step 6: Understand Your Annual Franchise Tax

Delaware imposes an annual franchise tax on corporations. The tax rate depends on your corporation's authorized stock and net worth, but most small corporations pay between the minimum and several hundred dollars per year depending on your capital structure. Confirm your specific franchise tax obligation with Delaware's Division of Revenue.

Your franchise tax is not due in the year of incorporation. It is due on the date that your Certificate becomes effective and then annually on that anniversary date. You will receive a notice when the tax becomes due. The annual franchise tax report must be filed on or before March 1 each year (fee: $50).

Step 7: Obtain Your Delaware Business License

After your corporation is formally established, you must also obtain a Delaware business license. Any person or entity conducting a trade or business in Delaware is required to have a license. The statutory annual fee is $75 for most business categories. You apply through Delaware One Stop.

Delaware does not impose a sales tax, but in place of sales tax, licensees owe a gross receipts tax of approximately 0.0945% to 1.9914% depending on your industry. Monthly or quarterly returns are filed with the Division of Revenue.

Tips and Common Mistakes to Avoid

Mistake 1: Forgetting Your Annual Filing Obligations

Delaware corporations must file an Annual Franchise Tax Report on or before March 1 each year. The fee is $50. Failing to file or pay on time results in penalties and potential dissolution of your corporation. Set a calendar reminder for early February, or have your accountant handle the annual filing.

Mistake 2: Neglecting Your Registered Agent Requirement

Your corporation must continuously maintain a registered agent with a physical address in Delaware. If your agent moves or leaves the role, you have 30 days to appoint a replacement and file a change of agent form (fee: $50). If you fail to maintain an agent, Delaware can administratively dissolve your corporation.

Mistake 3: Choosing the Wrong Corporate Name

Remember that your corporate name must include one of the required designations (Corporation, Inc., Corp., Company, Co., etc.). Names that sound similar to existing corporations or registered names may be rejected. Always run a search first and confirm availability before you invest time in branding or filing.

Tip: Keep Corporate Bylaws and Records Organized

Delaware requires corporations to keep bylaws, records of shareholder and director actions, and financial records. You do not file these with the Division of Corporations, but you must maintain them for inspection. Having organized records from the start helps if you ever face a legal dispute or sale.

Tip: Understand Your Tax Obligations in Other States

Delaware incorporation does not excuse you from paying taxes in other states. If you operate your business in New York, California, or any other state, those states may tax your corporation on income earned there. A qualified CPA or business tax attorney can help you understand your full tax picture across all states.

Timeline and Expected Results

The entire Delaware incorporation process typically unfolds as follows:

  • Day 1: Verify name availability (takes minutes). Arrange registered agent if needed (can take a day or two).
  • Days 2-3: Prepare and file your Certificate of Incorporation online. Pay the $109 filing fee.
  • Days 3-5: Delaware processes your filing and issues a Certificate of Incorporation (your proof of incorporation).
  • Day 5: Obtain your Delaware business license.
  • Year 1 (by March 1 following year): File your Annual Franchise Tax Report and pay the $50 fee.

Once your Certificate is accepted, your corporation is officially formed. You can open a business bank account, sign contracts, hire employees, and conduct business under your corporate name. Your corporation exists as a separate legal entity from its owners, which provides liability protection and tax advantages.

When to Consult a Professional

This guide covers the basic incorporation process. However, certain situations warrant professional advice:

  • Complex ownership structures. If you have multiple shareholders or complex ownership arrangements, an attorney can help you structure your stock classes and voting rights correctly.
  • Multi-state operations. If you operate in multiple states, a business tax attorney or CPA can help you understand your tax obligations and ensure proper registration in each state.
  • Liability or employment concerns. If your industry carries particular liability risks, an attorney can review your corporation's structure and insurance needs.
  • Financing or investor involvement. If you plan to raise capital or bring in investors, legal guidance on preferred stock, investment agreements, and shareholder protections is advisable.

Delaware incorporation is achievable on your own, but professional guidance often pays for itself in tax savings and legal protection.

Resources and Next Steps

To begin your Delaware incorporation:

Disclaimer

This article is informational and is not a substitute for legal or tax advice. The information presented reflects Delaware law as of the publication date, but laws change. Before incorporating your business, consult with a qualified attorney licensed in Delaware and a certified public accountant (CPA) familiar with Delaware corporate law and your business situation. Every business structure carries different legal and tax implications. A professional can help you understand the specific implications for your company.