Delaware Business Registration: Everything You Need to Know
Delaware business registration is the process of filing the required forms to register a business that will operate in the state.3 min read
2. Delaware Corporation Maintenance Costs
4. Delaware Corporation Advantages
Delaware business registration is the process of filing the required forms to register a business that will operate in the state.
How to Incorporate in Delaware
The first step to incorporate your business in the state of Delaware is filing the certificate of incorporation with the Division of Corporations. You can find a blank version of the certificate of incorporation form on the website of the Division of Corporations.
The next step is entering the information that is required:
- Name of your business
- Date of business formation
- How much stock will be authorized
- Registered agent's name and address
- Name and signature of the business owner
- Par value per share of stock (if applicable)
You must also pay the required filing fee.
Step three is faxing or mailing the completed form to the Division of Corporations. If you choose to fax the form, make sure to include the cover sheet required by the Division of Corporations. You will also need to pay the state corporation filing fee, which is at least $89. The average filing time is approximately three weeks.
Some of the costs associated with incorporating in the state of Delaware include:
- Stock fees, which are dependent on the number of shares authorized.
- If the business authorizes between 1,500 and 20,000 shares, the filing fee will go up by $0.01 for each share.
- If the business authorizes between 20,001 and 2 million shares, the filing fee will go up by $0.005 for each share.
- If the business authorizes over 2 million shares, the filing fee will go up by $0.004 for each share.
- Filing fee, which depends on the par value of the stock and how much stock your business authorizes. The minimum required filing fee is $89
The par value you assign to your corporation's stock can also impact the filing fee. For businesses that choose to assign a par value to each share of stock, the calculation rate for the filing fee is $0.20 for every $1,000 worth of stock. This can go up to $2 million before the corporation moves into the next tier.
When the par value is between $2 million and $20 million, the calculation for the fee is $0.10 for every $1,000 of stock. If the par value exceeds $20 million, the calculation for the fee is $0.04 for every $1,000 of stock. These calculations can quickly become complex, so fee calculators are available on the Division of Corporations' website.
Delaware Corporation Maintenance Costs
Several ongoing fees are required to maintain a corporation in the state of Delaware. One of these is the cost of annual reports. Delaware requires that all domestic corporations pay $50 each year for the annual report. The annual report fee for foreign corporations is $125.
Another cost for maintenance is the franchise tax. The minimum franchise tax in Delaware is $175, and it must be paid each year by March 1. When calculating the franchise tax, you can use one of two methods:
- Par value capital
- Authorized shares
If you opt for the par value capital calculation method, the minimum is $350. On the franchise tax help page of the Delaware corporations' website, you can get help with calculating your company's required franchise tax.
Corporations aren't required by state statues to draft bylaws, but doing so is helpful for everyone involved in the business. The bylaws of a corporation will govern its internal functions, including how it operates and what responsibilities are given to the directors and/or managers. A bank may also require a copy of the bylaws of your corporation before you can open a business account. Although they aren't required, bylaws show that a business is legitimate. Some business owners choose to hire lawyers to draft their bylaws, which often results in spending a lot of money in legal fees.
Delaware Corporation Advantages
Something that the state of Delaware is well-known for is corporations. Delaware is essentially the father of the corporation as it is known today. Before Delaware made major changes to its corporate laws, Congress had to enact all corporations. In the early 1900s, the federal government determined whether citizens could form corporations. The changes to the laws in Delaware transformed the way people formed companies.
If you need help with Delaware business registration, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.