How to Start a Business in Delaware

Types of Business Structures in Delaware

In Delaware, you have several options for forming your business entity. How you structure your business determines what kind of taxes you’ll pay and how you operate your business. Some business entity types give you more flexibility in how you operate. Other types give you personal liability protection. These are the different business structures you can choose from in Delaware:

• Delaware Limited Liability Company (LLC)
• Delaware Professional Corporation
• Delaware Corporation
• Delaware Nonprofit Corporation

How to Start a Business in Delaware

Delaware has established over 300 programs to support entrepreneurs and small business owners. Even though the state offers some help, starting your Delaware business takes time, planning, and investment.

The checklist below will help you refine your business idea, calculate the costs to open your business, and know what legal paperwork to file. We’re here to help you get to that wonderful day when you open for business.

Step 1: Create a business plan

Your company begins with a business plan. Planning can sometimes seem intimidating for entrepreneurs, but it doesn’t have to be. Writing a business plan is a vital step to set down in writing these key elements:

• What business you want to run
• The customer problem that your business solves
• How your business can stand out in the market
• Who your customers are and how you’ll attract them
• How you’ll fund your company until it reaches profitability
• What goals and metrics you’ll track
• What types of marketing you’ll invest in
• Your short-term and long-term vision for the company’s growth

Without a business plan, you’ll have trouble convincing potential investors or business partners to look at your idea.
Small Business Funding Opportunities in Delaware
The state government provides incentives and tax credits to attract new businesses. such as up to $50,000 in The Encouraging Development, Growth & Expansion (EDGE) Grants give up to $50,000 to new Delaware small businesses. If traditional bank loans aren’t an option, you may be able to turn to the State Small Business Credit Initiative Participation Loan or the Delaware Capital Access Program. Other potential programs include:

• Business incentives offered by the city of Wilmington
• Delaware Manufacturing Extension Partnership
• Brownfield Redevelopment Program
• Blue Collar Job Act

Step 2: Choose a business structure

In Delaware you can choose whether to form your business as a sole proprietorship, general partnership (GP), limited liability company (LLC), or corporation.

Sole Proprietorship in Delaware

Sole proprietorships and GPs are the easiest to set up. But, without a legal separation between you and your business, you can be on the hook for legal or financial trouble that your business runs into. This means your personal assets could be at risk.

Types of Delaware Corporations

It’s a little more costly to set up a corporation. Yet many corporations base themselves in Delaware due to favorable regulations. It’s worth considering whether an S or C corporation is the right structure for you.

Corporations are taxed differently from other entities. C Corps pay an income tax at the corporate level, and then a second time when they’re distributed shareholders. You can avoid this “double taxation” with an S Corp. They only report revenue on the owners’ personal tax return. But, S corporations are harder to qualify for and have more restrictions.

Delaware LLCs

Limited liability companies combine attributes of corporations and sole proprietorships. LLCs provide a legal separation between the business and your personal assets. So problems in the business, like lawsuits, don’t put your personal property at risk. Also, unlike C corporations, LLCs aren’t subject to double taxation.

A Delaware LLC can have one “member” or many members (they don’t use the term “owner”).

Step 3: Determine your business costs

The more costs you can factor into your business plan, the better prepared you are for financing, budgeting, and spending. Here are a few types of expenses your business may need to plan for:

• Entity formation costs
• Purchase or leasing fees for office or storefront space
• Office supplies or store inventory
• Payroll, contractor fees, and payroll taxes
• Company website design, development, hosting, and updating
• Technical equipment such as phones, tablets, and computers
• Business insurance

You also have to consider the taxes your business will pay. Corporations pay annual taxes, including your Corporate Annual Report (depending on if your company is exempt or non-exempt). Franchise tax payments for corporations range $175 to $200,000. If these taxes are over $5,000, you can pay quarterly instead of annually on the following schedule:

• 40% of the total amount due by June 1
• 20% due by Sept. 1
• 20% due by Dec. 1
• Remainder due March 1

If your corporation doesn’t file its annual report by March 1, it will face a penalty of $200.

On the flip side, Delaware-based LLCs don’t have to file an annual report. Instead, they pay a $300 annual tax, due each year by June 1.

Step 4: Pick a business name

Miller Metal Fabrication. Decal Girl. Bramble & Brine. Middleford Deli. These are all Delaware companies, and each business name tells a different story.

As you name your company, examine what sort of story you want your business name to convey, such as:

• Location
• Services
• Brand values or message

Do you already have a name in mind? Great! But before you register a domain name or print business cards, there’s some work to do.

For starters, businesses can’t have the same name. If multiple businesses have the same name, it can confuse customers. It could also get you into legal trouble. Your business name needs to be unique from any others. Before you choose a company name, do a Delaware Business Name Search to see if an active business is using the name already.

Another option? You could have one name for your business, and conduct different business under different names. To do this, you’ll have to apply for a “doing business as” (DBA) name. Sole proprietors and general partnerships may find DBA names especially useful. For these entities, without a DBA name, they must do business under the owner’s legal name.

Once you decide on a name that’s available, check what related domain names and social media handles are available. From there, you’re ready to start putting your business name to work.

Step 5: Register your business, get insurance, and open financial accounts

Business entities like LLCs and corporations need to register with Delaware’s Division of Corporations. Sole proprietorships and general partnerships don’t have to take this step. But they may need to register their business name with the Prothonotary Office in the county where they plan to do business.

File for Licenses and Pay Taxes

You’ll also need to see which business licenses and registrations to apply for, and figure out which taxes your business will need to pay. Your city and county may have more licensing, zoning, tax, and permitting requirements, too.

Apply for an Employer Identification Number (EIN)

A sole proprietor can use their social security number as their taxpayer ID number. But an employer identification number (EIN) is also an option. The other entity types have to get an EIN, available from the IRS.

Get Business Insurance

Consider discussing your business insurance needs with a local agent. You can also open business bank accounts, such as checking and credit cards, so you can start receiving income and paying expenses.

Step 6: Market your Delaware business

By marketing your business, you make customers aware of your services and products. It’s your way to make the case for why someone should choose you over the competition.

A company website is essential. The site should showcase your business, tell customers your story, and have a way for them to get in touch.

Online directories, like Yelp or Google My Business, are a good way highlight your business. Optimize those listings and your website, too, so potential customers are more likely to find your business in online searches.

Don’t forget about advertising, either. Print media and regional radio and TV broadcasters can be powerful ways to spread the word about your company.

Ideas for Businesses to Start in Delaware

With so many companies calling Delaware home, the First State is fertile ground for many traditional, new, and trending businesses. Here are a few ideas:

• Financial services
• Design-build architecture and construction
• Digital marketing
• Residential or commercial cleaning/janitorial
• CBD dispensary
• Food truck

The First State Could Be Your First Choice for Business

From small mom-and-pops to Fortune 500 companies, Delaware prides itself on being business-friendly. With potentially favorable taxation, a range of entities to choose from, and the right business plan, you could be on your way to building a successful, profitable business of your own in Delaware.

Top Kentucky Cities to Form Businesses

Wilmington: Financial and corporate hub of Delaware. Strong presence of banks and financial institutions. Benefits from Delaware’s corporate-friendly laws and sophisticated legal infrastructure.

Newark: Home to the University of Delaware. Focus on research and development in chemical, material science, and biotechnology. Young, educated demographic conducive to innovation.

Dover: State capital with a stable economy centered around government employment. Industries include manufacturing in food production and aerospace. Access to state-level economic incentives and programs.

Middletown: Growing due to strategic location near Philadelphia, Baltimore, and Washington, D.C. Increasingly popular for retail, distribution, and logistics. Benefits from proximity to major markets and transportation networks.

Lewes/Rehoboth Beach: Significant tourism and retail sectors. Coastal location ideal for hospitality and leisure businesses. Seasonal tourism boosts economy, offering opportunities for service-oriented businesses.

Each of these cities offers unique advantages based on their geographic and economic contexts, making them suitable for different types of businesses, from corporate and financial services to tourism and retail.