How to Start a corporation in Delaware

The first step will be to decide on a name for your business. Choose a name that is memorable and unique, easy to understand and pronounce, and accurately represents your business. You'll want to search your name choices on the web to quickly find out if they are already taken. It's also best to jot down one or two alternatives, in case the name you settle on is not available for registration in Delaware.

Like most states, Delaware's Division of Corporations offers the ability to conduct a name search for your LLC. The Division of Corporations can determine if the business name you plan on registering conflicts with any other businesses already registered in the state of Delaware.

If you find the name of your business is available, you may reserve an entity name through the Delaware Division of Corporations. Reserve the name online (or submit a reservation application in the mail), pay a fee of $75, and your business name will be held for 120 days.

Most states require that you designate a registered agent for your business, and Delaware is no exception. A registered agent acts as the state's means to communicate with a business and is responsible for receiving legal and official documents related to the business.

A registered agent can be anyone you wish, with one small caveat. The registered agent must have a physical address in Delaware. In other words, a P.O. Box is not allowed as a registered agent address. This means a member of the corporation can act as the registered agent if desired, or a third-party registered agent service like MyCorporation can be used.

Why designate a third party to act as my registered agent?

It should be noted that registered agent information is made publicly available. This can cause privacy concerns for business owners who do not wish to list their personal contact information on the internet for everyone to see. It is also common for the registered agent to become a target of spam or robocalls since this private information is relatively easy to obtain.

Another issue that may arise is that in the case of a lawsuit, these documents would be hand delivered directly to the registered agent, and in the case that you used your business location for this purpose, this could occur in front of your customers. This is why many business owners opt for a third-party registered agent service such as MyCorporation to act as a registered agent on behalf of their business.

For a full list of registered agents in Delaware Opens in a new window, please visit the Delaware Division of Corporations.

In order to form a Delaware Corporation, particularly one that issues stock, you must complete and file a Certificate of Incorporation (PDF)(88.5 KB)Opens in a new window with the Delaware Division of Corporations. Please note that the hyperlinked PDF is a form for template use only. It should be used to help correctly complete an Incorporation Certificate.

What information should be included in the Articles of Incorporation?

As stated in the template example, you must include the following information:

• The name of the corporation. This name must also include one of the following words: association, company, corporation, club, foundation, fund, incorporated, institute, society, union, syndicate, or limited. An abbreviation of one of these words is also considered acceptable use.
• The name and street address of the Delaware registered agent.
• General purpose clause.
• List of total number of authorizes shares for the corporation and the value assigned to each stock.
• Name and mailing address of the Delaware corporation's incorporator.

You may submit the entity forms with the help of Delaware's Document Upload Service or print the forms out and mail them in.

Corporate bylaws are a detailed set of rules agreed upon and adopted by the board of directors after a corporation is formed, that specify the internal management structure of the corporation. They are typically drafted by the corporation's founder or directors. Corporate bylaws are not submitted to the state.

All Delaware corporations must adopt a set of corporate bylaws. Bylaws allow a business to maintain consistency in the way it operates and communicate organizational rules to help avoid conflicts and disputes. They cover how directors are elected, meetings are organized, and officer roster and summary of duties. In addition to management, bylaws specify details about ownership rights, annual meetings, and the addition or removal of officers and directors.

If you are not sure how to create corporate bylaws, you can purchase MyCorporation's customized Minutes and Bylaws Package. This kit provides you with the internal documents required to fulfill your corporate formalities and properly operate your business after incorporating.

The board of directors of a corporation are normally elected by the shareholders. However, for a new business, the incorporator (the person who signed the Certificate of incorporation) will often designate the initial directors if there are no initial directors named in the certificate of incorporation. This is done by creating the "Statement of Incorporator" which will list the names and addresses of the initial directors of the business.

The statement of incorporator is then signed by all of the incorporators, which passes all elements of control over to the initial directors. This is filed not with the state, but in a corporate minute book of the incorporation. It is kept as part of the corporate record.

The first meeting of the board of directors is an important time in the life cycle of a corporation. During this meeting, the initial directors of the business will adopt the corporate bylaws, set the fiscal year, and appoint corporate officers. It is also common to authorize the issuance of shares of stock to the founders of your company, usually in exchange for assets.

This meeting, and all future meetings of the board of directors, must be recorded in corporate minutes. Minutes are documents that detail what was discussed and any decisions the business makes during meetings. They are stored with the corporate records.

Corporate minutes are required for all Delaware corporations by law. Falling behind on keeping and maintain minutes can jeopardize the corporation's liability protection and overall tax advantages. It is important to maintain updated corporate minutes and keep copies of all the signed and approved minutes or actions by unanimous consent from any special or annual meetings of the corporation's shareholders and directors.

Stock is a representation of ownership in your corporation. When your shareholders purchase stock, they are buying a small piece of your business. Although it's not legally required, it is common that most corporations will issue paper stock certificates to their shareholders.

In a private company (not publicly traded on the stock market), you can set the value to each stock however you see fit in your corporate bylaws. For example, one share could be worth $10 or $10,000, either would be completely acceptable. If you have additional questions, you may contact the Delaware Division of Corporations Opens in a new window to learn more.

In Delaware, nearly all industries require registering and licensing your business. Begin your business license registration at Delaware One Stop. This is a licensing portal for businesses, including LLCs, that operate in the state of Delaware. With the help of Delaware one stop, your Delaware LLC may take care of the following items.

• Learning about the information necessary to start a business in Delaware.
• Register and license your business in Delaware.
• Add, renew, change, or close licenses for a Delaware registered business.
• Hire employees in Delaware.
• Register out-of-state businesses as a Delaware withholding agent.

Keep in mind that annual fees for Delaware business licenses do vary. However, you may expect to pay $75 for the first location. Separate licenses must be obtained for separate business activities. Check in with your local and county offices to see whether or not you'll need additional licenses, too.

An EIN (also referred to as a Federal Tax ID) is a nine-digit number that is issued by the IRS and used to uniquely identify your business for tax purposes. Think of it as a Social Security Number (SSN) for your business, except an EIN is less sensitive. It is important to wait until the LLC has been approved by the state before applying for an EIN. For that reason, filing for an EIN is one of the last things to do when you are setting up a business.

• Open business checking, savings, or investment accounts
• File taxes for the business
• Complete payroll for employees if applicable
• Obtain lines of credit and credit cards, as well as "build credit" for your business
• Apply for applicable business licenses when required.

You will only need a few pieces of information to file including your mailing address and legal business name. You can apply online Opens in a new window with the IRS by downloading IRS Form SS-4 (PDF)(116 KB)Opens in a new window, or work alongside a third party organization like MyCorporation to complete an EIN application.