If you’re planning to start a business in the United States, you’ve probably heard that Delaware is the top choice for forming a Limited Liability Company (LLC). But why? Whether you are a US resident or a non-resident, Delaware offers unmatched business advantages that make it the first choice for entrepreneurs, startups, and even Fortune 500 companies.

In this guide, we will cover everything from the basics of an Delaware LLC, the benefits of Delaware as a business hub, comparisons with other states, the registration process, tax implications, and how non-residents can also form an LLC in Delaware.

What Is an LLC?

A Limited Liability Company (LLC) is a type of business structure that offers legal protection to its owners (called members) while allowing flexibility in taxation and management. An LLC is a hybrid between a corporation and a sole proprietorship/partnership.

• Limited Liability Protection: Owners are not personally responsible for business debts
• Pass-Through Taxation: Profits and losses pass through to members’ tax returns, avoiding double taxation
• Flexibility in Management: No strict corporate formalities like board meetings
• No Residency Requirement: Even non-US residents can own an LLC

Why Is Delaware the Preferred State for LLCs?

a. Strong Legal System for Businesses

• Delaware has a specialized business court called the Court of Chancery, which resolves business disputes quickly and efficiently
• Other states: Most states handle business disputes in general courts, leading to slower case resolution and less predictable outcomes
• Business laws in Delaware are well-established and predictable, giving investors and owners confidence

b. Privacy Protection

• Unlike many other states, Delaware does not require LLC owners to disclose their personal information publicly
• Other states: Some states, such as California, require LLC owners to disclose their names in public records

c. Tax Advantages

• No state sales tax: Delaware does not impose state-level sales tax on goods and services
• Other states: Many states, like New York and Texas, impose significant sales taxes on businesses operating within their jurisdiction
• No income tax for non-residents: If your business operates outside Delaware, you do not have to pay state income tax
• Other states: Most states impose state income taxes on all LLCs registered in the state, regardless of whether they operate there
• No capital shares tax: LLCs are not taxed based on their capital structure

d. Flexibility in Business Operations

• No requirement for an operating agreement, though it’s highly recommended
• Other states: States like California and New York require operating agreements, adding legal and compliance burdens
• No residency requirement for LLC members or managers
• Other states: States like Florida and Illinois require at least one member to be a resident of the US for legal representation
• Easy conversion to other business structures (C-Corp, S-Corp)

e. Investor & Startup-Friendly State

• Many investors prefer to fund Delaware LLCs due to the clear legal structure
• Other states: Investors often require startups to register in Delaware before funding because other states do not have a specialized business court like Delaware

Delaware LLC for US Residents vs. Non-Residents

If You Are a US Resident

• You can easily form an LLC in Delaware and operate within the US
• You will need a registered agent in Delaware to receive legal documents
• If operating outside Delaware, you may need to register as a foreign LLC in your home state

If You Are a Non-Resident

• You don’t need to live in the US or have a physical address in Delaware to form an LLC
• You will need a Delaware registered agent to represent your LLC
• You are required to get an EIN (Employer Identification Number) from the IRS for tax purposes
• If you don’t have a Social Security Number (SSN), you can still get an EIN using an IRS Form SS-4
• You can open a US business bank account, but most banks may require you to visit in person or use financial services that assist non-residents

How to Form an LLC in Delaware?

Step 1: Choose a Unique Business Name

• The name should be unique and must include “LLC” at the end
• You can check name availability on the Delaware Division of Corporations website

Step 2: Appoint a Registered Agent

• Every Delaware LLC must have a registered agent with a physical address in the state

Step 3: File the Certificate of Formation

• File the Certificate of Formation with the Delaware Division of Corporations
• Filing Fee: $90 (as of 2025)
• No need to list members or managers in this document.

Step 4: Get an EIN (Employer Identification Number)

• Required for opening a business bank account, hiring employees, and filing taxes
• You can apply for an EIN for free through the IRS website.
• Non-residents may need to apply via fax or mail using Form SS-4.

Step 5: Create an Operating Agreement (Optional, But Recommended)

• Defines ownership percentages, profit-sharing, and decision-making rules
• This document outlines ownership, management structure, and operating rules.
• Essential for multi-member LLCs to avoid future conflicts.

Step 6: Open a US Business Bank Account

• Many banks require you to visit a US branch in person to open an account

Step 7: File Annual Franchise Tax Report

• Delaware requires all LLCs to pay an annual franchise tax of $300
• Due by June 1 each year.
• Failure to pay can lead to penalties and loss of good standing.

Taxation of a Delaware LLC

If You Operate Outside Delaware	If You Operate in Delaware	Non-Resident Taxation
No state income tax in Delaware	Must pay state taxes and register as a foreign LLC in other states where you operate	Non-residents don’t pay Delaware state taxes unless they conduct business in Delaware

 

What’s a Delaware Registered Agent?

A Delaware Registered Agent is a legally required third-party representative responsible for receiving legal documents, government notices, and compliance-related correspondence on behalf of a business entity registered in Delaware. Every Delaware LLC, corporation, or partnership must appoint a registered agent to maintain good standing with the state.

Why Do You Need a Registered Agent for a Delaware LLC?

• Legal Requirement: Delaware law mandates that every LLC, corporation, and limited partnership must have a registered agent.

• Privacy Protection: Business owners can keep their personal addresses off public records by using an agent’s address.

• Compliance Assurance: The agent ensures that legal notices and tax documents are received and addressed on time.

• Business Continuity: Even if the business owner is outside the US or frequently traveling, the registered agent will always be available to receive legal documents. Book Agent 

Costs Involved in Forming a Delaware LLC

Expense	Cost
Certificate of Formation	$90
Registered Agent Fee	$50 – $300/year
EIN Application (IRS)	Free
Annual Franchise Tax	$300
Business Bank Account (Varies)	$0 – $500

Should You Choose Delaware LLC Over Other States?

When Delaware LLC Is a Good Choice:

• You want strong legal protection and privacy
• You plan to attract investors or raise funding
• You don’t live in the US but need a US-based company
• You sell services/products globally and need a US presence

When Other States Might Be Better:

• If you are a small local business, registering in your home state may be easier.
• Some states (like Wyoming) offer lower fees and similar benefits

Mistakes to Avoid When Forming a Delaware LLC

• Not hiring a registered agent – Delaware requires every LLC to have one.
• Ignoring tax obligations – Even if you don’t owe state tax, you must pay the $300 franchise tax.
• Not getting an EIN – An EIN is required for banking, tax filing, and hiring employees.
• Choosing the wrong structure – Make sure LLC is the right choice over an S-Corp or C-Corp.
• Not keeping records – Maintain proper documentation to avoid compliance issues.

  

Conclusion

Delaware LLCs are the gold standard for entrepreneurs, whether US residents or non-residents. With strong legal protections, tax benefits, privacy advantages, and startup-friendly policies, Delaware remains the #1 choice for forming a business in the US

If you are considering incorporating in Delaware, we can handle the entire process for you, from LLC formation to tax compliance and business banking. Contact us today to get started