Bethany Beach Business License: $250 a Year, $100 Rental License and the 7% Rental Tax on Top of the State 4.5%

If you're planning to operate a business in Bethany Beach, Delaware, especially a rental property, you need to understand the town's licensing and tax structure. The costs stack up fast: $250 for a business license, $100 for a rental license (if applicable), plus two separate layers of rental taxes that operate independently. This guide walks you through exactly what you need to register, pay, and file to stay compliant with Bethany Beach and Delaware law.

Materials and Prerequisites You'll Need

Before you file anything, gather these items:

• For all business license applications: Your business name (or DBA if using a trade name), a clear description of your business activity, and your contact information. If you've formed an LLC or corporation, have your Delaware entity documentation on hand.
• For a rental license: The address or addresses of the property or properties you're renting, the number of units at each address, and whether each unit is residential or commercial.
• For residential rental applications: The town's Safety Certification form, completed and signed by the owner or rental agent, certifying that the rental has the town's minimal safety items in place.
• Tax tracking system: You must track gross rental receipts (all rent collected before any deductions) to calculate both the 7% town tax and the 4.5% state tax. Keep invoices, payment records, and receipts month by month.
• Payment method: The town accepts online credit card payments for license renewals and rental tax, and its paper applications ask for a check payable to the Town of Bethany Beach. Have your payment method ready for license fees and semi-annual tax payments.
• Delaware state business license: Every business operating in Delaware, including rental operations, must obtain a state business license from the Delaware Division of Revenue. This is separate from your town license.

Step-by-Step: Getting a Bethany Beach Business License

Step 1: Determine Your License Type

Bethany Beach offers three business license categories. Select the one that matches your situation:

• In Town: Your business location is physically within Bethany Beach town limits.
• Out of Town: You are a contractor or service provider working in Bethany Beach but based outside town. This includes construction, repairs, landscaping, and skilled trades.
• Home Occupation: You run a small business from your home that is incidental and secondary to the residential use, with no retail storefront. The town also has a separate Home Occupation certificate application under its zoning code.

The $250 annual license fee applies to all three types. Note: the Bethany Beach license year runs June 1 to May 31, not January 1 to December 31. This is critical for renewals and payment deadlines.

Step 2: Complete the Safety Certification (Residential Rentals Only)

If you are renting residential units, the town requires its Safety Certification form. The property owner or rental agent signs it, under penalty of perjury, certifying that the rental has battery-operated smoke detectors (one on each level and one in each bedroom), exterior deadbolt doors that open from the inside without a key, GFCI protection on outdoor, bathroom, garage, kitchen and crawl space receptacles, house numbers at least four inches high and visible from the street, and secure locks on windows within 12 feet of the ground and on second-story windows reachable by fire escapes or stairs. No residential rental license is issued without the completed certification, and a license can be revoked if the certification proves false.

Step 3: Complete and File Your Business License Application

Visit the Town of Bethany Beach official website at townofbethanybeach.com and locate the business license application under the Licenses section (or Licenses and Permits). Download the form for your license type (In Town, Out of Town, or Home Occupation). Complete the form with the following information:

• Your business name and legal structure (sole proprietorship, LLC, corporation, partnership).
• A clear description of your business activity (e.g., "Short-term residential rental of furnished vacation units" or "General contracting and home repair services").
• Your business address within Bethany Beach (or, for out-of-town contractors, the address where you will primarily work or maintain an office in town).
• Your contact name, phone number, and email address.
• For rental businesses, list each property address and the number of units at that address.

Submit the application with the $250 annual license fee (existing license holders in good standing can renew and pay online by credit card). Confirm current processing times with the town.

Step 4: Choose a Multi-Year License to Reduce Renewal Burden

When you apply or renew, you can purchase a 1-year, 2-year, or 3-year license. A 2-year license costs $500 upfront ($250 per year) and a 3-year license costs $750 ($250 per year). If you are a current license holder in good standing, you can renew online and pay by card without completing a full new application. Do not wait until the June 1 start of the new license year to renew.

Step-by-Step: Getting a Bethany Beach Rental License

Step 1: Understand What Requires a Rental License

Under Chapter 102 of the Bethany Beach Town Code, any residential or commercial unit that is rented requires a separate Rental License. This applies whether you rent the unit for one week, one month, or year-round. You need a separate $100 rental license for each distinct unit you rent. A multi-unit building requires one rental license per unit.

Step 2: Prepare Your Property and Complete the Safety Certification (Residential Units)

If the unit is residential, complete and sign the town's Safety Certification form (smoke detectors, exterior doors, GFCI protection, house numbers and window locks, as listed above). Commercial rentals do not need the residential certification but must still meet all applicable building, fire, and zoning codes.

Step 3: Complete and File Your Rental License Application

Download the Rental License application from townofbethanybeach.com. Complete the form with:

• The property street address and unit number (if applicable).
• Designation of the unit as residential or commercial.
• Type of rental property (for example cottage or home, townhouse or condominium, apartment building or motel) and the periods you plan to rent (May to September, October to April).
• Whether a Realtor handles your rentals or you handle them yourself at least part of the time (including sites like Airbnb or VRBO).
• For residential rentals, the completed safety certification form from the town.

Pay the $100 annual rental license fee with your application (the form asks for a check payable to the Town of Bethany Beach; the town's site offers online card payment for renewals). Like the business license, the rental license year runs June 1 to May 31. Applications, fees and the safety certification are due by June 1, and the form lists an additional $100 administrative fee if the license is not renewed by June 1.

Step 4: Set Up Semi-Annual Tax Reporting

Once your rental license is active, you must pay the 7% town real estate rental tax twice per year. The town's rental license page says the tax is due on November 1 and June 1 every year, so confirm your reporting periods with Town Hall:

• First payment: due November 1.
• Second payment: due June 1.

Calculate 7% of all gross rental receipts (total rent collected, before deductions or expenses) for each six-month period. Rental tax may be paid with a credit card online. Check the town's FY 2027 Schedule of Fees on its website for any late or administrative charges, and confirm the consequences of late payment with Town Hall.

Understanding the State 4.5% Short-Term Rental Tax

Bethany Beach's 7% rental tax is local to the town. In addition, Delaware imposes a 4.5% short-term rental tax statewide under Delaware Code Title 30, Chapter 62. These two taxes are separate and independent. The state 4.5% tax does not replace the town 7% tax. Both must be paid.

If you rent through an intermediary platform such as Airbnb, VRBO, Booking.com, or another vacation rental site, the platform typically collects and remits the 4.5% state tax to Delaware on your behalf. However, you are still responsible for paying the 7% town tax directly to Bethany Beach. If you handle bookings directly without an intermediary, you must collect and remit the 4.5% state tax yourself, which requires the $25 accommodations intermediary business license from the Delaware Division of Revenue, in addition to the 7% to the town.

Do not assume a platform has handled the state tax. Verify with the platform what taxes, if any, it collects on your behalf. Check your account statements and tax documentation quarterly. In summary:

• 7% to Bethany Beach: On all residential and commercial rental receipts, payable semi-annually (due November 1 and June 1 per the town's rental license page).
• 4.5% to Delaware: On short-term rentals (usually collected by the platform, or filed by you monthly with the Division of Revenue).

Tips and Common Mistakes to Avoid

• Don't confuse the license year with the calendar year. Bethany Beach licenses expire June 1 and must be renewed by that date. Mark your calendar now.
• Don't skip the residential safety certification. The town will not issue a residential rental license without the completed, signed certification form. Check each listed safety item before you sign.
• Don't treat the 7% town tax and the 4.5% state tax as overlapping. Both apply. If your platform collects the state tax, you still owe the full 7% town tax. These are not alternative or combined rates; they are separate obligations.
• Don't file taxes late. The town's tax deadlines are firm. The town lists the rental tax as due November 1 and June 1. Late payments can carry charges listed in the town's Schedule of Fees. Set phone reminders 30 days before each due date.
• Don't forget your Delaware state business license. Every business operating in Delaware must have a state license from the Delaware Division of Revenue. This is separate from your town license and is required even if you have no physical office in Delaware (e.g., an out-of-state owner renting a Delaware property). Apply at Delaware One Stop (onestop.delaware.gov).
• Don't mix gross and net income for tax calculations. Both the 7% town tax and 4.5% state tax are calculated on gross rental receipts (total rent before expenses). Do not deduct mortgage or repairs. Check with the Division of Revenue on what the state tax base excludes, such as separately stated cleaning fees. Deductions are a separate issue for your federal income tax return.
• Don't wait to renew until the last day. If you renew after June 1, the rental license form lists an additional $100 administrative fee. Multi-year business licenses reduce the risk of missing a renewal deadline.
• Don't ignore changes to the town fee schedule. Bethany Beach publishes an annual Schedule of Fees each fiscal year. Late fees, inspection costs, and other charges may change. Check the town website before each renewal.

Expected Costs and Timeline

Annual Licensing and Tax Costs:

• Business License: $250/year (or $500 for 2 years, $750 for 3 years).
• Rental License per unit: $100/year.
• Safety certification (residential rentals): a signed form from the owner or rental agent; check the town's Schedule of Fees for any charge.
• Town rental tax (7%): Payable semi-annually (November 1 and June 1 per the town); amount depends on gross receipts.
• State short-term rental tax (4.5%): Collected by platform or filed separately; amount depends on gross receipts and does not replace the town tax.

Timeline from Application to Full Approval:

• Safety certification (residential rentals): complete and sign the town's form before you apply.
• Business and rental license application processing: confirm current timing with the town.
• First rental tax payment: the town lists November 1 and June 1 as the due dates; confirm with Town Hall which applies to your first period.

Bethany Beach is a small town of about 1,104 residents. If you have questions about any requirement, contact Town Hall by phone or email, or visit in person. The town website is townofbethanybeach.com.

Important Disclaimer

This article is informational only and does not constitute legal, tax, or business advice. Delaware municipal law and short-term rental taxation are complex, and your specific situation may have additional requirements or exemptions. Before opening a rental business or purchasing rental property in Bethany Beach, consult a Delaware-licensed attorney and a certified public accountant (CPA) or tax professional with experience in Delaware short-term rental taxation and Bethany Beach municipal regulations. The Town of Bethany Beach updates its Schedule of Fees annually, and state laws may change. Always verify current licensing requirements, fees, and deadlines directly on the town website at townofbethanybeach.com or by contacting Town Hall. The Delaware Division of Revenue provides additional state-level guidance at revenue.delaware.gov.