Steps to start a business in Delaware
Delaware nicknamed as “the Diamond State” is considered to have one of the most business-friendly corporate laws. This is one of the primary reasons why entrepreneurs prefer to start a business in Delaware. Today, the state is home to some of the largest companies in the nation including DuPont, AstraZeneca, Citicorp Banking Corporation, W. L. Gore & Associates, Inc., Swissport Holdings, Inc., Navient, Delphi Financial Group, Inc., and Barclays Bank Delaware among others. If you are planning to hire a Delaware registered agent and register your business in the state then the following steps would help you identify all your business requirements and ensure sustainability and success.
1. Prepare Delaware Business Plan
Whether you are a first time entrepreneur or an experienced business owner planning to register a business in Delaware; you will find a business plan to be the foremost tool towards helping you with good decision making. A strong business plan will take into account several aspects of the business thus providing increased clarity on various areas of the business operation including business formation costs and Delaware business license, marketing strategies, finance and funding options, product or service detail, identifying competition, hiring employees, and future expansion. Some of the areas that a strong business plan will focus on are:
- Committing resources towards capital improvements like investing in computers, software, logistics, buying or leasing of commercial space etc.
- Creating a sound marketing strategy that will take into account your existing competition, the product or services offered the existing market conditions, and the target audience.
- Seeking investments or securing funding using the marketing plan and future expansion plans
- Retaining professional services or hiring the right talent based on the specific requirements of your business, for example: if you register a business in Delaware as a retail store, you will need to hire a sales associate, cashier, customer service representative, visual merchandiser, store manager, and inventory control specialist.
- Providing cost estimates related to pre-opening and post-opening startup costs. This will take into account several areas like employee hiring, marketing and advertising, market research expenses, registration of a business, Delaware business license and annual maintenance costs, equity financing and debt financing, cost towards buying equipment, payroll, and insurance tax.
- Providing a proper structure and management objectives that will focus on operational milestones as well as sales targets. It will include both short-term and long-term milestones based on the revenue or business model.
2. Attend Entrepreneurial Training or Development Programs in Delaware
You have an idea and wish to unveil it on a global platform thus turning it into a successful business venture but, you don’t know how to implement it. What are your options? In such a scenario, identifying and attending Entrepreneurial Training or Development Programs in Delaware can help provide meaningful guidance and open up different avenues for you to launch your new business idea. The importance of Entrepreneurial Development Programs (EDP) lies in the advantage it offers especially to individuals with no prior business experience. Some of the benefits you will derive from such programs include:
- Promoting development as well as polishing of your business skills
- Helping in acquiring knowledge and skills critical towards establishing a new business
- Engaging in Entrepreneurial Development Programs (EDP) that focus on structural training, which is essential for transforming an individual into a successful entrepreneur
- Attending EDP programs before you start a business in Delaware as it provides meaningful guidance in several areas of business operation like product marketing, information on identifying state funding opportunities, guidance towards accessing facility centers as well as services and other infrastructure
- This type of program also plays a key socio-economic role through proper identification of your entrepreneurial qualities and helps you to channel enterprise resources
Where can you attend or enroll for Entrepreneurial Training or Development Programs in Delaware? The Delaware Small Business Development Center (SBDC) offers a wide range of options including small business training programs, webinars and events for small businesses, and workshops to enable you to start a business in Delaware.
3. Choose Business Structure for Delaware Business
In order to start a business in Delaware, you will need to first choose a proper business structure. There are several different business structures that you can choose from in Delaware and they are:
The decision related to the business structure is an important decision as it will have an impact on the amount of taxes you will have to pay. The structure you choose will also define the risk factor related to the personal assets and the personal liability you may face. Hence, it is important to choose a business structure that will offer a balance of tax benefits and legal protection. You can register a business in Delaware after choosing any of the above structures although the most commonly chosen structures according to the Delaware division of corporations are corporations and limited-liability companies because of the multiple benefits they offer.
4. Naming Your Delaware Business
One of the important areas to focus on before you register a business in Delaware is identifying a business name and then reserving it in the State. There are name specifications that you have to be aware of e.g., if you are planning to register an LLC then the name should contain words like “Limited Liability Company” or abbreviations like “L.L.C.”, pursuant to 2 DE Code § 18-103 (2014 through 146th Gen Ass). Once you have identified a name, you need to conduct a Delaware business name search forming a Delaware entity to ensure it is available. You can conduct a business name search using the Division of Corporations resources or website. Simultaneously, you will need to ensure that your chosen name is distinguishable from any other name on the database.
The Delaware division of corporations handles all name reservation applications and you can reserve, re-reserve, transfer a name or cancel an existing name reservation as well. You can reserve a name for a period of 120 days in order to start a business in Delaware.
5. Choose Your Location for Delaware Business
One of the key factors towards successfully operating a small business is choosing the right business location. When you start a business in Delaware, certain key elements of your business will be location dependent like availability of commercial space, business resources, transportation and logistics, business environment, foot traffic or targeted audience, cost, and accessibility. The startup environment in Delaware is positive and vibrant and there are three main counties where you can set up your new business. The counties are:
- Kent County
- New Castle County
- Sussex County
It is important to know that each of the above counties have their own County Laws & Codes, which will define the requirements of each and every business based out of that county including Delaware business license requirements.
6. Register Your Business with Delaware Division of Corporations
The most important aspect of starting a new business is its formation. If Delaware is your chosen state then you will have to go through the registration process. Different states have different laws, rules, and regulations pertaining to new business formation. So, how do you register a business in Delaware?
Once you have chosen your business structure, the next step is to download the form for incorporation or new business formation. This form has to be filled, signed, and submitted along with a cover memo and the applicable fee. The fee for Domestic Corporation is $89. The form has to be submitted to the Delaware division of corporations through mail or electronically using their Document Upload Service.
Alternatively, a top Delaware registered agent like IncParadise can help you with the process of registration or incorporation. We have the experience and expertise in Delaware new business formation and have knowledge of various processes and requirements that will help you to register a business in Delaware.
7. Get Your EIN
EIN is fully known as the Employer Identification Number and is a Federal Tax Identification Number that is assigned by the Internal Revenue Service (IRS). If you start a business in Delaware then you will be required by the IRS to apply for and obtain this unique nine-digit number as it is used for reporting employment taxes. It is also important to note that all businesses don’t require an EIN. If you want to know whether your business requires an EIN or not or if you want to apply for one then as one of the most reputable Delaware registered agents, we can provide the necessary information and guide you through the EIN application process.
8. Open a Business Bank Account for Delaware Business
Banking is an important aspect of any startup or entrepreneurship business. The fundamental benefit of banking is to secure your expenses and if you start a business in Delaware then you will need to keep your personal and business expenses separate. This is where opening a business bank account comes into play. Once you open a business bank account, you will not only get business credit cards but it will also help you to build a strong company credit profile. The paperwork for opening a business account will vary according to the type of bank and the form of business entity.
9. Obtain Delaware State Business Licenses and Permits
You can start a business in Delaware but to make it operational in the state, you will need to apply for and obtain state business licenses and permits. The type of Delaware business license or permit your business requires will be determined by the business activity. Your business may require a single or multiple license or permit. You can register with Delaware’s One Stop Business Registration and Licensing System and you can opt for a single-year or a three-year business license. It is important to note that Delaware counties as well as towns may also require you to apply for local licenses and permits and you can find licensing information from the local and county offices.
A Delaware business license or permit is issued by various state agencies. For example, if you start a business in Delaware as a food establishment like a restaurant, bakery, food truck etc., then you will have to apply for a business license with the Division of Public Health. Similarly, if you offer Non-Professional Services like an advertising agency or IT services in the City of Wilmington then you will need to apply with the City of Wilmington, Delaware Department of Finance, Wage/Business License Division. Yes, the entire process of identifying the right business license or permit for your company may look complex and this is where the “Business License Research Report” service by IncParadise can benefit you immensely. This research report contains a list of filing instructions, supporting document requirements and fees for all business licenses and permits in Delaware.
10. Annual and Ongoing Requirements
Different states have different annual and ongoing requirements for new and existing businesses. If you register a business in Delaware then in order to be compliant with the state business laws, different forms of businesses have to fulfill different annual requirements like all active domestic corporations have to file annual reports and franchise taxes while a limited liability company or limited partnership will have to file only annual taxes. It is important to note that failure to comply with annual requirements can result in penalties for the business. IncParadise as one of the top Delaware registered agents can help you to be compliant with all your annual business requirements.
Delaware is one of the most business friendly states – Register Today!