How to Start a Business in Delaware

Starting a business in Delaware involves several key steps, including selecting a business structure, registering with the state, and obtaining necessary licenses and permits. Entrepreneurs should also consider market research and business planning to ensure a successful launch.

Delaware Economy Trends

Small Business Statistics: Delaware is home to approximately 104,000 small businesses, which employ about 49.2% of the state's workforce. Notable industries include finance, insurance, and real estate. For more detailed statistics, visit the U.S. Small Business Administration.

New Business Application Statistics: In Delaware, there were 55,103 new business applications. For more information, see the Census Bureau's visualization.

Exports and GDP: Delaware's economy benefits from significant exports, particularly in chemicals and pharmaceuticals, contributing to a robust GDP. For recent data, refer to the U.S. Census Bureau.

Economic Highlights: Delaware's favorable tax climate and strategic location make it an attractive hub for large employers and industries. Key cities like Wilmington and Dover are central to the state's economic activities. For more information, visit the Delaware Division of Small Business.

• Step 1: Perform Market Research
• Step 2: Write a Business Plan
• Step 3: Get Licenses and Permits
• Step 4: Acquire Funding
• Step 5: Choose a Business Entity
• Step 6: Select a Business Location
• Step 7: Register the Company

Step 1: What Kind of Business Should I Start in Delaware?

Selecting a business type in Delaware depends on factors such as personal interests, market demand, and regional economic strengths. Delaware's economy is particularly strong in the following sectors:

• Finance and Insurance
• Real Estate
• Manufacturing

For more information, visit the Delaware Division of Small Business.

How to Do Market Research in Delaware: Market research involves gathering information to understand consumer needs and market conditions. Primary research methods include surveys and interviews, while secondary research involves analyzing existing data. Key areas to analyze include consumer demographics, buying behavior, and market gaps. Conducting a competitive analysis is also recommended to understand other businesses in the area. This research helps entrepreneurs make data-driven decisions when launching a new business in Delaware.

Step 2: How to Write a Business Plan in Delaware

A business plan is essential for clarifying goals, attracting investors, securing funding, organizing operations, and evaluating progress. It is valuable for both new and scaling businesses and can evolve over time.

Executive Summary: This section provides a snapshot of the business, including its mission statement, product or service offerings, and basic information about the leadership team, employees, and location.

Company Description: Detail the nature of the business, the marketplace needs it aims to satisfy, and the specific consumers, organizations, or businesses it serves.

Market Analysis: Include industry insights, target market demographics, and competitive analysis to demonstrate a thorough understanding of the market landscape.

Organization and Management: Outline the business's organizational structure, detailing the ownership, management team, and board of directors if applicable.

Product/Service Line: Describe the products or services offered, including the benefits to customers and the product lifecycle.

Marketing Plan: Explain the marketing strategy, including advertising, promotions, and sales tactics to attract and retain customers.

Financial Plan: Provide financial projections, including income statements, cash flow statements, and balance sheets, to illustrate the business's financial health and funding needs.

Appendix: Include any additional information, such as resumes, permits, lease agreements, or legal documentation, that supports the business plan.

Step 3: Do I Need a Business License in Delaware?

Yes, in most cases, businesses in Delaware need to obtain licenses or permits. There is no universal business license issued at the state level; instead, licensing depends on factors such as the type of business, its physical location, and whether it is regulated. Common types of business licenses or permits include sales and use tax permits, local city or county business licenses, and regulatory or professional licenses.

Business owners can determine which licenses apply to them by using state government licensing search tools or portals, consulting the Delaware Division of Small Business, or accessing centralized online checklists.

How Much Does a Business License Cost in Delaware?

Business license costs in Delaware vary depending on factors such as business type, jurisdiction, and the type of license or permit required. Some licenses may be available at no cost, while others may range from $15 to $100 for a general business license. Certain groups, such as veterans or nonprofits, may qualify for exemptions or fee waivers. Business owners should check with the appropriate issuing agency for exact fee amounts and payment policies.

How to Register for a Seller’s Permit in Delaware

In Delaware, a seller’s permit is referred to as a business license, which authorizes the sale of taxable goods or services. The state applies tax to sellers. The Delaware Division of Revenue issues these permits, and applications can be submitted online through the One Stop Business Licensing and Registration Service.

Applicants need to provide information such as the business name, address, ownership details, and expected sales. There is no cost for the permit, but annual renewals may be required. For further support, contact the Division of Revenue or visit their help center.

Step 4: How Much Does it Cost to Start a Business in Delaware?

The cost of starting a business in Delaware varies based on factors such as business type, industry, location, and scale of operation. According to the U.S. Small Business Administration, startup costs can range widely, with larger businesses or those in certain industries incurring higher expenses.

Common startup expenses include registration and incorporation fees, licensing and permits, equipment, supplies, office space, insurance, professional services, employee-related expenses, and marketing. Filing fees for LLC formation or corporation registration typically range from $90 to $200, with additional costs for annual reports or franchise taxes.

How to Get Business Funding in Delaware

Startups in Delaware have access to multiple funding options. Business owners should estimate their capital needs and choose suitable funding options based on their goals and eligibility. Common funding sources include:

• Self-funding (bootstrapping)
• Loans
• Grants
• Investors
• Crowdfunding

How to Self-Fund a Business in Delaware

Self-funding, or bootstrapping, involves using personal financial resources to start or run a business. Common methods include using savings, selling personal assets, earning supplemental income, pre-ordering, or borrowing from friends or family. Advantages include full ownership and control, while risks involve limited capital and personal financial exposure. Entrepreneurs should budget carefully and optimize resources. For assistance, consult the Delaware Chamber of Commerce or Small Business Administration tools.

How to Find Investors in Delaware

An investor provides capital and may offer mentorship, networking, or strategic guidance. Compensation may involve equity, dividends, or board positions. Business owners in Delaware can connect with investors by attending events, using local investment networks, contacting state-level organizations like the Delaware Division of Small Business, and preparing a compelling pitch. Types of investors include angel investors, venture capitalists, friends and family, and local private investors.

How to Get a Loan to Start a Business in Delaware

Business loans are a common funding method for new businesses in Delaware. Options include traditional bank loans, SBA-backed loans, and non-traditional options like peer-to-peer lending, microloans, and supplier financing. Steps to obtain a loan include:

• Choosing the right loan type
• Meeting eligibility criteria
• Providing required collateral
• Preparing key documentation

Required documents usually include financial statements, a business plan, proof of income, and tax returns. Prospective business owners should consult financial professionals and compare loan offers to find the best terms.

How to Find Delaware Business Grants

Business grants are funding sources that do not require repayment. Each grant program has different eligibility requirements and application processes. In Delaware, business owners can find grants through the Delaware Division of Small Business, local economic development offices, state agency websites, and dedicated grant portals. Entrepreneurs should use grant search tools and consult local business support centers for assistance.

Can I Start a Business with No Money in Delaware?

Starting a business with no money in Delaware is not possible, as some capital is required for essentials like registration fees, licenses, equipment, and marketing. However, it is possible to launch a low-cost business by starting from home, choosing a service-based model, using free resources, applying for grants, or networking locally. Delaware offers free or low-cost business tools, such as online registration portals, to help reduce expenses.

Step 5: Choosing a Business Structure in Delaware

Choosing a business structure is important in Delaware due to factors like taxation, liability, management, and registration requirements. Available structures include:

• Sole Proprietorship
• Partnership
• Corporation
• Limited Liability Company (LLC)

Each structure has implications for taxation, liability, operations, ownership, and funding. Consulting a tax accountant, attorney, or business consultant is recommended. For more information, visit the SBA.

How to Start a Sole Proprietorship in Delaware

A sole proprietorship is a business owned and operated by one individual, offering full control and simple tax treatment but with personal liability for debts.

Starting a Sole Proprietorship in Delaware:

• Step 1: Choose a business name. You may use your legal name or a trade name.
• Step 2: File a DBA (“Doing Business As”) if using a trade name. This is typically filed at the county level.
• Step 3: Obtain necessary licenses and permits. Requirements vary by business type and location. An EIN is required if hiring employees.

Sole proprietorships do not need to be formally registered with the Secretary of State in Delaware.

How to Start a Corporation in Delaware

A corporation is a legal entity separate from its owners, providing limited liability to shareholders. Different types include C-Corp, S-Corp, and nonprofit, with varying tax treatments.

Core Features:

• Legal separation of owners and business
• Limited liability for shareholders
• Centralized management
• Transferable ownership through stock
• Taxation of profits

Steps to Form a Corporation in Delaware:

• Step 1: Choose a Corporation Name. Ensure it meets naming requirements and is unique.
• Step 2: Appoint a Registered Agent and Registered Office. This can be an individual or company with a physical address in Delaware.
• Step 3: File the Articles of Incorporation with the Delaware Division of Corporations. Include name, shares, incorporators, and agent details. Filing fees apply.
• Step 4 (Optional): Foreign Corporations must file additional documents like a Certificate of Good Standing.
• Step 5 (Optional): File IRS Form 2553 for S-Corp election if applicable.

How to Start an LLC in Delaware

An LLC (Limited Liability Company) combines elements of corporations and partnerships, offering limited liability, pass-through taxation, and flexible management.

Steps to Form an LLC in Delaware:

• Step 1: Name Search/Selection. Use the Delaware Division of Corporations portal to search for or reserve a business name. Fees may apply.
• Step 2: File Articles of Organization with the Division of Corporations. Filing can be done online or by mail, with applicable fees.

Further steps may include obtaining an EIN and appointing a registered agent if required.

How to Start a Business Partnership in Delaware

A business partnership is owned by two or more individuals. Types include general partnership, limited partnership, and limited liability partnership.

How to Start a Limited Partnership in Delaware:

A Limited Partnership (LP) includes at least one general partner with full liability and management control, and one or more limited partners with limited liability. Starting an LP requires filing a Certificate of Limited Partnership with the Delaware Division of Corporations. Filing can be done online or by mail.

How to Start a General Partnership in Delaware:

A general partnership (GP) is jointly owned and managed by partners who share profits, losses, and liability. Registration is optional, but a Statement of Partnership Authority can be filed with the county recorder’s office if desired.

How to Start a Nonprofit in Delaware

A nonprofit is a corporation formed for purposes other than profit, such as charity or education. Nonprofits must comply with state-specific incorporation procedures and file with the Delaware Division of Corporations. To obtain tax-exempt status, file IRS Form 1023 or 1023-EZ for 501(c)(3) status. Filing fees and processing options are available.

Step 6: Choosing a Business Location in Delaware

Choosing a business location is critical for customer-facing businesses, impacting success, visibility, and compliance. Common setups in Delaware include brick-and-mortar, online, home-based, and mobile businesses. Key factors to consider are proximity to the target market, accessibility, local competition, cost, zoning laws, and brand visibility. For location requirements, consult local zoning boards or safety inspection offices.

What Kind of Business Can I Run From Home in Delaware?

Running a home-based business in Delaware is influenced by local regulations such as zoning ordinances and homeowner association rules. Some businesses are typically allowed if they do not affect the neighborhood's character, while others may be prohibited due to noise or safety concerns. Always check with local zoning or planning departments and review HOA rules.

How Do I Start a Small Business From Home in Delaware

Home-based businesses in Delaware must comply with legal requirements, including business formation, registration, licensing, and zoning compliance. Local governments enforce zoning laws, and a Home Occupation Permit may be required. This permit assesses the business's suitability in a residential setting. Contact local governing agencies for compliance.

Starting a Business Online in Delaware

An online business is conducted over the internet, with the same legal requirements as other businesses in Delaware. Steps include choosing a business name, selecting a legal structure, filing formation documents, obtaining an EIN, and acquiring licenses or permits. Additional regulations may apply, such as consumer protection laws.

Step 7: Legal Requirements for Starting a Business in Delaware

Delaware does not limit who can start a business, but all new businesses must follow state laws and local ordinances. Legal requirements depend on business structure, industry, location, and products or services offered. Businesses must file formation documents, obtain licenses, comply with tax obligations, and designate a registered agent if applicable.

How to Get an EIN Number in Delaware

An EIN (Employer Identification Number) is a unique nine-digit number issued by the IRS for tax identification. It is required for hiring employees, opening business bank accounts, and filing taxes. Apply for an EIN online using the IRS EIN Assistant, by mail or fax using Form SS-4, or by phone for international applicants. U.S. entities can mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Foreign applicants with no U.S. office can fax to: 855-215-1627.

How to Get a Delaware Registered Agent

A registered agent is designated to receive legal documents on behalf of a business. In Delaware, LLCs, corporations, and limited partnerships must appoint a registered agent. The agent can be an individual over 18 with a physical address in Delaware or a business entity authorized to operate in the state. Appoint the agent in the formation paperwork, and submit any required documentation to the Delaware Division of Corporations. Fees may apply for appointing a registered agent or for expedited processing.

Patents, Trademarks, and Copyrights in Delaware

Patents, trademarks, and copyrights are forms of intellectual property protection.

Patents: Provide exclusive rights to inventors to prevent others from using, making, selling, or importing their invention. Governed by the U.S. Patent and Trademark Office (USPTO) under Title 35 of the U.S. Code, patents generally last 20 years from the filing date.

Trademarks: Distinguish the source of goods or services through words, phrases, symbols, or designs. Federal trademarks are handled by the USPTO, while state trademarks are managed by the Delaware Division of Corporations. Trademarks last 10 years and are renewable.

Copyrights: Protect original creative works, granting exclusive rights to reproduce, distribute, display, and perform the work. Overseen by the U.S. Copyright Office under Title 17 of the U.S. Code, copyrights last for the life of the author plus 70 years.

Delaware Business Tax

The Delaware Division of Revenue oversees business taxation. Tax obligations vary by business structure, industry, and activity. Common taxes include:

• Income or Corporate/Franchise Tax: Levied on business profits.
• Sales and Use Tax: Applied to the sale of goods and services.
• Employment or Payroll Taxes: Withheld from employee wages.
• Property Tax: Based on the value of business property.

For specific rates or industry-specific taxes, consult the Delaware Division of Revenue.

Are Business Records Public in Delaware?

Yes, business records maintained by state or local government agencies in Delaware are generally public and can be inspected or copied by request, unless exempted by law. Agencies such as the Secretary of State and the Division of Revenue maintain these records. Some information, like Social Security Numbers and trade secrets, is exempt from public access. For record searches, use the Delaware Entity Search.