Are you planning to operate your business in Delaware? As a part of the formation process, you must meet certain requirements of licenses or permits in Delaware to legally start your business.
This blog article guides you through a business license in Delaware and how to obtain it. Let’s find out!
1. Common types of license and permit in Delaware
There is no fixed requirement of license for entities registered in Delaware. Typically, there are three types of licenses and permits that can be required for any business in the State: State level, Federal level, and Local level.
Based on your business structure and your residential location, you may be required to obtain further licenses or permits with the state, federal and local agencies as well.
Examples of some licenses or permits you may have to register are: Delaware business license, state tax identification number, contractor’s license, building permit, occupation permit, health permit, etc.
A wise choice for well-prepared businesses is to consult legal experts for advice on licensing requirements your company needs to comply with.
Delaware business license is a key state licensing requirement that every business in desire of doing business in Delaware must know. In what follows, we will delve into how to apply for this type of license.
2. Delaware business license – what you should know
2.1. Requirement of business license in Delaware
When coming to starting a business in Delaware, having a Delaware business license with the Delaware Division of Revenue is mandatory.
A question arising is that, do all Delaware businesses need to obtain a business license?
Providing that you are carrying on a trade or business in Delaware, you must apply for a business license with the Delaware Division of Revenue. Before you start to transact business in Delaware, you should already have such a Delaware business license in your hand.
Two common types of business licenses are: a one-year license and a three-year license. Any failure to register a business license shall lead to a penalty of $200.
2.2. How to get a business license in Delaware
Annual state business licenses are compulsory for all Delaware businesses and non-Delaware businesses incorporated in Delaware. The Division of Revenue is the agency to issue this license.
A business license in Delaware can be registered through two ways:
- Use the One Stop Business Licensing and Registration Service for online registration; or
- Use the paper Combined Registration Application Form (Form CRA).
Normally, Delaware business licenses have a validity period of 12 months. The expiration date typically falls on 31 December.
2.3. Processing time for Delaware business license
The standard processing time is during 1 month of registration with the Division of Revenue. You may choose to get a license which is temporarily issued for your demand, and then receive the permanent license in the next 10 business days.
2.4. Costs of getting a business license in Delaware
Delaware business license cost is generally $75 for the first location. Additional locations can result in an extra charge between $25 and $450, depending upon your selected business category. Depending on the business license which is suitable for each of your business activities, you will have to apply for different licenses, then pay different ranges of fee.
The fee for a three-year license is much higher, charging a three-fold increase as compared to the annual license fee in Delaware. Note that, for the first year starting your business, you will normally be issued the one-year license.
It is also noteworthy that business license fees must be accompanied with the submission of your license application.
A business can be granted a 75% discount on the business license fee in Delaware if the following criteria are met:
- It is a sole proprietorship, or a single-member LLC with election of tax treatment as a sole proprietorship;
- Its business owner must be at least 65 years old on or before 1st Jan of the current license year;
- It engages in one of the following categories: professional services, general services, contractors, manufacturers, wholesalers/retailers, lessors of tangible personal property.
- Its gross receipts must not exceed $10,000 for the discounted license year.
2.5. Renewal of Delaware business license
The expiration date for a Delaware business license is on 31st December. When the license comes to be expired, businesses have a duty to renew the business license to legally maintain their business operation in Delaware.
If you choose to renew a certain activity for 3 years, then all locations with that same
activity must also be renewed for the 3 year period.
A highlight of renewing business licenses is that you can select a three-year license instead of the one-year license of the first year. In case you opt for the three-year validated license, please note that all locations in relevance to that business activity must also be renewed for the same period.
There are two ways by which you can renew your business license in Delaware:
- Use the Revenue’s Online Renewal to renew online
- Send an email of renewing business license along with the renewal fee to the Public Service Office within the Division of Revenue.
So, keep track of when you need to renew!
3. Other licenses and permits for starting business in Delaware
3.1. Additional state licenses
In addition to a business license, you may need to obtain additional state licenses or permits concerning your selected business activity.
For regulated businesses. At the state level, certain business industries would be required to submit application forms to state agencies corresponding to their business. Such registration confirms the legality of the business activity in Delaware.
Below are some typical business industries that, if you wish to engage your business in those, you must obtain licenses with the State:
- Commercial Feeds and Pet Foods: register with Division of Agriculture Compliance, Department of Agriculture
- Alcohol (Liquor License): register with Division of the Office of the Delaware Alcoholic Beverage Control Commissioner, Department of Health and Social Services
- Mortgage Broker/Other banking-related business industries: register with the Office of the State Bank Commissioner
- Gasoline Delivery: register with the Division of Air Quality, Department of DNREC
- Food related businesses: register with Division of Public Health, Department of Health and Social Services
- Health (Long Term Care Facilities): register with the Division of Long Term Care Residents Protection, Department of Health and Social Services
- Manufacturing: register with the Division of Waste and Hazardous Substances, Department of DNREC, or Division of Public Health, Department of Health and Social Services
It should be noted that there are some types of business activities categorized as Professions. For such specialized businesses, you, as business owners, will need to register with the Division of Professional Regulation to obtain licenses. Examples of professions in Delaware include:
- Healthcare industry (pharmacy, physical therapy, controlled substances)
- Commerce industry (accountancy, cosmetology, electrician, real estate)
- Construction industry (home inspectors, architects, manufactured home installation)
- Events (boxing, gaming)
>>> Full list of Delaware’s regulated industries can be found here.
For businesses with employees. If you operate a business and have employees in Delaware, you should not forget to have a registration with the Division of Unemployment Insurance and the Office of Workers Compensation.
3.2. Federal licensing requirements
As a state within the US, Delaware needs to comply with certain requirements at the federal level as well.
Particularly, every business is required to obtain a unique Employee Identification Number (Federal Tax Identification Number), aka EIN. The registration is done by the federal government. Remarkably, businesses can also register online on the IRS website.
Furthermore, federal licenses and permits would be needed to obtain if you select the following business activities:
- Importing/transporting animals, animal-related products, plants, biological products from Delaware to another state (licenses issued by the US Department of Agriculture)
- Manufacturing/trading alcoholic beverages at a retail location (license issued by the Alcohol and Tobacco Tax and Trade Bureau, Local Alcohol Beverage Control Board)
- Importing/exporting wildlife-related products (license issued by the U.S. Fish and Wildlife Service)
- Broadcasting information through radio, TV, cable, wire satellite (license issued by the Federal Communications Commission)
- And other business activities in aviation, firearms, ammunition and explosives, nuclear energy, transportation and logistics, etc.
For more information on federal agencies corresponding to certain business industries, please visit this page.
3.3. Local licensing requirements
Doing business in Delaware can require you not only the business license of the State, but also the business license from the city, the county where you are situated in Delaware.
Assume you intend to operate a business in Wilmington, you will be required to obtain a City Business License issued by the Business License Division. Similarly, if you reach Dover City, you should clearly check whether your business category will fall into contractors, babers or other business types that must get a license as required by this City.
It is well advised that you contact the local government to know what local licensing requirements you should comply with.
Should you need more information about Delaware company formation as well as business licenses, feel free to drop us a message via email@example.com.