- What are the minimum required costs to form an LLC in Delaware?
- Why choosing the cheapest Registered Agent for your LLC is risky
- What criteria you should use to select a Registered Agent
I have seen registered agents that ask for around $300 per year. In addition, Delaware asks for around $300 per year for my LLC. Is there a way to avoid these fees?”
Every LLC registered in the State of Delaware must pay a flat tax of $300 each year. Delaware assesses this tax regardless of business activity or non-activity. This “tax” is really more of a fee for the privilege of having a Delaware LLC and being able to access its laws and courts, which are considered the most pro-business in the country. It must be paid the year after your LLC is formed. The tax is due on or before June 1 of every year. Delaware bills for the prior tax year; so for example, tax year 2015 would be due by June 1, 2016.
The Cheapest Way to Form an LLC
The advantages of forming a Delaware company are numerous and many of the top companies in the world have chosen to form an LLC in Delaware (see 11 advantages here). The cost to form an LLC in Delaware is among the lowest in the country. Its maintenance fees are also low compared to other states. However, the process of forming an LLC can be confusing. Often people find it’s easier to go through an experienced registered agent to make sure it’s done properly.
For your company to be incorporated in Delaware, it must name a “Delaware Registered Agent.” The RA serves as a physical presence in the state and will provide services between you and the Secretary and State. This includes forwarding notice of when the annual tax payment is due. Since Delaware does not require you to disclose Member information on the filing or when you make the annual payment, an agent is your liaison with the state. Another role of the agent is to be available during business hours to accept legal process in case your company is sued.
The registered agent has the ongoing role for the life of the company, even if it is mostly disconnected to the underlying business. When selecting an agent, it is risky to select one simply based on price. You want a reliable agent who will forward notices to you in a timely manner. Should your company or its officers, directors or managers be sued, the Registered Agent is the first to receive the lawsuit. Your Registered Agent then forwards this notice to you. Some Agents can be unreliable or slow in the forwarding of lawsuits. Your Registered Agent’s receipt starts a time period of usually 20 days to respond. Failure to respond to the lawsuit in a timely manner will result in a judgment by default and financial liability for the defendants.
How to Get a Low Cost LLC
It’s fairly low-cost to register your LLC in Delaware. Once your LLC is formed, you’ll just need to pay annual registered agent fees and your franchise tax annually. This does not include any tax you owe to the state where you are doing business.
IncNow charges $99 for registered agent services. We are backed by attorneys who have 70+ years of combined experience with Delaware law. Companies choose us because we provide reliable service at a competitive price. When you form an LLC with IncNow, the first year of registered agent service is included in the formation cost.