Forming a Limited Liability Company (LLC) in Delaware is a process that involves several key steps. Below is a detailed guide to help you navigate the process:
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STEP 1: Choose a Name for Your Delaware LLC
Decide on a unique name that complies with Delaware’s LLC naming requirements.
The name must include the term “Limited Liability Company” or its abbreviations (LLC or L.L.C.), and it should not be easily confused with existing entities registered in Delaware.
Conduct a name search on the Delaware Division of Corporations website to verify the availability of your desired LLC name.
If you’re not forming your LLC immediately, you can reserve the name for 120 days by filing a Name Reservation Application with the Delaware Division of Corporations, along with the required fee.
Time it Takes to name a Delaware LLC
Researching and deciding on a name: 1-2 hours
If opting for a name reservation: The act of filing can take about 10-15 minutes.
If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.
STEP 2: Appoint a Registered Agent
Delaware requires you to appoint a registered agent who can accept legal documents on behalf of your LLC.
The agent must be authorized to do business in Delaware and have a physical street address in the state (P.O. boxes are not acceptable).
Time it Takes to be a Registered Agent
Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.
If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.
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STEP 3: File Articles of Organization
To officially create an LLC in Delaware, you need to file a Certificate of Formation with the Delaware Division of Corporations.
This document requires information such as the LLC’s name, address, and the name and address of the registered agent.
There is a filing fee that must be paid at the time of submission; check the current fee on the Division of Corporations website.
Time it takes to write the Articles of Organization
Preparing the document: 1-2 hours
Filing online: 30 minutes to 1 hour.
Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.
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STEP 4: Create an Operating Agreement
Although Delaware does not require an LLC to have an operating agreement, it’s highly advisable to create one.
This internal document establishes how the LLC will be run and typically covers topics such as ownership percentages, member responsibilities, voting power, management structure, and rules for meetings and record-keeping.
Store this document safely as it’s not filed with the state but is kept on record by the business entity.
Time it takes to write an Operating Agreement
If using a template and making minimal changes: 1-3 hours
If drafting from scratch or having extensive negotiations among members: Several days to weeks.
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STEP 5: Obtain an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.
You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
The EIN will be used for tax filings, opening bank accounts, and hiring employees.
Time it takes to get an EIN / Tax ID
Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).
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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?
Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)
Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)
This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.
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