How to Start an Online Store or Retail Business in Delaware: $90 Retailer License, 0.7468% Gross Receipts Tax and the Out-of-State Delivery Rule

Delaware has a reputation as a business-friendly state, but the details matter, especially if you're starting an online retail operation. While Delaware has no sales tax, online retailers and e-commerce businesses still owe a gross receipts tax to the state. The key to minimizing your tax burden lies in understanding Delaware's tax structure, the out-of-state delivery rule, and whether your business qualifies for the lower wholesaler rate instead of the retail rate.

This guide walks you through the exact steps, costs, and tax implications of starting an online retail business in Delaware.

What You Need to Know About Delaware's Tax Structure for Online Retailers

Delaware has no sales tax. This is true. However, online retailers and brick-and-mortar stores both owe a gross receipts tax to the state on sales made to customers in Delaware. This is not optional, and it is not the same as a sales tax.

For a retail online store, the gross receipts tax rate is 0.7468% on the gross receipts of your business, calculated after a monthly deduction of $100,000 (or $300,000 quarterly if you file quarterly). This is significantly lower than the sales tax rate in most states, but it is a real tax obligation.

The reason this matters for online stores: if you sell to customers outside Delaware, the out-of-state delivery rule (explained below) can take those sales outside the retailer chapter, but only when you can prove an out-of-state retail sales tax was paid on them.

The Out-of-State Delivery Rule: How Online Stores Can Reduce Their Tax Burden

Delaware's retail chapter does not apply to goods that your store delivers outside Delaware, provided you can prove that an out-of-state retail sales tax was paid on those goods.

What does this mean in practice?

• If you ship to customers outside Delaware: Those goods fall outside the retailer chapter only if you can prove that an out-of-state retail sales tax was paid on them. Shipping alone does not qualify.
• If you ship to both Delaware and other states: The retail rate (0.7468%) applies to your Delaware deliveries. You must track and document which sales crossed state lines and the out-of-state tax proof for each.
• If you use a print-on-demand or fulfillment service: Keep the delivery address and any proof of out-of-state sales tax on file for each order.

Important: You must be able to prove that an out-of-state sales tax was actually collected on the out-of-state sales. Simply shipping to another state does not exempt you from Delaware's gross receipts tax on those sales; the tax must have been paid to that state.

Step 1: Choose Your Business Structure

Before you file for a retailer license, you need to decide whether to operate as a sole proprietorship, a limited liability company (LLC), or a corporation. This choice affects your personal liability, your annual tax obligations, and how you file with Delaware.

Sole Proprietorship (DBA): You operate under your own name or a trade name (DBA). There is no separate entity. A trade name (DBA) registration costs $25 (one-time, statewide, non-renewing) and is filed through the Delaware One Stop portal. You will still need a business license and will owe the gross receipts tax.

Limited Liability Company (LLC): An LLC provides liability protection and is the most common choice for small online retailers. Formation costs $110 (filing fee to the Division of Corporations). After formation, your LLC owes a flat annual tax, due on June 1 each year following the calendar year your Certificate of Formation became effective. The amount is $400 under the 2026 change, with the first $400 payment due June 1, 2027. Check corp.delaware.gov for the current amount and deadline. You will still need a separate business license and owe the gross receipts tax on your sales.

Corporation: A C or S corporation costs $109 to form and requires you to file an annual report ($50) and pay franchise tax (minimum $175 under the authorized shares method) by March 1 each year. Corporations are less common for online retail businesses because the annual reporting requirement adds complexity and the liability protection doesn't outweigh the administrative burden for most small operators.

Recommendation for most online stores: An LLC is the standard choice. It costs $110 upfront, offers liability protection, and carries a straightforward annual tax of $400.

Step 2: Form Your Entity (If Using an LLC)

To form an LLC in Delaware, file a Certificate of Formation with the Delaware Division of Corporations. You can file online through the eCorp Document Upload Service.

Your LLC name must include: The words "Limited Liability Company" or the abbreviation "L.L.C." or the designation "LLC."

Before you file: Check name availability at the Delaware Division of Corporations name search. If you want to reserve a name before filing, you can reserve it for 120 days for $75.

Filing fee: $110 for standard processing. Expedited options are available: $50 for next business day or $100 for same-day (for new formations), $500 for two-hour, or $1,000 for one-hour processing.

You will receive: Your filed Certificate of Formation, which your bank may ask for when you set up a company bank account.

If you don't form an entity and operate as a sole proprietor, skip to Step 3.

Step 3: Register a Trade Name (DBA), If Needed

If your LLC name is different from the name you plan to do business under, or if you are a sole proprietor using a business name other than your own, you must register a trade name (DBA) with the Delaware Division of Revenue.

Cost: $25 (one-time, statewide, non-renewing).

Where to file: Through the Delaware One Stop portal. More information is available at Delaware Division of Revenue Trade Names FAQs.

Important: Your DBA registration must be paired with an active business license. Once registered, the name does not expire and is not renewed.

Step 4: Obtain Your Delaware Retailer License

This is where the $90 comes in. Every online retailer operating in Delaware must obtain a business license from the Delaware Division of Revenue. The license is applied for through Delaware One Stop.

License type: General Retailer (for online stores selling merchandise).

Cost: $90 for your first location. This breaks down as $75 for the retailer license + $15 Retail Crime Fund fee. Each additional location costs an additional $25.

License validity: One year, expiring December 31, with the first-year fee prorated by full calendar months. At renewal you can opt for a three-year license at three times the annual fee.

What you need to apply: Your federal employer identification number (EIN) or Social Security number if you are a sole proprietor, your business address, and details about your business structure and ownership.

Step 5: Understand Your Gross Receipts Tax Obligation

Once you have your retailer license, you owe a gross receipts tax of 0.7468% on the gross receipts of your business in Delaware, calculated after a monthly deduction of $100,000 (or $300,000 if you file quarterly).

How it works: If your monthly gross receipts are $50,000 (all from Delaware customers), you owe no gross receipts tax because your receipts are below the $100,000 threshold. If your monthly gross receipts are $120,000 from Delaware, you owe 0.7468% on $20,000 = $149.36 in that month.

Filing frequency: New businesses file quarterly. If your receipts in the lookback period exceed $1,500,000, you file monthly instead.

Payment: File and pay through the Delaware One Stop portal or through the Division of Revenue website.

Wholesaler license: If you are licensed as a wholesaler (0.3983% rate), for example as a catalog or mail-order distributor of manufactured goods (see Step 7), the filing and calculation are similar, but your rate is lower.

Step 6: Obtain an EIN and Set Up Your Bank Account

Apply for an Employer Identification Number (EIN) from the IRS, even if you have no employees. You'll need this to file taxes with Delaware and the federal government, to open a business bank account, and to apply for your retailer license. You can apply online at irs.gov/ein. It's free and takes about 15 minutes.

Open a business bank account in your EIN and business name. Many online banks accept Delaware businesses. Keep your business and personal finances separate; this is essential for liability protection and tax compliance.

Step 7: Determine If You Qualify for the Wholesaler Rate

This is critical for online retailers. If your business model is an online catalog or mail-order distributor of manufactured goods with no in-state retail business, you may qualify as a wholesaler at 0.3983% instead of the retailer rate of 0.7468%. Delaware defines a wholesaler to include a person who does catalog or mail-order distribution of manufactured goods and does not own, operate or engage in any retail business within the State (30 Del. C. 2901(21)a.6).

You qualify for the wholesaler rate if:

• Your business is primarily a catalog or mail-order distributor of manufactured goods.
• You have no retail business location in Delaware.
• You do not own, operate or engage in any other retail business within Delaware.

You do NOT qualify for the wholesaler rate if:

• You have a retail storefront or pickup location in Delaware.
• You operate a retail business in Delaware beyond mail-order distribution (confirm with the Division of Revenue how your sales to Delaware customers are classed).
• You are a print-on-demand or made-to-order service that doesn't fit the "manufactured goods" definition.

Discuss your business model with the Delaware Division of Revenue before filing. Misclassifying your business as a wholesaler when you're a retailer can result in back taxes, penalties, and interest.

Common Mistakes to Avoid

Mistake 1: Assuming no sales tax means no tax at all. Delaware has no sales tax, but you owe a gross receipts tax. These are different. Gross receipts tax is calculated on your business revenue, not collected from customers at checkout.

Mistake 2: Not tracking out-of-state vs. in-state sales. If you ship to multiple states, you must track which sales are to Delaware customers (subject to the 0.7468% retail rate) and which are out-of-state (potentially lower-tax or exempt). Sloppy record-keeping can cost you thousands in back taxes.

Mistake 3: Misclassifying as a wholesaler when you're a retailer. If your business does not fit the mail-order distributor definition, you are a retailer, and misclassification can result in owed back taxes, penalties, and interest.

Mistake 4: Operating without a business license. Violating Delaware's licensing requirement carries a fine of up to $3,000 or up to two years in prison. It's not worth the risk.

Mistake 5: Forgetting the annual LLC tax. If you formed an LLC, you owe a flat annual tax due June 1 ($400 under the 2026 change; first $400 payment due June 1, 2027). Missing this deadline brings a $200 late penalty plus 1.5% a month. Mark your calendar.

Out-of-State Sales Tax Compliance

As an online retailer, you may need to collect and remit sales tax to other states. This depends on your nexus (connection) to those states and the current sales tax laws. For example, many states now require marketplace facilitators or sellers with economic nexus to collect sales tax on remote sales.

Check with each destination state's tax authority about their specific requirements. This is separate from Delaware's gross receipts tax and is your responsibility as a seller.

Ongoing Compliance and Next Steps

• File your gross receipts tax: Quarterly as a new business (monthly if your lookback receipts exceed $1,500,000), through Delaware One Stop.
• Renew your retailer license: Annually, expiring December 31. Set a reminder in October.
• Pay your LLC annual tax: due June 1 each year (if you formed an LLC; $400 under the 2026 change, first $400 payment due June 1, 2027). Check corp.delaware.gov for the current amount.
• File federal income tax: As the owner of the business, you owe federal income tax on the net profit of your online store. File Form 1040 and Schedule C (sole proprietor) or the relevant form for your entity type.
• Consider a CPA or tax professional: The intersection of Delaware gross receipts tax, out-of-state sales tax, and federal income tax can get complex quickly. A professional can save you money and headaches.

Disclaimer

This article is informational and does not constitute legal, tax, or business advice. The information was accurate as of October 2026, but Delaware law and regulations change. Before you file anything with the state, consult the official resources:

• Delaware One Stop (business licenses and gross receipts tax)
• Delaware Division of Revenue (tax rates and filing requirements)
• Delaware Division of Corporations (LLC and corporation formation)

For complex situations involving multi-state sales, trade name registration, or entity structure, consult a Delaware business attorney or a CPA licensed in Delaware. The cost of an hour of professional advice is far less than the cost of back taxes, penalties, and interest.