A huge share of Fortune 500 companies are legally incorporated in Delaware, despite almost none of them actually being headquartered there. The draw is a specialized business court, unusually flexible LLC law, and a flat annual tax you can predict years in advance. For a small business, whether any of that matters comes down to one question: are you actually going to operate in Delaware, or just form there? What follows covers the 2026 process either way.
1. Which business structure fits you?
Picking a structure is the first real decision, and Delaware gives you a bit more flexibility than most states once you get there.
- Sole proprietorship. No filing required, and legally you and the business are indistinguishable, which also means personal liability for every debt the business incurs.
- Partnership. Same liability exposure as a sole proprietorship, just shared between two or more people running the business.
- LLC. The most common small-business structure, separating your personal assets from the business's debts and lawsuits, and Delaware's LLC Act gives you unusually wide latitude in how the operating agreement itself is written.
- Corporation, S-corp or C-corp. More paperwork and more formal upkeep, generally justified once investors or multiple shareholders enter the picture, and the structure most venture-backed startups end up choosing when they incorporate here.
See our guide on choosing a business structure for a fuller comparison.
LLC and corporation filings go through the Delaware Division of Corporations, which handles them statewide. Sole proprietorships and general partnerships don't file there.
2. Register your business
Forming an LLC
A Certificate of Formation filed with the Division of Corporations is what creates a Delaware LLC, for $110. Standard processing takes around two weeks, though 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, reachable during business hours, which matters a great deal if you have no other presence in the state. Delaware's formation document itself is minimal, just five fields, and doesn't force you to publicly disclose member or manager names, part of the state's broader privacy appeal.
Delaware doesn't require you to file an operating agreement with the state, but its LLC Act assumes one exists internally and gives you considerable freedom in how you write it.
Sole proprietorships and DBAs
Sole proprietorships have nothing to file with the Division of Corporations. Operating under a trade name means registering it with the Prothonotary's office in whichever county the business is based.
3. Get an EIN
Getting an Employer Identification Number from the IRS is free and usually takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, single-member LLC with no employees included.
4. Check licenses and permits
Most businesses in Delaware need a state business license from the Division of Revenue, on top of anything specific to your industry. Beyond that baseline, requirements depend on your field and city: professional licensing for regulated work, 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
There's no state sales tax in Delaware at all, one of only five states nationwide without one. If your LLC forms in Delaware but doesn't actually conduct business there, and has no Delaware-source income, you typically owe no Delaware state income tax either, which is really the core of the appeal for founders operating elsewhere. Actually operate in Delaware, though, and personal income tax applies progressively from 2.2% up to 6.6%.
One thing to keep straight: forming in Delaware while running the business somewhere else usually still means registering as a foreign LLC in that other state, and paying its fees and taxes in addition to Delaware's.
6. Stay compliant
There's no traditional annual report for Delaware LLCs. Instead, every LLC pays a flat $300 franchise tax each year, due June 1, regardless of income, revenue, or activity level. It's about as simple a recurring obligation as any state offers, no calculations needed. Fall behind and a $200 penalty applies plus 1.5% monthly interest; three years of nonpayment and Delaware can void the LLC's certificate of formation outright.
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.