Delaware Beach Towns Business Rules: Rehoboth, Lewes, Dewey, Bethany and Ocean View License Fees and Rental Taxes
Delaware Beach Towns Business Rules: Rehoboth, Lewes, Dewey, Bethany and Ocean View License Fees and Rental Taxes
If you're starting a vacation rental, restaurant, retail shop, or service business in a Delaware beach town, you're juggling more than one licensing layer. Delaware's three-level system, state business license, potential entity formation, and municipal licenses, can feel confusing, especially when each beach town sets its own rules and fees.
This guide walks you through exactly what you need to get licensed in Rehoboth Beach, Lewes, Dewey Beach, Bethany Beach, and Ocean View. We cover state requirements, local fees, rental taxes, and the steps to avoid common mistakes.
The Three-Layer Licensing System in Delaware
Before you file anything locally, understand Delaware's structure. Every business operating in Delaware needs these components:
- State business license from the Delaware Division of Revenue (required for all)
- Business entity formation (LLC or corporation) if you want liability protection and tax benefits (optional for sole proprietors, necessary for entities)
- Municipal licenses and rental tax registration in your beach town (required if you operate in that town)
Beach towns layer their own license fees and rental taxes on top of state requirements. The state issues no sales tax permit because Delaware has no sales tax. Instead, you file and pay gross receipts tax by business category.
State-Level Business License Requirements
Start here. Every business in Delaware must obtain a state business license from the Delaware Division of Revenue through the Delaware One Stop portal. This step is non-negotiable, whether you operate a restaurant, rental property, retail shop, or service business.
State business license fee: $75 per year for most categories (general services, professional and occupational, contractors, manufacturers, wholesalers); $90 per year for general retailers, which includes a $15 retail crime fee. Additional locations cost $25 each.
Processing: Apply through Delaware One Stop at https://onestop.delaware.gov. Licenses run one year and expire December 31. If you're starting mid-year, fees are prorated by full calendar months. Operating without a license carries a fine of up to $3,000 or up to two years in prison.
Gross receipts tax: In place of sales tax, Delaware licensees pay gross receipts tax on revenue by category. The rate depends on your business type:
- Services and wholesale: 0.3983%
- Retailers: 0.7468%
- Restaurants and contractors: 0.6472%
- Food processors: 0.1991%
- Manufacturers: 0.126%
New businesses file quarterly; larger established businesses file monthly. There is a monthly exclusion of $100,000 per business ($300,000 if filing quarterly), meaning you pay tax only on revenue above that threshold.
Materials You Will Need
Before you apply for state and local licenses, gather these documents and information:
- Delaware state business license application (completed through Delaware One Stop)
- Personal identification (driver's license or passport)
- Social Security number or Employer Identification Number (EIN)
- Business address (street address, not a mailbox) in the beach town where you operate
- Business description and estimated annual gross revenue
- For rental properties: property address, number of units or bedrooms, anticipated rental income
- For restaurants and bars: seating capacity and planned hours of operation
- For contractors: proof of workers compensation insurance and Department of Labor notice
- Trade name registration (DBA) if you operate under a name different from your legal name (optional, $25 one-time through Delaware One Stop)
- Proof of entity formation (Certificate of Incorporation or Certificate of Formation) if forming an LLC or corporation
- Municipal license application(s) for your specific beach town
Step-by-Step Guide to Getting Licensed
Step 1: Form a Business Entity (Optional but Recommended)
If you want liability protection and tax flexibility, form an LLC or corporation with the Delaware Division of Corporations. An LLC costs $110 to form and owes a flat $400 annual tax due each June 1 (check https://corp.delaware.gov for the current amount and date, as this may change). The Division of Corporations does not publish a standard turnaround, so timing varies with volume and whether you pay for an expedited tier.
If you operate as a sole proprietor with no entity, you skip this step and proceed to the state business license.
Step 2: Apply for State Business License
Go to https://onestop.delaware.gov and complete your state business license application. You will need your legal name, Social Security number or EIN, physical street address where you operate, business category, and estimated annual gross revenue.
Select your license category carefully because it determines your gross receipts tax rate. Choose the category that matches your main activity; restaurants and caterers, for example, are in the restaurant category. Submit and pay the fee (typically $75, or $90 for retailers). Licenses expire December 31 of that year.
Step 3: Register Your Trade Name (If Using One)
If you operate under a name different from your legal name, register a trade name (DBA) through Delaware One Stop for a one-time $25 fee. This registration is statewide and never expires. It requires that you have an active state business license.
Step 4: Apply for Municipal License in Your Beach Town
This is where fees and rules diverge by town. Each beach town has its own license application process, fee schedule, and renewal date. Contact your beach town's business licensing office or visit its website to submit the municipal application. You will typically need:
- Proof of state business license and your state license number
- Property address
- For rentals: number of units, bedrooms, or sleeping capacity
- For restaurants: seating capacity and hours
- Copy of your lease or property deed
- Proof of insurance if required by your town
Step 5: Register for Rental Tax if Applicable
If you operate a vacation rental, short-term rental, hotel, or motel in a beach town, register for rental tax filing and obtain any required rental license separate from your business license. Each town collects rental tax at a different rate on your gross rental income. You will file and pay rental tax semi-annually or twice per year, depending on the town. Confirm filing frequency and due dates with your town hall.
Beach Town License Fees and Rental Tax Rates (2026)
| Town | Business License Fee | License Year | Rental License Fee | Rental Tax Rate |
|---|---|---|---|---|
| Bethany Beach | $250 | June 1 to May 31 | $100 | 7% |
| Ocean View | $200 | Calendar year | $150 | 6% |
| Dewey Beach (Restaurants) | $359 + $10 per Fire Marshal seat (2025-26 license year; check with the town for 2026-27) | May to April | N/A | N/A |
| Dewey Beach (Rentals) | N/A | N/A | Reported $250 + $20 per bedroom over 2 (check with the town) | 3% |
| Lewes (Rentals) | N/A | N/A | $200 per unit per year | Check with city |
| Rehoboth Beach | Check with city | Check with city | Check with city | 7% (for agreements on or after April 1, 2024) |
Important note: Fees and rates shown are as of October 2026, except where marked as reported or tied to a past license year, but beach towns update their fee schedules regularly. Rehoboth Beach is weighing business license increases for January 2027. Contact your town's business licensing office directly to confirm current rates before you submit an application.
Additional Overlay Taxes: State Hotel and Short-Term Rental Taxes
On top of town rental taxes, Delaware imposes statewide overlay taxes on lodging:
- State hotel tax: 8% on rent for hotels, motels and tourist homes
- State short-term rental tax: 4.5% on short-term rentals of a dwelling for 31 nights or fewer, generally collected by the booking platform or accommodations intermediary
The state lodging taxes stack on top of beach town rental taxes. For example, a short-term rental of a home in Rehoboth Beach with a 7% town tax also owes the 4.5% state STR tax; the 8% hotel tax applies to hotels, motels and tourist homes instead, not on top of the STR tax. You file the state taxes at the state level, not with your beach town. Check the Delaware Division of Revenue website for filing instructions and deadlines.
If your rental property is in an unincorporated area outside a beach town, you owe no town rental tax, and Sussex County's 3% lodging tax covers unincorporated areas only. Check with Sussex County whether it applies to your rental, in addition to the state taxes.
Tips and Common Mistakes to Avoid
- Don't skip the state license. Operating without a Delaware business license is illegal and carries steep penalties. It is not optional even if you have a municipal license.
- Confirm your license year. License years differ by town: Ocean View runs on the calendar year (January to December), Bethany Beach runs June 1 to May 31, and the Dewey Beach restaurant license year is May to April. Missing a renewal deadline means operating without a valid license.
- Separate business license from rental license. Many beach towns require both a general business license and a separate rental or short-term rental license. Apply for both to avoid penalties.
- Budget for stacked taxes on rentals. A 7% town rental tax plus the 4.5% state STR tax comes to 11.5% of rental income for a short-term rental of a home (a hotel or motel owes the 8% state hotel tax instead of the 4.5%). Build this into your pricing and cash flow projections.
- Prorate fees if starting mid-year. State licenses are prorated by month if you start mid-year. Confirm whether your beach town does the same.
- Get contractor insurance if required. Ocean View requires anyone performing work in town to have a license. If you're a contractor or tradesperson, confirm insurance and licensing requirements before you start.
- File rental tax on time. Beach towns assess penalties for late rental tax payments. Set calendar reminders for semi-annual or quarterly filing deadlines.
Expected Timeline and Results
How long does licensing take?
- State business license: apply through Delaware One Stop; confirm current processing time with the Division of Revenue.
- Municipal license: processing times vary by town, so confirm with your town.
- Rental license: confirm processing time with your town.
- LLC formation: the Division of Corporations publishes no standard turnaround; expedited tiers run from $50 to $1,000.
What does a completed license look like?
You will receive a state business license (digital or physical, depending on your town) that you must display at your business or provide upon inspection. You will also receive a municipal license and a separate rental license from your beach town if you operate rentals. Keep all licenses accessible and available for inspection by business licensing inspectors. Penalties for operating without valid licenses include fines and potential closure.
When to Consult a Professional
This guide covers standard scenarios. Consult a Delaware CPA or attorney if you:
- Own rental properties across multiple Delaware towns (different rules apply in each)
- Operate a restaurant or bar with alcohol service (additional licensing required)
- Plan to hire employees (payroll tax, workers compensation, and unemployment insurance add complexity)
- Are unsure whether you qualify for any tax exemption or reduction
- Need help navigating quarterly gross receipts tax filing or rental tax obligations
- Are establishing a business entity for the first time
Important Disclaimer
This content is informational and based on Delaware law and municipal fee schedules as of October 28, 2026. It is not legal or tax advice. Beach town fees change regularly, and municipal ordinances vary. Before you submit any application or make licensing decisions, verify all requirements and fees directly with:
- Delaware Division of Revenue: https://revenue.delaware.gov/
- Delaware One Stop: https://onestop.delaware.gov
- Your beach town's business licensing office
- A qualified Delaware CPA or attorney
Rehoboth Beach is reviewing business license increases for January 2027, so confirm current fees before you apply. Lewes rental tax rates should be confirmed with the city. These beach towns are independent jurisdictions with their own rules, and changes happen frequently.