Costs of Delaware Incorporation
It is a well known fact that Delaware incorporation is cheaper than similar services in other locations. This is due to the flexible incorporating laws and the large number of individuals ordering incorporation services in Delaware.
However, there are some costs involved and some incorporators tend to make public only several expenses. Usually, there are no hidden fees but there are extra costs that will arise a bit later.
Usually there is just one time fee, the incorporator fee. This covers the state fee and incorporator's profit. The average amount is $250.00 with a fee decrease trend. Please note that some one-time fees that seem to be higher include services that are recurring billed by other incorporation service providers.
The very next expense, which usually is a recurrent one, is the registered agent fee. This means you pay a rent for a mailbox where you will receive documents from the state authorities of Delaware. This is the only asset locate in Delaware required by the incorporating laws.
An optionally cost, but essential to many business models, is the mail forwarding fee. Having a registered agent in Delaware doesn't mean the forwarding service is included unless this is stated! Serious incorporators will forward for free the incorporation papers and the tax ones, but not always.
The State of Delaware also requires an annual recurring charge named the franchise tax. This is $200.00 for LLCs and may vary between $35.00 to $165,000.00 for corporations (+ $25.00 filling fee).
The franchise tax is not an income tax. However, if you will have to pay income taxes or you want to hire people, you will also need Employer Identification Number (EIN). EIN assignment is free and can be obtained online or by phone. The problem is that if you fill in the forms wrong your request will be denied and you will have to start over. Incorporators usually offer this extra service, priced between $50.00 and $100.00 and you will get your EIN from the first request submission.
Many times considered optional, a bank account is mandatory for many businesses. If you are a resident of the US this should not be a problem. For people from overseas it might be difficult, and before incorporating make sure the incorporator has decent fees for a bank account formation for you future company. The pricing range varies from $200.00 to $500.00, but make sure the service package includes everything (e.g. online banking is a must). Please note that opening a business bank account will require an EIN.
The Certificate of Good Standing is a document may be required by another US state if you ever decide to register as a Delaware company doing business in its jurisdiction. It is also sometimes required by certain financial institutions in order to open an account. Issued by the state of Delaware, it certifies that a company legally exists as of the date of its issuance. The average incorporator fee for this certificate is $150.00.
Foreign residents may require a Certificate of Incorporation/Formation with Apostille. This official paper is issued by the Delaware Secretary of State required by foreign countries that are parties to the 1961 Hague Convention (most US allies) that attests to the validity of a signature on a US document. The apostille allows the foreign country to accept the validity of the US document.
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