How to Form a Delaware Corporation

How to form a corporation in Delaware

Here are the steps you’ll need to take to create a Delaware corporation and get your business up and running in the state.

1. Name your corporation

Before incorporating a business, you’ll need to come up with a corporation name. This is the name you’ll use when you file your certificate of incorporation, but for that name to be usable, it must be available in Delaware. You can determine if your proposed corporation name is available by conducting a search with the Delaware Division of Corporations on the Secretary of State’s website. You may reserve a business name for 120 days by submitting an application online or in writing to the Secretary of State. 

Your corporation’s name must include one of these words or an abbreviation of one of these words: 

• Association
• Company
• Corporation
• Club
• Foundation
• Fund
• Incorporated
• Institute
• Society
• Union
• Syndicate
• Limited

Your corporation’s name must be distinguishable from the name of any corporation, limited liability company, partnership, limited partnership, or statutory trust on file or reserved using the Corporate Name Reservation Application form with the Secretary of State unless the party currently using the name consents in writing.

Not sure what to name your business? Use LegalZoom’s name generator for inspiration.

2. Develop a corporate purpose

You can state your corporation’s purpose in general terms to allow flexibility in case the nature of your business changes over time. Under Delaware law, it is sufficient to state that “the purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.”

3. Choose a Delaware registered agent

A Delaware registered agent is a person or entity that a corporation designates to receive legal documents on behalf of the corporation. The registered agent is responsible for forwarding those documents to the corporation.

Every Delaware corporation must have a registered agent that has a physical street address in Delaware.

A registered agent may be an individual who resides in Delaware or a business entity that is authorized to conduct business in the state.

A corporation may act as its own registered agent if it is physically located in Delaware.

You can review a list of registered agents on the Delaware Division of Corporations website. 

4. Specify incorporators

An incorporator’s primary role is to file the certificate of incorporation. The incorporators’ names and addresses must be listed on the certificate. When specifying incorporators, you must adhere to the following requirements:

• Your corporation must have at least one incorporator.
• An incorporator may be a person, corporation, partnership, or association. The incorporator does not have to reside or be incorporated in Delaware.
• If the certificate of incorporation does not name initial directors, the incorporators must hold an organizational meeting to elect directors.

The incorporators may also approve initial bylaws and do whatever else is necessary to manage the business until the directors are chosen. Once directors are named, the incorporators have no further role.

5. Prepare your certificate of incorporation

A Delaware corporation exists as soon as you file its certificate of incorporation with the Secretary of State using the Certificate of Incorporation form. To form a corporation, you must mail or fax a certificate of incorporation and a cover sheet to the Secretary of State’s office and pay a fee. The articles of incorporation must include the following:

• Name of the corporation
• Corporate purpose
• Details about the corporation’s stock structure
• Registered agent's name and address
• Names and addresses of incorporators

6. Draft corporate bylaws

A corporation’s bylaws are its internal rules and operating procedures. They are not filed with the Delaware Division of Corporations. Bylaws may include any provisions relating to the business and affairs of the corporation or the rights and powers of the corporation and its directors, officers, shareholders, and employees.

Your corporate bylaws must meet the following requirements:

• The incorporators or directors must approve initial bylaws.
• Corporate bylaws cannot include anything that is inconsistent with the law or the certificate of incorporation.

7. Appoint your directors

Corporate directors determine corporate policies and strategies. They are also responsible for managing the business of the corporation, though they often delegate day-to-day management to the officers. When specifying directors, you must meet the following requirements:

• There must be at least one director.
• There is no maximum number of directors, but the number of directors should be stated in the certificate of incorporation or bylaws.
• A director must be a person, but a director does not need to own stock in the corporation. The certificate of incorporation or bylaws may include additional limitations on who can serve on the board of directors.

8. Determine your stock structure and issue shares

A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages. For example, one can offer voting rights while another may not. The corporation’s certificate of incorporation must meet several requirements.

If the corporation will only issue one class of stock, the certificate of incorporation needs to state the total number of shares authorized. The certificate must also list the par values of the shares or state that there is no par value if applicable.

If there will be more than one class of stock, the certificate of incorporation list the following information:

• The total number of shares
• The number of shares in each class
• The par value of the shares for each class, or a statement of no par value
• The designations, powers, preferences, rights, qualifications, limitations, and restrictions applicable to each class of shares.

9. Register for an EIN and pay taxes

For your company to be in full compliance with the state’s regulations, you’ll need to apply for an employer identification number (EIN). This number acts as your federal tax ID number and lets the IRS identify your company and associate it with your tax payments and liabilities.

You can apply for an EIN through the IRS website, or LegalZoom can help you apply. 

Once you have your EIN, you’ll need to comply with local tax regulations. Most Delaware corporations will need to pay these taxes.

• Franchise tax: This tax is paid by all corporations incorporated in Delaware, even if they’re not currently active. This tax is due on March 1 with your annual report.
• Corporate income tax: Delaware corporations must pay a corporate income tax by the 15th day of the fourth month after the end of their fiscal year. For corporations that follow a calendar-year fiscal schedule, the tax is due on April 15.
• Gross receipts tax: Delaware doesn’t have a sales tax, but businesses will need to pay a gross receipts tax based on their gross revenue. This tax is paid monthly or quarterly.
• Employer withholding tax: Often referred to as payroll tax, this tax is the money withheld from employees’ paychecks to cover a portion of their tax responsibility. Employers pay withholding tax monthly, quarterly, or every eight months, depending on the amount they withhold.
• Unemployment insurance tax: Delaware corporations must also pay unemployment insurance tax quarterly.