Today we’re beginning a series to walk new business owners through all the initial steps to form a Delaware LLC and get their business up and running.
Like many people, the pandemic has given me time to explore my strengths and hobbies from home. A fun side project I was doing with a friend has begun to make money and my accountant advised us to start an LLC.
My friend (and now business partner) and I live in different states so my accountant suggested Delaware as a home state for our business. This is no surprise to me because after years of working at The Incorporators, I know how business-friendly Delaware is. In fact, 93% of all U.S. initial public offerings are entities registered in the state of Delaware! (source)
If you're not sure which entity type or state is best for you, talk to your accountant or attorney.
Select a Service Provider
The first step to starting my LLC is to select a service provider to file the documents on my behalf. Lucky for me, I know the best in the business – The Incorporators!
First, I’m going to visit theincorporators.com and head to the navigation menu, hovering over “start your business” and selecting “LLC” from the drop down.
This will take you to a page that allows you to select a package.
The main question to ask yourself here is – Do I need/want the physical documents? Or am I okay with receiving everything digitally? If we decide we want paper copies, do we want a customized snap or three-ring binder, plus all the bells and whistles?
As two millennial women, my partner and I are used to doing most things digitally and don’t foresee ourselves needing additional corporate supplies right now. If we decide later that we’d like corporate supplies (like a corporate seal or binder), they can be purchased from The Incorporators here.
If you prefer to have the ability to issue membership certificates on screen and would like to have a customized digital gold seal, you may want to consider the LLC Executive E-Kit.
We’ve decided to select the LLC E-Kit. It’s a popular choice among new business owners because of its affordability.
Up next, begin filling out the form with all the business details needed for The Incorporators to create your documents.
These questions are fairly straightforward and mostly include details about your new business and contact information but let’s talk through some of the ones that new business owners may have questions about.
Company Ending Selection
All companies in Delaware are required to have a specific ending, which you can select from the drop down menu.
Since we are not forming a series LLC, my options are:
- Limited Liability Company
When you consider which to select, also note that if you want a comma after your business name and before the company ending, it must be included in the preferred and alternate name box.
The examples above will be Nadine Starts a Business LLC or Nadine’s Business LLC.
If we add a comma after like the above example, my business name will be Nadine Starts a Business, LLC or Nadine’s Business, LLC.
For our business, we opted to go without the comma and selected LLC as our company ending.
Who is the Manager?
Since my partner and I own our business 50/50, when I got to the question about naming a manager, I paused. What if we are both the managers?
Luckily there is an easy answer to this – you only need to name one manager during formation and then may add managers during your initial meeting. Your package includes a template for initial meeting minutes. You will find a page within the minutes that allows you to name additional managers.
Since I’m the one setting up the business, my partner and I agreed that I’d be the manager and she’d be a member during the initial set up process.
Add to Cart
Once I’m confident that I’ve entered all my details correctly, I click “Add to cart”. This takes me to the cart screen where I can review the details I’ve entered again.
The checkout process is fairly straightforward. The Incorporators uses Shopify, a popular ecommerce platform so the checkout pages may look familiar to you. Throughout the checkout process you'll be able to see and confirm all of the details of your company on the right side of the page.
When complete, you'll see a confirmation page like this:
State Processing Times
Due to Covid and the high volume of orders at the end of the year, the State of Delaware Division of Corporations is currently experiencing a backlog.
My partner and I decided to upgrade to expedited processing to avoid the current 30-40 business day wait time for normal processing.
Done in five minutes!
And that's it! The Incorporators has all the details that they need to start our LLC. I immediately received an email confirmation from The Incorporators with a receipt and full order summary.
Receiving Formation Documents - Order Complete
Six days later, I received an email from The Incorporators with 13 attachments including:
- My formation documents
- Digital corporate seal
- Operating agreement
- Membership certificates
- EIN instructions
- Other instructions and details
I immediately saved all documents to both my computer and our business shared drive. I printed a hard copy of the formation documents and filed them with my other important personal documents.
The entire process to start an LLC took me less than five minutes. Now on to the next important step - getting an EIN number. We'll be covering that in our next post in this series.