Guide to Forming a Corporation in Delaware
Should you form your corporation in Delaware? We’ve collected the relevant information that will help you make this decision.
- Long history of corporate law and established rules
- Law favorable to business owners
- Minimal disclosure of owners
- Extra administration and expense to form in Delaware and operate in your home state
- Have to hire a registered agent in Delaware (we can help).
- High state corporate income tax rate
Cost of doing business
- $89 filing fee / $225 annual statement
- 8.7% corporate tax rate
- Minimal disclosure of owners to public
Forming your corporation in Delaware
Your official name for your corporation will need to end with one of the following signifiers (or a relevant abbreviation): “incorporated”, “Company”, or “corporation.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. There are also some naming restrictions placed on certain financial institutions. Do a FREE name search now.
You will need to form an official board of directors when incorporating in Delaware.
- Required number of directors
Delaware corporations must have at least one director listed in their incorporation documents.
- Age restrictions
Directors of corporations located in Delaware can be of any age.
- Residence restrictions
There are no residence restrictions imposed on the directors of C corporations in Delaware. However, S corporations are only allowed to have directors located in the United States.
- What information needs to be included in the articles of incorporation?
Delaware does not require the names or addresses of directors to be disclosed in incorporation documents.
Requirements for the articles of incorporation
The articles of incorporation is a document that must be filed to form your corporation in Delaware. It must include:
Delaware requires the number of initial shares outstanding and their par value, to be disclosed during the incorporation process. The number of outstanding shares does not affect initial state filing fees.
The state of Delaware does not require officer information to be disclosed during the filing process.
Registered agent information
All Delaware corporations must have a registered agent on file and submit their name and Delaware physical name and address (which cannot be a P.O. Box). This agent will be required to be accessible during standard business hours and acts as the state’s point of contact with the company. Learn more about Delaware registered agents.
Additional Delaware filing requirements
Professional service companies are permitted to form as PCs, or professional corporations in Delaware.
Corporate record keeping requirements
Corporations are required to keep formal documentation regarding several of their operations including:
- A copy of the certificate of incorporation, bylaws, and their amendments
- Records that detail the owners of all outstanding stock shares
- Meeting minutes for all shareholder and director meetings.
- A copy of all accounting materials, and records of account.
Delaware corporation taxation and fee requirements
There are several tax and fee requirements that must be addressed by corporations in Delaware. They are as follows:
Delaware corporations are generally taxed at 8.7% of the income derived from sales in Delaware. For more information regarding taxes in Delaware, it is advised that you visit the state’s official business related website.
Annual report requirements
Corporations in Delaware are required to an Annual Franchise Tax Report before March 1st each year. There is a $50 fee for filing this document, and the tax associated with it increases when there is a larger number of outstanding shares issued.
Tax identification numbers
Delaware requires an EIN (Employer Identification Number) for all corporations that will have employees, and most banks will require one to open accounts. Delaware does not require corporations to obtain state tax ID numbers.
Business license requirements
The business licenses and permits required in Delaware vary wildly depending on the county or municipality where your new corporation is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Need a Delaware LLC instead? Click here.