Wilmington Delaware Business License: City License, Wage Tax and What to Check With the Department of Finance

Starting a business in Wilmington means navigating two licensing layers: Delaware's state business license and Wilmington's city business license. Both are mandatory, they overlap in some ways, and they come with different fees, tax obligations, and renewal requirements. This guide walks you through exactly what you need to do, what each one costs, and what you must verify directly with the Department of Finance.

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What You'll Need Before You Start

Before you apply for either license, have these materials ready:

Your federal Employer Identification Number (EIN) or Social Security Number
A legal business name that complies with Delaware naming rules (if forming an LLC or corporation)
Your chosen business location address in Wilmington
Proof of your business structure: a Certificate of Formation for an LLC, Certificate of Incorporation for a corporation, or proof of sole proprietorship
A copy of your Delaware state business license once you receive it (required for the city application)
Knowledge of your business activity category (retail, services, restaurant, contractor, wholesale, manufacturer, hotel, rental, etc.)
Number of full-time and part-time employees (for head tax calculations)
A list of any professional licenses or certifications required for your trade (electricians, plumbers, contractors, etc. have additional licensing through the Division of Professional Regulation)

Understanding Wilmington's Two-Layer License Structure

Wilmington is a home-rule city under 22 Del. C. ch. 8. This means it has the power to require its own business license separate from the state license. You cannot operate legally in Wilmington with only a state license or only a city license. You need both.

The state license is administered by the Delaware Division of Revenue through the online Delaware One Stop portal. The city license is administered by the City of Wilmington Department of Finance, Wage/Business License Division, located at 800 N. French St, Wilmington. You can call them at (302) 576-2415 for questions about city-specific requirements, fees, and deadlines.

Step 1: Decide Your Business Structure

First, determine whether you will operate as a sole proprietor, partner, LLC, or corporation. This decision affects both your filing requirements and your annual tax obligations.

If you are a sole proprietor or partnership operating under your own name, you can skip directly to Step 3. You still need a state business license and a city business license, but you do not need to file formation documents with the Delaware Division of Corporations.

If you want to form an LLC or corporation, you must file formation documents first. An LLC files a Certificate of Formation with the Division of Corporations for a $110 filing fee. A corporation files a Certificate of Incorporation for a $109 filing fee. You can file online through the eCorp Document Upload Service at https://icis.corp.delaware.gov/ecorp2. Processing times vary, but expedited options are available for an additional fee.

The Delaware Division of Corporations is separate from the Division of Revenue and handles entity formation only. Learn more at https://corp.delaware.gov/.

Step 2: Register Your Business Name (If Using a Trade Name or DBA)

If you will operate under a name different from your legal name or entity name, you must register that trade name (also called a DBA, or "doing business as") with the Delaware Division of Revenue. Registration is a one-time fee of $25 and does not expire or need renewal. You register through Delaware One Stop at https://onestop.delaware.gov. You can learn more about trade name registration at https://revenue.delaware.gov/trade-names-faqs/.

The reverse is true: the Division of Revenue requires an active Delaware business license to register a DBA, so complete Step 3 first and register the trade name afterward. Registering the trade name is not the same as obtaining the business license; they are separate filings.

Step 3: Apply for Your Delaware State Business License

The state business license is required for any person or entity conducting a trade or business in Delaware. You apply through Delaware One Stop at https://onestop.delaware.gov.

To apply, you will need to:

Log in or create a Delaware One Stop account.
Select your business activity category. This is crucial because it determines which gross receipts tax rate applies to you (see Step 5 for rate details).
Provide your name, address, and EIN or Social Security Number.
Pay the state license fee, which is $75 for most business categories and $90 for general retailers (which includes a $15 retail crime fee). The fee covers one year and expires December 31.
If you have multiple locations in Delaware, each additional location costs $25.

The Division of Revenue says you can print a temporary license at the end of online registration, and permanent licenses are generally sent within 10 working days. Print it and keep it accessible because you will need to show a copy to the City of Wilmington when you apply for your city license.

Operating without a state business license in Delaware carries a penalty of up to $3,000 or up to two years in prison (30 Del. C. 2119). The license is not optional.

Step 4: Apply for Your Wilmington City Business License

Once you have your state license in hand, apply for your Wilmington city business license. Visit or contact the Department of Finance, Wage/Business License Division, 800 N. French St, Wilmington, at (302) 576-2415, or check the city website for an online application portal if one is available.

When you apply, bring or provide:

A copy of your state business license
Your business name and address
Your activity type (the same category you selected for the state license)
Your EIN or Social Security Number

City license fees depend on your activity type. Fees are set by activity type under City Code chapters 4, 5 and 12. Council Ordinance 23-014 (the city application cites a fee increase effective January 1, 2024) lists these amounts as of 2024, which we could not confirm as the current schedule:

$200 for construction trades and nonprofessional services
$250 for retailers
$300 for restaurants, professional services, wholesale, and manufacturing
$3,000 for hotels

These are the amounts cited in Ordinance 23-014. However, the city council can adjust fees, and you must verify the current schedule directly with the Department of Finance before submitting your application. Call (302) 576-2415 or visit the city website to confirm what you owe.

If you operate multiple locations within Wilmington, ask the Department of Finance how the city licenses additional locations.

Step 5: Understand Your Ongoing Tax Obligations

Unlike most states, Delaware has no sales tax. Instead, businesses pay a gross receipts tax on their revenue. This is a state obligation, not a city tax, but it is mandatory and must be filed regularly.

The gross receipts tax rate depends on your business category:

Services and wholesale: 0.3983% of gross receipts
Retail: 0.7468% of gross receipts
Restaurants and contractors: 0.6472% of gross receipts
Food processors: 0.1991% of gross receipts
Manufacturers: 0.126% of gross receipts

New businesses file gross receipts tax quarterly. Established businesses may file monthly or quarterly depending on revenue. You must exclude the first $100,000 of monthly receipts (or $300,000 quarterly) from the tax calculation.

In addition to state gross receipts tax, Wilmington imposes its own local taxes on businesses and employees:

Head tax: $15 per month for each employee above five, as listed in City Code 5-102A (confirm the current rate and who counts with the Department of Finance). If you have six employees, you owe $15 a month ($180 per year). If you have eleven employees, you owe $90 a month ($1,080 per year). There is a job-commitment exemption program available. Contact the Department of Finance for details.
Earned income tax: Reported as 1.25% of wages earned within the city limits. This is separate from the head tax. Confirm the current rate and who withholds it with the Department of Finance.
Net profits tax: A tax on business net profits. Rates and calculation methods vary. Contact the Department of Finance to determine your specific obligation.

Wilmington is the only city in Delaware that imposes a local income-type tax. If you employ people, be sure to understand these obligations. Contact the Department of Finance at (302) 576-2415 to confirm current rates and filing procedures.

If you formed an LLC or corporation with the Delaware Division of Corporations, you also owe an annual franchise or annual report fee. LLCs owe a flat annual tax of $400, due June 1 each year (the first payment is due June 1, 2027). Corporations file an Annual Franchise Tax Report for a $50 fee, due by March 1 each year. Confirm current amounts and dates at https://corp.delaware.gov/.

Special Licensing Requirements

If your business falls into specific categories, additional licensing may be required:

Contractors: The Division of Revenue issues contractor licenses that require proof of workers' compensation insurance and a notice from the Department of Labor. This is separate from the general business license.
Licensed trades (electricians, plumbers, HVAC technicians, etc.): The Delaware Division of Professional Regulation manages licensing for specific trades. Contact the appropriate board for your trade.
Rental properties: Rental licenses are issued by Wilmington's Licenses and Inspections department on a per-unit basis. Contact them directly for current fees and requirements.

Tips and Common Mistakes to Avoid

Do not confuse the state license with the city license. Both are mandatory. Applying for one does not automatically satisfy the other. Verify completion of both before opening.
Confirm all city fees in advance. The Department of Finance adjusts fees periodically, and you may not yet be charged the rate listed in a previous year's ordinance. A quick phone call saves surprises.
Save your state license number. You will need it when applying for the city license and when filing gross receipts taxes. Treat it like you would an EIN.
If you have employees, understand the head tax and earned income tax before budgeting. These are not part of federal payroll tax and are often overlooked by new business owners. They can add hundreds of dollars per year to your tax burden.
File gross receipts taxes on time. Late filing carries penalties and interest. Set calendar reminders for quarterly or monthly due dates depending on your filing frequency.
Do not operate under a trade name without first registering it. Trade name registration is a separate $25 filing at Delaware One Stop, and it requires an active business license, so get the license first.
Account for the license expiration date. The state license expires December 31; ask the Department of Finance when your city license expires. Plan your renewal at least a month in advance to avoid operating without a valid license.

Expected Timeline

Once you begin, the timeline typically runs as follows:

If forming an LLC or corporation: processing time varies with volume at the Division of Corporations (expedited options available for higher fees)
State business license: a temporary license can be printed at the end of online registration at Delaware One Stop
City business license: ask the Department of Finance for current processing time

Do not assume you can open on day one. Ask each office for current processing times before you set an opening date.

Important Note: Wilmington Has a Local Income Tax

Unlike most of Delaware, Wilmington has a local earned income tax and net profits tax on businesses. This is a critical distinction. If you operate or have employees in Wilmington, you will owe these taxes in addition to the state gross receipts tax. Other Delaware cities and counties do not impose similar taxes.

When to Consult a Professional

Consider consulting a CPA or tax professional if you:

Are unsure which gross receipts tax category applies to your business
Have complex revenue streams or multiple locations
Need to understand how Wilmington's head tax and earned income tax affect your payroll and net income
Are forming a corporation or multi-member LLC and want to optimize your tax structure
Operate a rental property or licensed trade that requires additional regulatory approvals

The Delaware Small Business Development Center (Delaware SBDC) also offers free business consulting and can help you navigate licensing and tax questions. Learn more at https://delawaresbdc.org/. Note that the SBDC has no office in Wilmington; the nearest office is in Newark.

Key Contacts and Resources

Delaware One Stop (state business license, trade names, gross receipts tax): https://onestop.delaware.gov
Delaware Division of Revenue: https://revenue.delaware.gov/
Delaware Division of Corporations (entity formation): https://corp.delaware.gov/
City of Wilmington Department of Finance, Wage/Business License Division: 800 N. French St, Wilmington, DE 19801, (302) 576-2415
Delaware SBDC: https://delawaresbdc.org/

Disclaimer

This content is informational only and does not constitute legal, tax, or professional business advice. Requirements, fees, and tax rates are subject to change. Before you apply for any license or assume tax obligations, verify all current requirements directly with the Delaware Division of Revenue, the City of Wilmington Department of Finance, and a qualified tax professional or attorney. The state and city contact information provided is current as of the publication date, but you should confirm it before reaching out.