Delaware is where a huge share of Fortune 500 companies are legally incorporated, even though almost none of them are headquartered there. The pitch is a specialized business court, flexible LLC law, and a flat, predictable annual tax. Whether that's worth it for a small business depends a lot on whether you'll actually operate in Delaware or just form there. Here's what it takes to start a business in Delaware in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses. It separates your personal assets from the business's debts and lawsuits, and Delaware's LLC Act is unusually flexible about how you structure the operating agreement.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders, and the structure most venture-backed startups end up choosing when they incorporate in Delaware.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the Delaware Division of Corporations, the agency that handles business filings statewide. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in Delaware by filing a Certificate of Formation with the Division of Corporations. The filing fee is $110. Standard processing takes a couple of weeks; same-day service is available for an extra $100, and next-day for $50.
Every LLC needs a registered agent with a physical Delaware address, available during business hours, which matters especially if you don't otherwise have a presence in the state. Delaware's formation document is minimal, just five fields, and doesn't require you to disclose member or manager names publicly, which is part of its privacy appeal.
Delaware doesn't require an operating agreement to be filed with the state, but its LLC Act assumes you'll have one internally and gives you wide latitude in how you write it.
Sole proprietorships and DBAs
Sole proprietorships don't file with the Division of Corporations. If you're operating under a trade name, you'll register it with the Prothonotary's office in the county where your business is located.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Delaware requires a state business license from the Division of Revenue for most businesses, on top of anything industry-specific. What else you need depends on your industry and city: professional licensing for regulated fields, and local licenses in some municipalities. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand Delaware taxes
Delaware has no state sales tax at all, one of only five states in the country without one. If your LLC forms in Delaware but doesn't actually conduct business there, and has no Delaware-source income, you generally owe no Delaware state income tax either, which is the core of the appeal for out-of-state founders. If you do operate in Delaware, personal income tax is progressive from 2.2% up to 6.6%.
Keep in mind that forming in Delaware while operating elsewhere usually means registering as a foreign LLC in whatever state you actually do business in, and paying that state's fees and taxes on top of Delaware's.
6. Stay compliant
Delaware LLCs don't file a traditional annual report at all. Instead, every LLC pays a flat $300 annual franchise tax, due June 1 each year, regardless of income, revenue, or activity. It's one of the simplest recurring obligations of any state, no calculations required. Miss it and you'll owe a $200 penalty plus 1.5% monthly interest; if it goes unpaid for three years, Delaware can void the LLC's certificate of formation entirely.
Delaware business costs at a glance
| Item | Cost |
|---|---|
| Certificate of Formation (LLC) | $110 |
| Annual franchise tax (every year, due June 1) | $300 flat |
| Late penalty | $200 + 1.5%/month interest |
| Registered agent service (required for non-residents) | $50 to $300/year |
| EIN | Free (IRS) |
| State income tax | None if no DE-source income; 2.2% to 6.6% otherwise |
| State sales tax | None |
Frequently asked questions
Do I owe Delaware state income tax if my LLC doesn't operate there?
Generally no. If your LLC has no Delaware-source income, you typically owe no Delaware state income tax, the core appeal for out-of-state founders.
How much is Delaware's annual franchise tax?
A flat $300, due June 1 every year regardless of income, revenue, or activity.
How much does it cost to form an LLC in Delaware?
$110 for a Certificate of Formation, with same-day service available for an extra $100.
Does Delaware have sales tax?
No, Delaware is one of only five states with no state sales tax at all.
If I form in Delaware but operate elsewhere, do I still need to register in my home state?
Yes, typically as a foreign LLC, paying that state's fees and taxes on top of Delaware's.
Fees and rates above come from the Delaware Division of Corporations and Division of Revenue as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Delaware-licensed attorney or CPA about your specific situation.