The Delaware LLC, explained honestly

A Delaware LLC is a limited liability company formed under the Delaware Limited Liability Company Act, 6 Del. C. Chapter 18. Delaware carries about 1.65 million active LLCs and registered 235,393 new ones in 2025 — more than any other state.

One number frames everything else. Delaware registered 235,393 new LLCs in 2025 but the Census recorded only 60,132 business applications from Delaware addresses — a 3.9× gap. Because applications are attributed to the applicant’s own address, the only available reading is that the overwhelming majority of Delaware LLCs belong to people who are not in Delaware.

Delaware is the state most often named when someone asks where to form an LLC. The advantages behind that reputation are real — and several of the things people believe about them are not. Here is every common claim, tested against the statute.

Most people typing “Delaware LLC” into a search box are one to three people running a business somewhere else. For them Delaware is not a substitute for their home state’s requirements — it is an addition to them. Two states, two annual filings, two registered agents, and Delaware’s $400 sitting on top of a home-state bill that does not shrink by a dollar.

Texas is the clearest case

Texas charges $750 to register a foreign entity, and its late fee multiplies the registration fee by the number of years you have been transacting business there unregistered. An unregistered entity also cannot maintain a lawsuit in Texas.

The pattern holds across states. The home-state cost is owed regardless, Delaware is layered on top, and the premium is stable and predictable — roughly $450–700 a year, every year. Only the one-off entry cost varies: modest in California, painful in Texas.

Where Delaware is straightforwardly the wrong answer

• A local business with premises, staff or customers in one state.
• A single-owner business that will never raise institutional money — the Chancery and freedom-of-contract advantages solve problems you do not have.
• A licensed profession regulated by your home state.
• Anyone choosing Delaware to reduce tax. You are taxed where you live and operate, not where you filed.

If you have already formed in Delaware and now think it was wrong, there are three routes: foreign-qualify at home and keep it, cancel in Delaware and re-form at home, or convert out of Delaware where your home state permits it. Each has different costs and tax consequences, and which is right depends on facts — a question for a lawyer or an accountant. Note that Delaware requires the annual tax to be paid before it will accept a cancellation.

1. Choose a name that satisfies 6 Del. C. §18-102

The name must contain “Limited Liability Company”, the abbreviation “L.L.C.” or the designation “LLC”. Delaware is narrower than most states here — there is no “Limited Company”, no “LC”, no “Ltd. liability co.” The name must also be distinguishable on the Division’s records. Search it first at the Division’s name-availability tool; quotation marks force an exact match.

2. Appoint a registered agent

Required continuously, with a Delaware address. See the registered agent section below — Delaware regulates its agents more heavily than most states.

3. File the certificate of formation

Under §18-201 it needs remarkably little: the LLC’s name, the address of the registered office with the name and address of the registered agent, and any other matters the members choose to include. No member or manager is named. It is signed by an authorized person.

4. After filing

• Get an EIN from the IRS. Free, minutes online if you have an SSN or ITIN. Without one the online tool is closed, but the number is still free — Form SS-4 can be faxed, or you can call the IRS international line.
• Put a limited liability company agreement in place. §18-201(d) says one “shall be entered into”, and §18-101 recognises written, oral or implied agreements. It is never filed with the state. Given Delaware’s whole distinctive is deference to this document, writing it down is the point.
• Open a bank account before taking any money, so company and personal funds never mix.
• Diarise 1 June. That is the annual tax deadline, every year, forever.

Fees verified against the Division of Corporations fee schedule and the Delaware Code on 13 August 2026. One thing worth knowing if you check our numbers against the statute: the Division’s schedule runs about $40 above the statutory fee wherever receiving, indexing and municipality charges are bundled. Formation is $70 in the code and $110 payable. Quote the code figure alone and you will underpay.

So the realistic steady-state cost of keeping a Delaware LLC alive is $400 plus a registered agent — roughly $450 to $700 a year, indefinitely, whether or not the company does anything.

The tax is flat. It does not scale with revenue, profit, assets or members — a dormant LLC with no bank account pays exactly what one turning over $50m pays. Registered series add $100 each. A foreign LLC registered to do business in Delaware owes the same $400.

There is no proration. Form your LLC on 20 December and the full $400 is due the following 1 June for that stub period. And you cannot walk away from it: §18-1107(c) requires the annual tax to be paid before Delaware will accept a certificate of cancellation.

What happens if you do not pay

The arithmetic is unforgiving. Three missed years at $400 plus a $200 penalty each, with 1.5% monthly interest compounding on the lot, plus the revival fee, turns a $1,200 obligation into several thousand — for a company that may have done nothing at all. If you have a Delaware LLC you no longer use, cancelling it properly is far cheaper than abandoning it.

What Delaware does not tax, and what your own state still will

Delaware imposes no income tax on an LLC that does not do business in Delaware, and has no sales tax. That says nothing about where you are taxed. You are taxed where you have nexus — where you live, work, employ people or hold property. Delaware does tax income sourced to Delaware, and a business genuinely operating there faces a gross receipts tax (levied on revenue, not profit, though monthly exclusions start around $100,000) and a general business licence of about $75 a year under 30 Del. C. §2301. The trigger for both is doing business in Delaware, not being chartered there.

Delaware issues two certificates and they are not interchangeable. Both attest to status as at the moment of issue, which is why counterparties usually demand one dated within the last 30 to 90 days.

The $125 premium buys the recitation of filings, not a stronger attestation. Issued the same day, both say exactly the same thing about whether the entity is in good standing. Banks opening accounts and lenders at closing usually want the short form; acquirers in diligence usually want the long form.

If a bank outside the US is going to read it

A certificate on its own carries a Delaware signature that a foreign institution has no way to check. To be accepted abroad it usually needs that signature authenticated by the state — either an apostille, or a plain authentication, depending on whether the destination country is a party to the Hague Apostille Convention. Delaware charges $30 for either, so the realistic cost of a certificate a foreign bank will accept is $80, not $50.

What the free search shows — and what it withholds

The Division runs a free entity search, and every other “Delaware company search” site is a reseller sitting on top of it. The free result gives you the entity name, file number, formation date, entity kind and type, whether it is domestic or foreign, and the registered agent’s name, address and phone number.

Note also that the Division prohibits data mining and states that using automated tools may result in suspension of access. If you need Delaware data at volume, that is a licensing conversation, not a scraping project.

The certificate of formation requires the LLC name, the registered office address, and the registered agent’s name and address. No member or manager is named. And because Delaware LLCs file no annual report, no name is added later either.

For comparison: Nevada publishes managers or managing members annually under NRS 86.263, Florida requires at least one person with authority to manage under Fla. Stat. §605.0212 on a free and bulk-downloadable register, and Texas requires initial managers or members on the certificate of formation under Tex. Bus. Orgs. Code §3.010. Delaware, Wyoming and New Mexico do not.

On federal beneficial-ownership reporting: FinCEN states that US companies are exempt and no longer file BOI reports. The rule in force is at 90 FR 13688 (26 March 2025). Only entities formed under the law of a foreign country that register to do business in the United States report, and those companies do not report their US-person beneficial owners. A Delaware LLC is a domestic entity, so it is exempt — the test is the law the entity was formed under, not who owns it. Verified against fincen.gov on 14 August 2026.

Every Delaware LLC must continuously maintain a registered office and a registered agent in Delaware. The agent receives service of process and state correspondence. Your principal place of business and mailing address can be anywhere in the world — only the agent’s address must be in Delaware.

Changing your agent is a routine state filing. If your agent resigns and you do not replace them, the LLC eventually ceases to be in good standing — the same consequences as non-payment of the annual tax.

The Court of Chancery is a court of equity dating to 1792. It sits without a jury, and its judges hear business disputes and very little else. It describes itself as the preeminent forum for disputes involving the internal affairs of Delaware entities, and the LLC Act routes agreement disputes to it by name.

That matters enormously if you might actually litigate a governance dispute — investors, co-founders with real capital at stake, funds. It matters considerably less to a two-person business that never will, and litigating in Delaware from another state is more expensive, not less.

Freedom of contract is the real distinctive

§18-1101(c) lets fiduciary duties be expanded, restricted or eliminated by the agreement — with the exception that the implied contractual covenant of good faith and fair dealing cannot be eliminated. This is genuinely powerful for a negotiated, multi-party arrangement. It does nothing at all for a single-member LLC with no agreement to speak of.

Liability and charging orders

§18-303 provides that the company’s debts are solely the company’s, and no member or manager is personally obligated solely by reason of being a member or acting as a manager. What that does not cover: your own negligence or wrongful acts, debts you personally guarantee, unpaid payroll taxes, and fraud. The things that actually protect you are mundane — a separate bank account, no personal spending through the company, a written agreement, proper records.

Two caveats belong in the same breath. Whether a court in another state applies Delaware’s §18-703 to a member domiciled there is unsettled — a charging order is arguably a remedy rather than an internal-affairs question, and courts apply their own law to their own enforcement. And bankruptcy is a separate system: where a member files, a federal trustee succeeds to the interest, and the reported cases have held that in a single-member LLC the trustee takes the whole of it. If this is why you are here, it is a conversation for a lawyer.

You can. No US citizenship, residency, visa, Social Security Number or US address is required, and you never need to visit. The statutes simply never imposed such a condition.

Whether Delaware is the right choice is a different question. If you are raising US venture capital, investors expect Delaware and that is a real, non-negotiable reason — though note the entity-type point above. If you are not raising money, the reason is much weaker and Delaware costs $400 a year more than states that ask for very little.

Getting an EIN without a Social Security Number

The IRS online application is closed to you, but the number is still free. Fax Form SS-4 — the IRS instructions say a faxed application is generally processed within four business days, though applicants commonly report the letter itself taking longer to arrive — or call the IRS international line, which can issue the number during the call. Where the form assumes a US taxpayer ID, you write “Foreign”. A third party can be authorised to receive the number on your behalf using the designee section.

A foreign-owned single-member LLC treated as a disregarded entity also generally has to file Form 5472 with a pro-forma Form 1120 every year — including for transactions people do not think of as transactions, such as capital contributions. It cannot be e-filed, and the penalty for not filing is substantial. That obligation exists whether or not the company made any money, and it is entirely separate from Delaware’s $400.

Whether your income is effectively connected with a US trade or business depends on where the work is actually performed and on any treaty between your country and the United States. That analysis needs a qualified international tax professional in both countries. No formation service can do it for you.

Cancel it properly rather than abandoning it. Delaware will not accept a certificate of cancellation until the annual tax is paid, so walking away does not end the obligation — it just lets penalties and interest accumulate until the certificate is cancelled for non-payment three years later, by which point reviving it costs several times the original bill.

Before filing, settle debts, close the bank account, file any final federal returns and cancel registrations in any other state where you foreign-qualified. If the certificate has already been cancelled for non-payment, revival is a separate filing with its own fee plus all arrears, and it restores the company as though the certificate had never been cancelled.