By Jake Lawson, LLC Formation Strategist
Let’s talk about the elephant in the room: Delaware LLCs are expensive. I’ve helped over 1,200 entrepreneurs navigate LLC formation, and Delaware consistently ranks among the most costly states for ongoing LLC maintenance. But here’s the thing—sometimes that cost is worth it, and sometimes it’s a complete waste of money.
I’m going to give you the straight story on Delaware LLC costs without the marketing fluff. You’ll learn exactly what you’ll pay, when Delaware makes sense (spoiler: less often than you think), and when you’re better off choosing a different state.
Delaware LLC Costs: The Bottom Line
Here’s what forming and maintaining a Delaware LLC actually costs:
| Expense | Cost | When You Pay |
| Certificate of Formation | $110 | One-time (formation) |
| Registered agent | $125-$300/year | Annually |
| Operating agreement | $0 | One-time (optional but recommended) |
| EIN (tax ID) | $0 | One-time |
| State business license | $75 | Annually |
| Annual franchise tax | $300 | Every year |
| Business licenses | Varies | Depends on your business |
Total to get started: $110 (if you handle everything yourself) Annual ongoing costs: $375-$675 (depending on registered agent choice)
Reality check: That’s significantly more expensive than most states. Montana charges $55 annually, Wyoming charges $160, and even California is only $20 per year for the basic franchise tax.
The Formation Costs (One-Time)
Delaware Certificate of Formation: $110
This is Delaware’s fee for filing your Certificate of Formation (what most states call Articles of Organization). At $110, it’s about average—not the cheapest, not the most expensive.
Processing time: 10 business days for online filing Expedited option: Available for additional fees if you’re in a rush
Registered Agent: $125-$300/Year
Delaware requires all LLCs to have a registered agent with a Delaware address. Your options:
Option 1: Be Your Own Registered Agent ($0)
- Must have a Delaware street address (not P.O. box)
- Must be available during business hours
- Your address becomes public record
Option 2: Hire a Professional Service ($125-$300/year)
- Protects your privacy
- Ensures reliable document receipt
- Includes mail forwarding and scanning
My recommendation: Unless you live in Delaware and don’t mind your address being public, hire a professional registered agent. Northwest Registered Agent at $125/year offers excellent service and privacy protection.
Operating Agreement and EIN: Free
- Operating Agreement: You can draft this yourself or use templates (don’t skip this document)
- EIN: Always free directly from the IRS at irs.gov
The Ongoing Costs (Annual)
Here’s where Delaware gets expensive and where many entrepreneurs get surprised:
Annual Franchise Tax: $300/Year
This is Delaware’s version of an annual report, but it comes with a hefty price tag. Every Delaware LLC pays $300 annually, regardless of income or business activity.
Due date: June 1st every year Late penalties: $200 additional penalty if filed after June 1st No exceptions: Even if your LLC made $0, you still owe $300
My take: This $300 annual fee is why Delaware doesn’t make sense for most small businesses. You’re paying premium pricing for features most entrepreneurs don’t need.
State Business License: $75/Year
Delaware requires all LLCs to obtain a general business license from the Division of Revenue.
Cost: $75 annually Renewal: Required every year No exceptions: All Delaware LLCs must have this license
Additional Business Licenses: Varies
Depending on your business type and location, you might need additional licenses:
- Professional licenses (varies by profession)
- Local business permits ($25-$100 typically)
- Industry-specific licenses (wide range of costs)
Delaware vs. Other States: Cost Comparison
Let me show you how Delaware stacks up against other popular LLC states:
| State | Formation Fee | Annual Costs | 5-Year Total |
| Delaware | $110 | $375+ | $1,985+ |
| Wyoming | $100 | $160 | $900 |
| Montana | $35 | $55 | $310 |
| Nevada | $75 | $350 | $1,475 |
| Texas | $300 | $0 | $300 |
| Florida | $125 | $138.75 | $820 |
Bottom line: Delaware is one of the most expensive states for LLC maintenance. Over five years, you’ll pay at least $1,600 more than Montana and $1,000+ more than Wyoming.
When Delaware Makes Sense (Spoiler: It’s Rare)
Despite the costs, there are legitimate reasons to choose Delaware for your LLC:
Investor-Backed Businesses
If you’re raising venture capital or planning to go public, Delaware’s business courts and corporate law expertise matter. Investors expect Delaware entities.
Complex Multi-Member LLCs
Delaware’s LLC statute is well-developed and offers flexibility for complex ownership structures, management arrangements, and profit distributions.
Significant Multi-State Operations
If you’re doing substantial business in multiple states anyway, Delaware’s legal framework might justify the extra cost.
Asset Protection Strategies
Delaware offers strong charging order protection and other asset protection features (though other states offer similar protections at lower costs).
When Delaware Doesn’t Make Sense (Most of the Time)
Here’s my honest assessment of when Delaware is overkill:
Small Local Businesses
If you’re running a local consulting firm, restaurant, or service business, Delaware’s advantages don’t justify the $375+ annual costs.
Solopreneurs and Freelancers
Single-member LLCs rarely need Delaware’s complex legal framework. You’re paying premium prices for features you’ll never use.
Businesses That Want Simple, Cheap Compliance
If your goal is minimal paperwork and low costs, Delaware is the wrong choice.
Non-U.S. Residents Avoiding State Taxes
Many foreign entrepreneurs choose Delaware thinking it saves taxes. Reality: if you live elsewhere, you’ll often pay taxes in your actual location anyway.
The Delaware Hype vs. Reality
Let me address the common myths about Delaware LLCs:
Myth 1: “Delaware Has No State Taxes”
Reality: Delaware has state income tax. If you live in Delaware, you’ll pay it. If you live elsewhere, you’ll typically pay taxes where you actually live and work.
Myth 2: “Delaware Offers Better Liability Protection”
Reality: Most states offer identical liability protection for LLCs. Delaware isn’t special in this regard.
Myth 3: “Delaware Makes You Look More Professional”
Reality: Your customers and clients don’t care where your LLC is formed. They care about your service quality.
Myth 4: “All Successful Companies Choose Delaware”
Reality: Large corporations often choose Delaware, but most successful small businesses form in their home states.
Hidden Costs to Consider
Beyond the obvious fees, factor in these additional Delaware costs:
Tax Preparation Complexity
Multi-state tax filing can cost an extra $200-$500 annually in accounting fees if you’re not actually based in Delaware.
Travel and Communication Costs
If you need to appear in Delaware courts or handle state business in person, factor in travel expenses.
Opportunity Cost
The extra $200-$400 you spend annually on Delaware fees could be invested in marketing, equipment, or business growth.
Smart Alternatives to Delaware
Instead of automatically choosing Delaware, consider these options:
Your Home State
Best for: 90% of small businesses Benefits: Lower costs, simpler compliance, local legal support Example: California LLC = $70 formation + $20 annually
Wyoming
Best for: Privacy-focused businesses, asset protection Benefits: No state income tax, strong privacy laws, low costs Costs: $100 formation + $60 annually
Montana
Best for: Cost-conscious entrepreneurs Benefits: Lowest costs in the nation, simple requirements Costs: $35 formation + $20 annually
Nevada
Best for: Businesses wanting no state income tax with more credibility than Wyoming Benefits: No state income tax, business-friendly courts Costs: $75 formation + $350 annually
Formation Service Recommendations for Delaware
If you decide Delaware is right for your situation, here’s how to get the best value:
Northwest Registered Agent: $39 + State Fee
Pros: Excellent service, includes registered agent for first year, transparent pricing Cons: Limited additional services Best for: Most Delaware LLCs
LegalZoom: $149 + State Fee
Pros: Brand recognition, comprehensive packages Cons: Expensive, aggressive upselling Best for: People who don’t mind paying premium for a big name
DIY Filing: Just State Fees
Pros: Lowest cost option Cons: No guidance, must handle registered agent separately Best for: Experienced entrepreneurs comfortable with paperwork
Delaware Tax Implications
Understanding Delaware’s tax structure is crucial for cost planning:
State Income Tax
Delaware has a progressive income tax (0% to 6.6%). If you’re a Delaware resident, you’ll pay this on your LLC profits.
No Sales Tax
Delaware is one of five states with no statewide sales tax.
Gross Receipts Tax
Some Delaware businesses pay gross receipts tax based on total revenue (not just profits).
Multi-State Tax Issues
If you form in Delaware but live elsewhere, you’ll likely need to file taxes in both states.
Staying Compliant in Delaware
Delaware’s requirements are straightforward but expensive:
Annual Franchise Tax Filing
- Due: June 1st every year
- Fee: $300
- Late penalty: $200
- File online: Through Delaware’s website
Business License Renewal
- Due: Various dates based on license type
- Fee: $75 annually
- Renewal: Required every year
Registered Agent Maintenance
- Keep your registered agent current
- Update within 30 days of any changes
- Ensure reliable document receipt
Making the Delaware Decision: My Framework
Here’s my decision framework for whether Delaware makes sense:
Choose Delaware if:
- You’re raising venture capital or institutional investment
- You have complex multi-member ownership structures
- You’re planning significant multi-state expansion
- You have specific legal reasons requiring Delaware’s statute
Skip Delaware if:
- You’re a small local business
- Cost is a primary concern
- You want simple, straightforward compliance
- You’re not based in Delaware and don’t have compelling legal reasons
Frequently Asked Questions
Is Delaware really better for business?
For most small businesses, no. Delaware’s advantages mainly benefit large corporations and investment-backed companies.
Can I change my LLC’s state later?
It’s possible but complex and expensive. It’s better to choose the right state from the beginning.
Do I need a Delaware attorney for my Delaware LLC?
Not required for formation, but helpful for complex situations. Many issues can be handled remotely.
What happens if I miss the franchise tax deadline?
$200 penalty, potential loss of good standing, and risk of administrative dissolution.
Can I avoid the $300 franchise tax?
No. It’s required for all Delaware LLCs regardless of income or activity level.
The Bottom Line on Delaware LLC Costs
Delaware LLCs cost significantly more than most other states—at least $375 annually in required fees alone. For many small businesses, this premium isn’t justified by the benefits.
My honest recommendation: Unless you have specific legal reasons for choosing Delaware (like investor requirements or complex ownership structures), you’re probably better off forming in your home state or choosing a low-cost alternative like Montana or Wyoming.
When Delaware makes sense: Venture-backed companies, complex multi-member LLCs, or businesses with significant multi-state operations.
When Delaware doesn’t make sense: Most small businesses, solopreneurs, cost-conscious entrepreneurs, or businesses seeking simple compliance.
The math: Over five years, choosing Delaware over Montana costs an extra $1,600+. That money could be better invested in growing your business.
Don’t let Delaware’s reputation fool you into paying premium prices for features you don’t need. Choose the state that makes the most financial and operational sense for your specific situation.
Ready to explore your options? I’ve reviewed all the major formation services and can help you find the best value for your needs. Check out my detailed service comparisons to make an informed decision.
This guide is for informational purposes only and doesn’t constitute legal or tax advice. Business formation decisions should be based on your specific circumstances. Consult with qualified professionals for guidance tailored to your situation.
About Jake Lawson: With over 15 years of experience in LLC formation, Jake has helped more than 1,200 entrepreneurs choose the right formation state and avoid costly mistakes. He believes in honest, data-driven advice that saves business owners money and headaches.