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Thursday, April 28, 2011

How to start a business in Delaware

Starting a business in Delaware can be a good idea for the simple reason Delaware is a "business friendly state". If considering Delaware as a state to register and/or incorporate, a business has already taken an important step in the process of business formation. Several formalities generally pertaining to registration, licensure and documentation may be required by the state of Delaware. These requirements vary depending on the type, and nature of the business. This article will outline necessary steps for various types of businesses wishing to be identified as Delaware businesses.

Step 1: Business licensure and registration

In Delaware, a business license and registration is required for businesses including sole proprietorships. Licenses can be obtained by applying through the Delaware division of revenue and cost anywhere between $3.00-$750.00 based on the type of business. For example, a cigarette machine business license costs $3.00 and a for profit circus business license costs $750.00. An http address to the Delaware license and registration application form aka "Form CRA", is provided at the bottom of this article.

Additional licensure may be required at the municipal level, thus contacting local city and county halls can be of assistance in determine this requirement. Starting a business in Delaware also requires the use of a registered agent by law. Registered agents assist with legal compliance and communication between business and the Government and may be obtained for as little as $50.00 per year.

Step 2: Type of business and federal registration

If a business is not a sole proprietorship, but rather a corporation or partnership, federal registration is also required at the outset of business. Typically, this involves completing a U.S. Internal Revenue Service form SS-4 i.e. the application for an employer identification number. It is important to note that even a corporation or partnership with no employees is required to apply for an EIN. An http address to the IRS EIN application form is also included with this article.

Determining which type of business is ideal is a matter of business planning in regard to taxation, growth, size, regulation, legal aspects etc. Researching each type of business type and discovering which one applies best to one's intended practice can be useful in this process. Several business types exist to choose from, sole proprietorships, partnerships, Limited Liability Corporation, limited liability partnerships and small businesses or S corporations. Business name reservations can also be obtained via the Delaware division of corporations.

Step 3: Incorporation and certifications

Depending on the type, size and capitalization of the business in question, incorporation documentation may be required to start a business in Delaware. These types of documents may include articles of incorporation, bylaws, certification of incorporation etc. The State of Delaware registered agent requirement can assist with determining which, if and in what circumstances corporate documentation are required. 

Fees are charged for corporate certifications and vary based on the type of business. For example, a "Stock certificate of Incorporation" costs $89.00 for a normal sized application whereas a "Statement of Qualification of Limited Liability Partnership" costs $200.00 per partner according to the State of Delaware division of corporations.

Step 4: Additional business start-up considerations

Starting a new business in Delaware may also encompass additional aspects of procedure. These further needs can depend on the operational structure of the business and the decisions made by the businesses owners and/or management. Consequently, some of the following items are variable and are listed for consideration purposes.

• Professional licensure
• Real estate and zoning related requirements
• Business and business asset insurance
• Legal protection for intellectual property
• Loan and capitalization agreements
• Vendor contracts

The process of starting a business in the State of Delaware may seem overwhelming at first, but is really a matter of filing paperwork, applications and paying start up fees. These steps may be best considered within the initial planning stages of a business rather than after the owners, inventory, business network, franchise license etc. if any have been obtained. 

Much assistance in the formal business start up process can be obtained by contacting the Delaware division of corporations, business registered agents, municipal government offices and the internal revenue service. Further business start up considerations unique to the state of Delaware may also be necessary in regards to insurance, property and legal protection. If such aspects of starting up a business in Delaware pertain to a new business, contacting the businesses, attorneys and/or agents directly may be necessary to carry out a more successful starting up of business operations.


1. http://dedo.delaware.gov/information/small_business_structure.shtml
2. http://corp.delaware.gov/nameres.shtml
3. http://revenue.delaware.gov/services/Business_Tax/taxforms/Cra/CRA.pdf
4. http://www.irs.gov/pub/irs-pdf/fss4.pdf
5. http://corp.delaware.gov/howtoform.shtml
6. http://ezinearticles.com/?Delaware-Incorporation-A-Very-Business-Friendly-State!&id=689607

1 comment:

  1. Really informative. You showed it in a very interesting manner. I had fun reading your post.