How to start a business in Delaware in 14 steps (2025 guide)

Delaware, the “First State,” known for its scenic beaches and bustling manufacturing sector, offers ample opportunities for aspiring business owners. If you’re one of these budding entrepreneurs, Delaware is the perfect place to bring your vision to life. With its pro-business environment, no sales tax, and a straightforward incorporation process, the state has long been a favorite for both small businesses and large corporations.

In this guide, we’ll walk you through everything you need to know to start your business in Delaware, from choosing the right business entity to securing funding,

Why start a business in Delaware in 2025?

Starting a business in Delaware offers valuable advantages for entrepreneurs, making it one of the most business-friendly states in the U.S. 

Delaware’s low unemployment rate, growing population, and established corporate law system make it attractive to corporations like Google’s parent company Alphabet, CVS Health, and DuPont. The state’s unique tax structure—no sales tax and exemptions for companies registered but not operating within Delaware—further enhances its appeal.

Industries like chemical manufacturing, industrial engineering, and medical research have long fueled Delaware’s economy. Tourism ranks as the fourth-largest private employer, drawing nearly 10 million visitors annually. Entrepreneurs also benefit from a cost of living below the national average, saving on housing and utilities. With a stable economy, robust legal framework, and economic incentives, it provides a supportive environment for launching and growing your business.

Here are the topics we’ll cover in this step-by-step guide: 

• 14 steps to starting a business in Delaware
• Step 1: Decide what type of industry is best for your business
• Step 2: Conduct industry research
• Step 3: Create a business plan
• Step 4: Choose your business entity: Types of business entities in Delaware
• Step 5: Secure funds: Delaware small business funding, loans, and grants
• Step 6: Choose your Delaware business name and Delaware DBA
• Step 7: Pick a business location in Delaware
• Step 8: Find a Delaware registered agent 
• Step 9: Get a Delaware EIN and file your tax and employer identification documents 
• Step 10: Register as a small business in Delaware
• Step 11: Register for your business license and permits in Delaware
• Step 12: Secure insurance for your Delaware small business 
• Step 13: Prepare to pay taxes on your business in Delaware
• Step 14: Set up your business bank account
• Additional resources to get your business started
• Frequently asked questions 

14 steps to starting a business in Delaware

Whether you're a long-time resident or drawn to the state's business-friendly environment and coastal charm, a wealth of small business resources is available. Want to launch a tech startup in Wilmington or a tourism company in Rehoboth Beach? We’ll guide you on how to make your entrepreneurial dreams a reality in Delaware.

Step 1. Decide what type of industry is best for your business 

Delaware's diverse economy spans a range of industries, from financial services and healthcare to agriculture and tourism. When deciding which industry to focus on, consider your skills and experience, as well as the specific market demands and opportunities in your chosen location within the state.

Not sure where to start? Explore various small business ideas for inspiration.

Step 2. Conduct industry research

Before launching your business, take the time to analyze market trends, conduct a competitive analysis, and identify your unique selling proposition. Delaware's diverse economy offers opportunities across various sectors, including financial services, healthcare, legal services, and tourism. 

Step 3. Create a business plan

Craft a detailed business plan, which is your guiding map toward any successful small business in Delaware. Use it to attract investors, secure funding, develop market strategies, and create goals. 

Make sure to include these items in your business plan:

• Executive summary: Give a concise overview that highlights the main points of your business plan.
• Company description: Outline your mission statement, company background, and long-term objectives.
• Market research and potential: Explore your target market, industry trends, and customer demographics.
• Competitive analysis: Examine your competitors and explain what sets your business apart.
• Products and services: Detail what your business offers and how it benefits your customers.
• Marketing and sales: Explain your approach to attracting, engaging, and retaining customers.
• Business financials: Include detailed financial projections such as income statements, balance sheets, and cash flow forecasts.
• Management and leadership: Highlight the experience and skills of your leadership team.
• Funding request: Specify how much funding you need and how you’ll use it.
• Appendix: Provide additional documents, such as resumes, legal agreements, or research.

Dedicate time to research and articulate each section to ensure your plan is clear, compelling, and backed by data. To get started, use a free business plan template and reach out to the Delaware Small Business Development Center for no-cost advisory services.

Step 4: Choose your business entity: Types of business entities in Delaware

The entity type determines your tax requirements and liability, including whether your personal assets will be at risk if the company is bankrupt or sued, and your business structure, including who oversees the company’s day-to-day operations. 

Each entity type offers advantages and disadvantages. The registration cost will also vary depending on which type you choose for your business. Applying for benefits or nonprofit status as a corporation incurs additional oversight. Learn about the business structure types and select the one that best compliments your business model. 

Here are the main structures available to Delaware small businesses:

Sole proprietorship

A business owned and operated by one person, with no legal distinction between the owner and the business.

General partnership

A business owned by two or more people who share profits, losses, and management responsibilities.

Corporation 

A legal entity separate from its owners, with shareholders who have limited liability for the company's debts and obligations.

Limited liability company (LLC)

A hybrid business structure combining the limited liability of a corporation with the tax flexibility of a partnership. Learn more about LLCs.

Step 5: Secure funds: Delaware small business funding, loans, and grants

You’ll need to secure funding from various sources to sustain your business until it becomes profitable. Starting a business in Delaware comes with various costs, including potential incorporation fees for corporations and LLCs, registered agent fees, local business licenses, and industry-specific licenses. To accurately estimate your startup costs, consider your business structure, industry needs, and required licenses. The Delaware Division of Small Business and the SBA offer helpful resources for budgeting and planning.

Here are some options:

There are also Delaware-specific funding opportunities:

Delaware State Small Business Credit Initiative: 

The Delaware State Small Business Credit Initiative offers funding solutions to ventures owned by socially and economically disadvantaged persons and small businesses struggling to obtain a traditional bank loan.

Encouraging Development, Growth & Expansion (EDGE) Grant: 

The Delaware Division of Small Business awards five STEM-based companies up to $100,000 and five non-STEM Entrepreneur Class businesses up to $50,000 on a $3 (state) to $1 (business) match. Funds are awarded twice a year in February and August.

Monthly Delaware funding opportunities 

The state connects aspiring small businesses to grants and reputable lenders. Use the state’s monthly funding opportunity board to identify loans and grants that could benefit your operations. 

Step 6. Choose your Delaware business name and Delaware DBA

Select a unique, memorable name, and make sure it’s available for use and complies with the state’s business naming requirements. Naming your Delaware business provides your outward-facing brand identity, showing potential customers who you are and your products or services. Check the state’s name search tool for availability. 

Reserve your business name

Name your business during the registration process. It must be distinguishable from other corporations or entities registered in Delaware. You can choose to reserve your business entity name for 120 days with the Delaware Division of Corporations. The reservation costs $75. 

Filing a DBA (Doing Business As)

Apply for a Delaware DBA to legally attach the trade name to your registered entity name. “Doing business as” or DBA corporations register a fictitious name to operate under a different brand. DBAs offer privacy for the parent company and increased marketing flexibility. DBAs are filed at the county level, and registering costs $25 per name in each county.

Step 7: Pick a business location in Delaware

Thinking of opening a bustling craft brewery in Smyrna? Or perhaps you're envisioning a tech startup in the heart of Wilmington's growing innovation hub. No matter your industry, choosing the right location for your Delaware business is crucial. It impacts everything from operational costs and tax benefits to customer access and employee commutes. Before settling on an area, check with your local municipality and county for licensing, permitting, zoning, and tax requirements. 

If applicable, consider running your business from home, which can help reduce overhead costs like rent, utilities, and commuting.

But if you want to set up shop in a metropolitan area, the following are some locations to consider:

Wilmington

Wilmington, Delaware’s largest city and home to over half of Fortune 500 companies, anchors the state’s corporate, financial, and government sectors. With a diverse economy across finance, healthcare, and technology, Wilmington provides a dynamic business landscape. 

With a walkable downtown, and the exciting Riverfront district for dining, shopping, and entertainment. Ideally located 30 minutes from Philadelphia and between New York and Washington, D.C., the city offers exceptional regional, national, and international connectivity.

Dover

Delaware's capital city, Dover, offers a relaxed atmosphere, with a focus on government, education, and healthcare. It has access to transportation networks and a diverse customer base. 

Newark

Home to the University of Delaware, Newark boasts a college-town atmosphere with a strong emphasis on education, research, and technology. The presence of the university also provides a readily available pool of highly educated talent for businesses seeking skilled employees.

Smyrna

Smyrna, a town in Kent County, offers a mix of small-town charm and business opportunities. Its downtown area features a variety of shops and restaurants, while its surrounding areas provide ample space for industrial and commercial development. As the state’s fifth-largest and fastest-growing municipality, Smyrna is strategically positioned for continued economic and residential development, making it a promising location for businesses and residents alike.

Regardless of your chosen area, it's essential to research and understand the specific regulations that apply to your business location.

Step 8: Find a Delaware registered agent

You must designate a registered agent to represent your business in government, tax, and legal correspondence. If you or your business is in the state or authorized to do business in Delaware, the agent can be yourself, a co-owner, or an employee. 

You can also hire a professional registered agent or third party to handle these requirements on your business’s behalf. The agent must be located in Delaware and have regular hours at the listed address. Use this list of registered agents in Delaware from the Division of Corporations.

Step 9: Get a Delaware EIN and file your tax and employer identification documents

An EIN (Employer Identification Number) is a nine-digit number the IRS uses to identify your business for tax purposes. Although Delaware doesn't require a state EIN, you'll need one to file payroll taxes and federal tax returns, open a business bank account, and apply for loans. You can apply for a free EIN through the IRS website.

Step 10: Register as a small business in Delaware

Begin the registration process once you’ve designated a registered agent and chosen a name. Visit OneStop to register your business with the Division of Revenue. Create an account and the portal will walk you through the application based on the business structure. LLCs and corporations must register with both the Division of Corporations and the Division of Revenue.

You can also download a PDF of the registration application from the Delaware Division of Corporations based on the entity type and e-file the completed form using the Document Filing and Certificate Request Service or mail a paper copy to the Division of Corporations – John G. Townsend Building – 401 Federal Street – Suite 4 – Dover, DE 1990.

Here are the registration requirements based on your business entity:

Step 11: Register for your business license in Delaware

Delaware requires businesses operating in regulated industries to obtain the appropriate state license. These licenses ensure compliance with industry-specific regulations and consumer protection standards. 

To determine the specific license needed for your business, refer to the comprehensive index on Delaware.gov website. Once you've identified the relevant license, complete the application process and submit the required documentation to obtain your license and legally operate your business in Delaware.

Do you need a business license in Delaware?

It depends on the nature of your business. Check the index to see if your business operates in a regulated industry. You can also hire a business consultant for more advice when starting a business. 

Step 12: Secure insurance for your Delaware small business

Your insurance needs vary by liability and business size. Use the Delaware Small Business Insurance Guide to find the right amount of coverage for your needs. 

Types of small business insurance in Delaware

Here are common types of business insurance in Delaware:

Step 13: Prepare to pay taxes on your business in Delaware

Delaware levies fewer taxes on corporations than other states. It has a unique tax structure that tends to be more favorable to business owners. Here are the frequent types of Delaware taxes:

Franchise tax 

In Delaware, all corporations must pay an annual franchise tax, even if they don't conduct business in the state. The minimum tax is $175, but it can reach up to $200,000 for most corporations or $250,000 for large corporate filers. You can find detailed information and helpful resources on the Delaware Division of Revenue website to ensure you calculate and pay your franchise tax correctly.

Corporate income tax

In Delaware, both domestic and foreign corporations are subject to corporate income tax.The tax rate for 2024 was 8.7% of the corporation's federal taxable income that's allocated to Delaware.

Corporations incorporated in Delaware but not conducting business in the state are typically not required to pay Delaware corporate income tax. For detailed information and filing instructions, refer to the Delaware Division of Revenue website.

Gross receipts tax

Delaware has no sales tax, but all businesses must pay a gross receipt tax on all revenues acquired in the state. This shifts the cost to business owners rather than customers. The current rate ranges between .0945% and .7468%, depending on the industry. There are monthly and quarterly exclusions (tax-free amounts) that vary by business activity. Businesses with gross receipts below certain thresholds (varying by industry) may be exempt from filing and paying the gross receipts tax.

Withholding tax

Delaware employers are required to withhold state income tax from employee paychecks, calculating the correct amount based on earnings and filing status, and submitting it to the state quarterly. They must also withhold federal income tax, Social Security, and Medicare taxes, which are regulated by the IRS.

Use QuickBooks payroll to automate withholdings and tax reporting. 

Federal taxes

In addition to state and local taxes, all businesses must pay applicable federal taxes, including:

• Federal income tax
• Self-employment tax (for sole proprietors and partners)
• Employment taxes (if you have employees), including the Federal Unemployment Tax Act (FUTA tax)
• Excise taxes (for certain industries)

To ensure you understand your federal tax obligations, check out these IRS resources: Publication 334, Tax Guide for Small Business and Publication 583, Taxpayers Starting a Business and Keeping Records.

Step 14: Set up your business bank account

As a business owner, you’ll need to open a separate business bank account to manage all your finances. Here’s how to get started: 

1. Collect all your business paperwork, including your EIN, business formation documents, registrations, permits, and licenses, to open your small business bank account. 
2. Choose a bank or credit union that offers products and services you need, whether loan offerings or high-yield savings accounts. 
3. Establish business credit using a bank credit card for business-related purchases and expenses. 
4. Set up your financial records by selecting the right accounting software for your organization. 
5. Hire a professional accountant who is well-versed in local tax codes and your industry to help with financial and other bookkeeping services.

Additional resources to get your business started 

There are several state and federal resources that can support your business with guidance, training, potential funding and more. 

State resources

• Division of Small Business: This division serves as a central hub for small business assistance, providing guidance on licensing, financing, and networking opportunities.
• Delaware Small Business Development Center (SBDC): The SBDC offers free counseling, training, and workshops to help entrepreneurs start, grow, and manage their businesses.  
• Division of Revenue: This division provides information and resources on Delaware's tax laws and regulations, including registration, filing requirements, and payment options. 
• Delaware Department of Labor: This department enforces labor laws, provides workforce development programs, and offers resources for both employers and employees.
• Delaware One Stop Online Business Registration: This website streamlines the business registration process, allowing entrepreneurs to register their businesses with various state agencies in one convenient location. 

Federal resources 

• Small Business Administration (SBA): The SBA supports small businesses through various loan programs, including the 7(a) loan, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.
• Grants.gov: This centralized platform simplifies the process of searching for and applying for federal grants across various sectors. It also provides grant writing tips and has a Grants Learning Center featuring the basics of grants, eligibility, and more. 
• Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR): SBIR and STTR programs provide research and development funding to innovative tech companies. 
• SCORE: SCORE is a national nonprofit organization that partners with the U.S. Small Business Administration (SBA) to provide free mentoring and educational resources to entrepreneurs and small business owners. While not a direct federal agency, SCORE is an independent organization with a network of volunteer business mentors across the United States.
• U.S. Department of Agriculture (USDA): The USDA website lists grants, loans, and other programs and resources for farmers and other businesses serving rural America. 

Disclaimer: 

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