How to start a Delaware corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Delaware corporation.

How to start a corporation in Delaware

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Delaware corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Delaware requirements:

• All Delaware corporation names must include "Association," "Company," "Corporation," "Club," "Foundation," "Fund," "Incorporated," "Institute," "Society," "Union," "Syndicate," or "Limited."
• Your business name must distinguish your corporation from all other business entities on file with the Delaware Division of Corporations.
• Delaware does not allow business names to include the words "bank" or "trust," unless the corporation is a bank reporting to the Delaware State Bank Commissioner.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Delaware S-Corp and C-Corp tax designation

There are similarities between a Delaware S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: Both S-Corps and C-Corps are owned by stockholders. The businesses are managed by a board of directors. There are no limits to the number of shareholders a C-Corp can have, but S-Corps are usually limited to 100 shareholders.
• Taxes: C-Corps pay taxes on business income at the corporate rate. Profits distributed to shareholders are taxed at the shareholder's personal income tax rate. S-Corps are not taxed at the corporate level. Corporate income is taxable to their shareholders at their personal income tax rate.
• Documents: An S-Corp must file IRS Form 2553 to elect S-Corp status.

3. Appoint directors and shareholders for your Delaware corporation

Each state has its own personnel requirements for incorporating. In Delaware, you must have at least one or more incorporators. Delaware has no age requirement for incorporators, and there is no requirement that incorporators must live in the state of Delaware.

State the number of your corporation's directors in either your Bylaws or your business's Articles of Incorporation. 

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Delaware address) or choose one to do that service for you (if you are not located in Delaware or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Delaware

Once you have a business name and registered agent, you can register your business as a Delaware corporation with the state by filing your Articles of Incorporation. This document may be referred to informally as a corporation's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Delaware must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Delaware corporation.

What to do after incorporating in Delaware

Delaware requires that corporations keep corporate records, such as Bylaws, to maintain their corporate status. Although it's not required in Delaware, keeping Corporate Minutes is still a good idea. They help protect the legality of your corporate status. We have more detailed information about Delaware's requirements for Bylaws and Corporate Meeting Minutes.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Delaware means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Delaware, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you have to keep records like bylaws and meeting notes to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state