In this Article, we will give you a snapshot of the legal compliance requirement and associated fees required to register Limited Liability Company (LLC) in Delaware and most importantly, maintain the status of an LLC, especially as a small business e-commerce start up.
In the United States, LLCs are registered on the state level, therefore you can register an LLC in any of the 50 States in the United States, including Washington DC.
You can check out the best states in the US to register your LLC as a small business e-commerce start-up, if you want to pay less State fees, less State imposed taxes and do less periodic paperwork in order to maintain your LLC.
In this Article, our focus is on Delaware LLC. What cost should you expect to pay when you register a Delaware LLC? What periodic filings requirements are imposed on Delaware LLCs? What State taxes are levied on e-commerce small business start ups in Delaware and what are the tax rates? What business permits are required to be obtained by e-commerce businesses in Delaware, what’s the cost of these permits and are there any renewal requirements?
This Article presents you a snapshot, so you know what fees and legal compliance requirements to expect if you want to register an LLC for your e-commerce small business start up in Delaware, operate with the required licenses and maintain your LLC status.
Business registration and compliance on Delaware
- LLC Registration cost; the state fee for registering an LLC in Delaware is $140. You can register your Delaware LLC with Bizee for a service charge of $0 + the State fee.
- LLC registration Publishing requirement; No, LLCs in Delaware are not required to publish their registration in a local newspaper.
- Has the Option to register as an Anonymous LLC; LLCs in Delaware have the option to register as an anonymous LLC. This means that the LLC can be registered without putting the names and personal details of the LLC Owners on public record of the State.
- DBA requirement; DBA is required if your LLC is operating under a different name than your LLC registered name. In Delaware DBA is referred to as a “Trade, business, and fictitious name”. Cost of registration is $25, the length of approval indefinite. You can register a DBA in Delaware online.
- Annual report filing requirement; No, Arizona LLCs do not have annual report filing requirements.
Annual Franchise tax filing and compliance in Delaware
- State Franchise tax requirement; Yes the cost for LLCs filing Franchise tax in Delaware is $300.
You can learn more about the Delaware Franchise tax.
Annual State income tax filing and compliance in Delaware
- State income tax requirement; Delaware has a graduated state individual income tax, with rates ranging from 2.20 percent to 6.60 percent. There is also a jurisdiction that collects local income taxes. Delaware has a 8.70 percent corporate income tax rate and also levies a gross receipts tax.
- Who files State income tax; LLCs by default are passed through entities meaning that tax obligation passes through to the individuals who own the LLC. Therefore an LLC with a default tax status pays the individual state income tax. Interestingly, if the individuals behind the LLC are not resident in the state and do not have state source income (a dependent agent in the state), then they are not required to pay “individual State income tax”.
If the LLC owners are resident in the State or have State source income (a dependent agent in the state), then the LLC Owners are required to pay “individual State income tax”.
If the LLC has elected to be taxed as a corporation (C-corp), then the LLC is required to pay “Corporate State income tax”.
- How to file state income tax; You can file your Delaware State income tax by yourself. You will need to visit the State website. Alternatively, we recommend using the Service of a Certified Public Accountant (CPA), through H&R Block to file your state income tax.
Periodic Sales tax filing and compliance in Delaware
- Sales tax requirement; Delaware does not have any state or local sales taxes.
- Sales tax nexus; Sales tax nexus is the state-defined threshold between a Seller and a state, which when reached makes it obligatory for the Seller to register for a Seller permit in the state, charge sales tax to customers in the state and remit the sales tax to the State Government.
Generally, there is the “physical sales tax nexus” and “economic sales tax nexus”.
Physical sales tax nexus is reached when the Seller had physical presence in the state (i.e have an office address, a warehouse etc).
In most States, “economic sales tax nexus” is reached when a Seller makes up to 200 transactions or $100,000 in sales in a State.
It’s important to note that, when you register your LLC in the State of Delaware (which generally requires that you have a registered business address in Delaware), you automatically meet the physical sales tax nexus and will be required to obtain a Sales tax permit in Delaware, charge applicable sales tax rates to customers in Delaware and remit sales tax to the Delaware State Government.
- Sales tax permit; there is no sales tax in Delaware. Delaware does not issue sales tax permits. Other registration requirements may apply.
- Reseller/Resale Certificate; Delaware doesn’t have a state sales tax, or similar. Therefore, a Resale certificate is not applicable.
Delaware resale businesses who want to the MTC Uniform Sales & Use Tax Resale Certificate or SST Certificate of Exemption form can use the Delaware Federal Employment Identification Number (FEIN) as Seller’s ID when indicating others States as resale States (except for states that do not accept out-of-state seller ID). For States that do not accept out-of-state seller IDs, the Business must register for seller IDs specifically in those states and indicate those state issues seller IDs on the MCT or SST forms.
Conclusion
This Article shows you a snapshot of the legal fillings and compliance requirements for LLCs that are registered in Delaware, specifically for LLCs that want to carry on the business of selling and especially for small e-commerce start up LLCs that are registered in Delaware.
If you are wondering what might be the best State in the United States to register your small business (especially if you are a reseller or an e-commerce business), we have written this Article, where we go over our most recommended states for registering a business in the United States, if you want to pay less LLC filing and legal compliance fees, if you want less state imposed taxes and if you want to do less periodic legal paperwork required to maintain your LLC status.
