How to Form a Delaware Limited Liability Company

By Bryan Driscoll, J.D.

How to Form a Delaware Limited Liability Company

By Bryan Driscoll, J.D.

A limited liability company (LLC) offers many benefits to owners. Delaware provides even more benefits to those looking to create an LLC in the state. These benefits range from ownership anonymity to having a separate state court just for business issues.

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If you are looking to form a Delaware LLC, below are the steps you must take.

1. Name Your LLC

If you're ready to form your Delaware LLC, you'll first need to choose a name for your business. You might already be doing business in another state, or perhaps you already have a name chosen. However, keep in mind that every state, including Delaware, has rules in place for LLC business names.

Particularly, you must include "LLC" or some variation thereof in your name, i.e. "Limited Liability Company" or "Limited Liability Co." Additionally, there are several words that are prohibited, such as terms that would indicate that your business operates as a government entity, financial institution, or educational facility, e.g. FBI, bank, university.

2. Choose a Registered Agent

Perhaps most important is the fact that you can only choose an LLC name that is currently available for use. In order to find out if the name you want to use is available, you can visit the Delaware Secretary of State website.

Thereafter, you'll need to choose registered agent who will send/receive legal paperwork on your LLC's behalf. This must be a person or business with a physical location in the state of Delaware. Post office boxes are not permitted. You could also choose to be your own registered agent.

3. File the Certificate of Formation

The Delaware Secretary of State requires that all LLCs file a Certificate of Formation. You can do this by mail or in person.

On this form, you'll need to make several designations regarding your LLC. One of these designations is whether your LLC will be a manager-managed or member-managed LLC. Manager-managed LLCs give decision making authority to managers of the LLC, as opposed to owners. Member-managed LLCs, however, retain that decision making authority to the members, or owners, of the LLC.

4. Create an Operating Agreement

An operating agreement is a document that describes the ownership of your LLC and how it will operate. The operating agreement will discuss everything from ownership interest to how the business will dissolve. It will also provide instructions for transferring ownership, how to handle the death of a member, and what happens in the event of bankruptcy. This is an incredibly important document for your LLC and must be prepared with great attention to detail and expertise.

Delaware does not require that LLCs have an operating agreement. If you don't have one, Delaware's default LLC operating rules will govern your LLC. These rules may not suit your business. This is why it's important to speak with a skilled and trusted legal adviser who can help you determine how to properly structure your LLC operating agreement.

5. Get Your LLC EIN

An EIN, or Employer Identification Number, is used to identify your LLC. You can obtain it free of charge on the IRS website. Your LLC EIN will allow you to:

  • Open a business bank account
  • File federal and state taxes
  • Hire employees

Delaware LLCs provide many benefits above and beyond such businesses formed in other states. But the filing process can be both overwhelming and risky if done incorrectly. That's why it's best to work alongside a trusted legal adviser to ensure that all required steps are taken to properly create your LLC.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.