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STARTING AND OPERATING A BUSINESS IN DELAWARE Copyright © 2000, Michael D. Jenkins
CONTENTS OF THIS SECTION:
I. INTRODUCTION I. INTRODUCTION Delaware has a tax and legal structure that has for many years been designed to attract businesses to the state, and which has been very successful in doing so. In addition to a generally favorable tax structure and business climate, with no state or local sales tax, Delaware has always been in the forefront in developing pro-business features in its corporate laws. Because it also offers very favorable tax treatment for companies headquartered elsewhere, many of the largest firms in America have chosen this small state as their state of incorporation. In fact, Delaware is the corporate home to some 250,000 companies, and to 58% of the Fortune 500. Like most states, Delaware imposes an income tax, a franchise tax on corporations, and various excise taxes, with property taxes imposed at the local level. Unlike most other states, Delaware has no state or local sales taxes. In addition, there is no state or local property tax on tangible or intangible personal property. A 2005 study by the Tax Foundation found Delaware had the third-lowest taxes of any state, as a ratio of per capita income, with only Alaska and New Hampshire having lower ratios. The state has also adopted a limited liability company (LLC) law and a limited liability partnership (LLP) law, so that businesses operating in Delaware in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to corporate taxation, generally. The Massachusetts Taxpayers Foundation study of state taxes in 2004 (based on 2002 data) found that Delaware had the second-lowest property taxes in the nation, in relation to residents' income, at just under $16 of tax per $1,000 of income. Alabama had the lowest property taxes, at $13 per $1,000 of income, in comparison, and Maine had the highest property taxes, at $55 per $1,000 of income. Delaware recently (in 2004) created a new type of corporate entity, called a Delaware Headquarters Management Corporation, or "HMC," to attract investment management firms and headquarters support operations, in order to increase employment in the state. The new HMC entity is subject to state income tax at a rate of 8.7% on its headquarters management activities and 4% on investment income, with a minimum annual tax of $5,000. An HMC is exempted from the General Service license and the Delaware gross receipts tax. Various tax credits of up to $400 per employee and a 20% tax rate reduction may be available to an HMC that increases its number of employees. At present, the state's economy is quite robust, in terms of the level of unemployment and other economic measures. For example, in January, 2000, the state's unemployment rate was only 3.1%, down from 3.5% a year earlier, but well below the national unemployment level of 4.0% for that month. To view the latest federal Bureau of Labor Statistics unemployment rate data for Delaware or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in Delaware can operate as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. In addition, like the federal tax law, the state income tax law also recognizes S corporations, for income tax purposes, and generally allows the income or losses of an S corporation to "flow through" and be taxed or deducted at the shareholder level, rather than taxing the corporation itself as an entity, except for the portion of income that is allocable to non-resident shareholders. Delaware also provides for limited liability partnerships, in which no partner is liable for debts of the partnership, in general, as in the case of a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in Delaware can be formed with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. No separate tax form filing is required, generally, for a sole proprietorship, under the Delaware income tax law. Instead, as with the Schedule C on your federal Form 1040, you simply report the net income or loss from your sole proprietorship on your state personal income tax return. See Section IV(c) for information on the Delaware income tax and filing requirements for individuals. As a sole proprietor, if you have no employees, you are not required to pay any unemployment taxes, withhold any federal or state income tax from wages, nor obtain workers' compensation coverage for yourself. (c) Partnerships. As a rule, general partnerships in Delaware can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will typically be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. Delaware has adopted a Revised Uniform Partnership Act, which has replaced the former Delaware Uniform Partnership Act in its entirety for any partnerships formed on or after January 1, 2000. Previously existing partnerships will not be subject to the new act until January 1, 2002, unless they elect to be subject to the provisions of the new act before 2002. A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under Delaware law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a Certificate of Limited Partnership with the Delaware Secretary of State, plus filing fees of $200. The same fees are applicable for registering a foreign limited partnership. Limited partnerships must also file an annual report with the secretary of state and pay an annual franchise tax of $200 by June 1 of each year. For information on limited partnership filing requirements, see the contact information for the offices of the Delaware Secretary of State, listed in Section VI(a). Limited liability partnerships (LLPs) are a new form of partnership permitted under the laws of Delaware. Somewhat like an LLC, an LLP provides a degree of limited liability for its owners, while retaining the tax advantages of a partnership for federal and Delaware state income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization. To form an LLP in Delaware, you must file a registration fee and pay a filing fee of $100 per partner, up to a maximum of $165,000 (the same as the maximum corporate franchise tax). Foreign LLPs, those created under the laws of another state, must register with the Delaware Secretary of State and pay the same fees as a domestic LLP. For more information on LLP registration and reporting requirements, see the contact information for the offices of Delaware Secretary of State, listed in Section VI(a). Note that one potential drawback of LLPs, if you will do business in other states besides Delaware, is that some states, like California, only recognize certain types of professional partnerships as LLPs. Such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
Partnerships, as entities, are not subject to state income tax in Delaware. Instead, the income or losses of the partnership, as allocated among the partners, must be reported on the personal income tax returns of the individual partners (or on the corporate tax returns of any corporate partners). Partnerships are required to file an annual tax information return with the state. For details on Delaware partnership tax return filing requirements, see Section IV(c). (d) Corporations. To form a corporation in Delaware, you must file articles of incorporation with the secretary of state and register the corporation with the county clerk in the county where the corporation is located. State filing fees for incorporation are based on the amount of the company's authorized capital stock, with differing rates for par or no-par value stock. There is a minimum fee or tax of $35, plus a $50 filing fee. There are also small recording fees charged by the respective county clerks, of $15 plus $9 per document page. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of qualification before it may legally conduct business in Delaware, by filing an application for a certificate of qualification and paying an entrance fee of $80, plus a filing fee of $50. If your business incorporates or qualifies to do business in Delaware, you must maintain an office in Delaware -- a post office box is not sufficient. For more information on filing articles of incorporation or applying for a certificate of qualification to do business in Delaware, see the contact information for the offices of the Delaware Secretary of State, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file annual reports with the Delaware Secretary of State and, in the case of a domestic corporation, pay a filing fee of $20 and a franchise tax that can range from $35 to $165,000, depending on the amount of authorized stock of the corporation. In the case of a foreign corporation, a $50 fee is required with each annual report. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter, in addition to late filing penalties. Note that foreign corporations are not required to pay the Delaware franchise tax that applies to Delaware corporations, but are required to pay the annual report fee of $50 per year mentioned above. Effective since August 1, 2003, all corporate filings with the Delaware Secretary of State must be accompanied by a $20 courthouse municipality fee. In addition to paying federal income taxes on its income, a corporation that does business in the state must also file Delaware corporate income tax returns. See Section IV(c) for a discussion of state corporate income tax rates and tax return filing requirements. For tax forms and more information on corporate income and franchise taxes in Delaware, see the contact information for the offices of the Division of Revenue and the Division of Corporations -- Secretary of State, respectively, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Delaware recognizes S corporations for income tax purposes, and treats them in a manner similar to the federal tax treatment, where all the shareholders are Delaware residents. However, where any of the shareholders on the last day of the taxable year are non-residents, the corporation must pay Delaware income tax on their share of the corporate income. (f) Limited Liability Companies. Delaware, like every other state, has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in Delaware may also choose to operate in the form of an LLC. In most states, LLCs are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes. See Section IV(c) for a discussion of the income tax treatment of LLCs under Delaware tax laws. To form an LLC under the laws of Delaware, one or more authorized persons must file a certificate of formation with the Delaware Secretary of State, which must be accompanied by a filing fee of $50. A Delaware LLC may now be formed with only one member. Foreign LLCs, those formed under the laws of another state, must obtain a certificate of authority to do business in Delaware, by filing an application with the Delaware Secretary of State and paying a filing fee of $50. In addition to initial filing fees, an LLC formed in Delaware or a foreign LLC must subsequently file annual reports and pay an annual tax of $200. Effective since August 1, 2003, all LLC filings with the Delaware Secretary of State must be accompanied by a $20 courthouse municipality fee. For more information on filing articles of organization for an LLC, see the contact information for the offices of the Delaware Secretary of State, listed in Section VI(a). III. BUSINESS ACQUISITIONS (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should handle for you before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal and state income tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. Delaware is one of the states that has repealed its bulk sale laws, so you no longer have to be concerned with this requirement when buying a business in Delaware. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. In Delaware, there is no specific procedure for obtaining a tax release for unemployment tax, gross receipts tax, or unpaid withholding taxes of the seller. Accordingly, you will need to carefully examine the seller's records and tax filings to ensure that all tax returns have been filed and the taxes shown have been paid. You may also want to hold back part of the sales proceeds in escrow to offset against any unpaid taxes of the seller for which you may be held liable as a transferee. Note that you can request a list of delinquencies from the Division of Unemployment Insurance, to see if the seller is known to be delinquent on any payments of unemployment taxes. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. To obtain the seller's favorable experience rating as a successor employer, you will need to file Form UC-411, Application for Employment Experience of Predecessor, on a timely basis with the Division of Unemployment Insurance, requesting that you be treated as a successor employer. IV. DELAWARE TAXES AND OTHER GENERAL REQUIREMENTS. (b) State and Local Licensing. Nearly any business, operated anywhere in the United States, will have to have at least one government license of some kind. In most cases, this will be a local license, issued by your city or county. Before you open your business, contact your local city or county hall and find out if your particular business needs one or more local licenses. Most kinds of local business licenses are granted upon payment of a fee, with no further requirements, except possibly for annual or other periodic renewal fees. However, if you are engaging in any kind of food business, you will usually need to also obtain a health department permit and show that you are in compliance with health department food-handling requirements. In addition, be sure to check with an attorney or local government zoning or planning department officials to determine if your business will be in compliance with all local zoning and planning restrictions. If you own or rent any type of facility, you will generally need fire department permits, showing that you meet fire safety codes and any construction or improvements to an existing structure will usually require a building permit. If you intend to simply operate your business from your home, you may be in violation of local zoning requirements, but this is less likely to be a concern if you don't have clients, customers, suppliers, or employees coming to your house on business, on a regular basis. State governments have also traditionally required special licenses for many kinds of professionals, such as physicians, dentists, lawyers, and accountants. To further protect consumers, Delaware has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing. All persons conducting any business in Delaware or having one or more employees in the state are required to register with the state for a business license, on Form CRA, Combined Business Registration Application. This application form provides a combined registration for your business license, for the gross receipts tax, and as an employer withholding agent. Sole proprietorships with no employees may register with the Division of Revenue by completing a Sole Proprietor Business License Application, Form 2301SP9703. New businesses applying for a business license will receive a welcome letter with tax tips about their respective business and the name of a personal representative at the Office of Business Taxes who will answer questions and assist in tax processing issues. For information on state licensing and business registration requirements in Delaware or to obtain a copy of the Form CRA business registration form, see the contact information for the offices of the Delaware Division of Revenue, listed in Section VI(a). Also, to find out whether the type of profession or occupation you wish to engage in requires a specific state license, contact the main state licensing agency, the Division of Professional Regulation -- Administrative Services Department, at the address listed for it in Section VI(a). (c) Income and Franchise Taxes. Delaware has both an individual income tax and a corporate income tax, as well as a franchise tax on domestic corporations. The Delaware individual income tax is imposed at a maximum tax rate of 5.95% after 1999 (it was 6.4% in 1999). Individual taxpayers generally pay state income tax on their business earnings from a sole proprietorship, or on their share of the earnings of a pass-through entity, such as a partnership or S corporation, or LLC. The Delaware personal income tax return for residents is Form 200-01, which is filed with the Division of Revenue. Partnerships, or entities taxable as partnerships, such as LLCs, are not subject to state income taxation in Delaware, but must file an information return with the Division of Revenue each year, showing each partner's share of taxable income, losses, and credits, on Form 300. The partnership information return is due by April 1 of the following year, in the case of a calendar year partnership. Individual taxpayers doing business as sole proprietors, or who are partners in partnerships, or members of LLCs, are required to make payments of estimated Delaware individual income taxes, on Form 200-E, if their net tax liability (not covered by withholding) exceeds $100. Estimated tax payments are due in four installments, on the 30th of April and on the 15th day of June, September, and January 15th of the following year, in the case of a calendar year taxpayer. The Delaware corporate income tax rate, on corporations other than S corporations, is a flat tax of 8.7% on the taxable income of a corporation that is apportioned to Delaware. The state corporation income tax return is Form 1100, which must be filed with the Division of Revenue by the 1st day of the fourth month following the end of the taxable year, or April 1st in the case of a corporation whose taxable year is the calendar year. Corporations are required to make estimated tax payments of their state corporate income tax in advance, on Form 1100-T. Estimated tax payments are due in advance, in four unequal installments, on the 1st day of the fourth month of the taxable year, and on the 15th day of the 6th and 9th months, and the 15th day of 1st month of the following year. For a calendar year corporation, the payment schedule is as follows: Date of Percentage of estimated Cumulative % installment tax due on such date due by such date ------------- ----------------------- ---------------- April 1 50% 50% June 15 20% 70% September 15 20% 90% January 15 10% 100% Penalties will be imposed for failure to make the required estimated tax payments on a timely basis. However, if the preceding year was a full year of 12 months, the current year payments need only be equal to 100% of the prior year's tax liability, if less. In Delaware, a limited liability company (LLC) is taxed in the same manner as a partnership, thus avoiding the possible double taxation of income that can occur with a corporation. Delaware law now permits formation of 1-person LLCs, which will generally be treated as sole proprietorships for tax purposes. (d) Sales and Use Tax. There is no general sales or use tax in Delaware. However, businesses are subject to a tax on their gross receipts, which generally range from 0.096% to 1.92% of the company's gross receipts, and for which there are very few deductions or exclusions. Since 1996, an across-the-board cut of 4% was enacted. Thus, the former 0.75% gross receipts tax rate on retailers is now reduced to 0.72%, for example. Obtain tax forms and filing instructions from the Division of Revenue, for which contact information is listed in Section VI(a). (e) Real and Personal Property Taxes. In Delaware, as in every other state, any business real estate you own will be subject to real property taxes. In general, there is little that you must do, unless you wish to challenge your assessed valuation, since the assessor will bill you for each year's property taxes as they come due. Delaware, unlike most other states, does not impose any property taxes on personal property, such as equipment or inventories, or intangible property. (f) Other Business Taxes. Delaware imposes a number of other taxes on businesses, including:
(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. Filing articles of incorporation automatically protects that corporate name in Delaware. If your business operates under an assumed or fictitious name in Delaware, you must register such trade name in each county where you do business, with the Prothonotary of the county. The registration is filed on a standard form, and there is a small registration fee you must pay. V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. If you have any employees, you will already be withholding federal income tax and FICA taxes from their wages. In addition, since Delaware imposes a state income tax on the income of individuals, you will need to also withhold Delaware income tax from the wages of your employees. Before you begin to pay wages, you must register as an employer with the Division of Revenue, on Combined Business Registration Application, Form CRA. For more information on Delaware income tax withholding and registration requirements for employers, see the contact information for the offices of the Division of Revenue, listed in Section VI(a). (b) Unemployment and Other State Payroll Taxes. If your business employs one or more individuals in each of 20 weeks during any calendar year or if your payroll amounts to $1,500 in any calendar quarter, you, as an employer will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the Delaware unemployment tax are required to register with the Division of Unemployment Insurance of the Delaware Department of Labor. Most new employers, other than those in the construction industry, are required to pay tax at a rate of 1.9% in 2000 on the first $8,500 of wages paid to each employee. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. All state unemployment taxes are imposed upon you as the employer, and, under Delaware law, cannot be charged to your employees or withheld from their wages. You must prominently display the official poster, Notice of Coverage, Form UC-6, in your workplace. For more information on your Delaware unemployment tax obligations as an employer, see the contact information for the offices of the Division of Unemployment Insurance, listed in Section VI(a). (c) Workers' Compensation. In Delaware, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. Note, however, that a sole proprietor or a partner in a partnership is generally not considered an employee. Similarly, up to four employees of a corporation who are stockholders of the corporation may be exempted from coverage by written agreement with the corporation. Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. Thus, if you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance. For more detailed information regarding your obligations as an employer under the Delaware workers' compensation laws, contact your insurance carrier or see the contact information for the offices of Division of Industrial Affairs, Delaware Department of Labor, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still usually be subject to the Delaware wage-hour laws, which provide for a state minimum hourly wage that is generally the same as, but not less than, the federal minimum. Thus, the state minimum wage of $5.00 an hour increased again when the federal wage went from $4.75 to $5.15 an hour in late 1997. Subsequently, the state minimum wage was increased to $5.65 an hour on May 1, 1999, and increased to $6.15 on October 1, 2000. Besides the federal wage-hour posters that you must display in the workplace, you must also display a state wage-hour poster, which you can obtain from the Division of Industrial Affairs, Delaware Department of Labor. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in Delaware. Under these laws, you generally may not hire children under age 14. Children between age 14 and 18 can be hired, but only if work certificates for them are on file. (e) State Occupational Safety and Health Laws. Approximately half of the states have their own OSHA-like agency, charged with administering the state's own occupational safety and health laws. The remaining states have no such enforcement agency, and thus rely instead on the federal Occupational Safety and Health Administration (OSHA) to administer the federal job safety rules within such states. Delaware is one of the states that does not have its own local equivalent of OSHA. Note that while you may obtain a free safety consultation from federal OSHA experts, they must and will cite you for any violations they discover at your workplace. This is not the case in states with their own OSHA programs, where, if you request a safety consultation from the state agency and they detect violations, they will not cite you if you promptly correct the unsafe conditions. However, the Delaware Department of Labor, Division of Industrial Affairs, can provide you with such free safety consultations, as well as information on complying with the federal OSHA requirements. For information on your job safety and health obligations as an employer, required posters, and possible on-site safety consultations, see the contact information for the Wilmington offices of the Division of Industrial Affairs, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other Delaware labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. Final wage payments to an employee who quits or is discharged by you between paydays may be made on the next regular payday in the regular manner, or must be mailed to the employee if so requested. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. Delaware does not have such a right-to-work law and allows union shop or agency shop contracts between an employer and a union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in Delaware. You can obtain information on the Delaware civil rights laws and regulations from the Anti-Discrimination Section of the Division of Industrial Affairs, at the address listed in Section VI(a). (4) Reporting new hires. Under new federal welfare reform laws, employers in all states are now required to report newly-hired (or rehired) employees to a designated state agency (the Division of Child Support Enforcement for Delaware employers) within 20 days after the date of hire. See the contact information for the Delaware Division of Child Support Enforcement, listed in Section VI(a), for information on where and how to file. VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Delaware, as many states have done in recent years, has set up what can be considered a "one-stop" center, the Delaware Small Business Development Center at the University of Delaware, to help your new or existing business with questions about all necessary state licenses and permits. This office can also provide you a useful free publication, the Small Business Start-up Guide. Contact this agency at the address listed under Small Business Development Centers, in Section VI(b). In addition, you can register your business with the state for Delaware income tax, gross receipts tax, employer withholding, and your state business license on a single state application form, Form CRA, Combined Business Registration Application, which you should obtain from and file with the Division of Revenue. Addresses and other contact information for the Division of Revenue and other key state government agencies mentioned in Sections I through V above are listed below for your convenience. SECRETARY OF STATE. Contact this office for information on:
EMPLOYER WITHHOLDING. Contact the Division of Revenue, the main state tax agency, at the address for it listed above, to register as an employer for purposes of Delaware income tax withholding. STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject.
NEW HIRE REPORTING. All new hires must be reported to the Division of Child Support Enforcement (DCSE) within 20 days of hire. A copy of the employee's W4 form is acceptable. The W4 form must include the employee's name, address, social security number; the employer's name address and Federal Identification Number (EIN). This information can be mailed to:
WORKERS' COMPENSATION INSURANCE. If you employ workers for whom you must supply workers' compensation coverage, contact the Division of Industrial Affairs, Department of Labor, at the address listed above for that agency. STATE OSHA PROGRAM. There is no state OSHA enforcement program in Delaware. The federal government provides federal OSHA enforcement instead. For required posters and information on federal occupational safety and health laws that affect you as an employer, or to inquire about free safety consultations in Delaware, contact the offices of the Division of Industrial Affairs of the Delaware Department of Labor, at the address listed above for that agency. (b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout Delaware to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you. Also request the publication, the Small Business Start-up Guide.
(c) Internet Sites. If you have access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in Delaware. Since new sites are appearing constantly, you might also want to search for other Delaware government Web sites by using one of the popular Internet search engines, such as Excite! or Yahoo. To start your Internet search for Delaware government information, you may want to begin with the following Internet sites: State of Delaware Home Page: Delaware list of state agencies: Delaware Division of Corporations: Small Business Development Center, University of Delaware: Delaware Economic Development Office (DEDO):(d) Financing Sources. For information and help on locating financing for your small business, contact the U.S. Small Business Administration office in Wilmington, or contact the Business Finance Section of the Delaware Economic Development Office, at the address listed for that agency below. The Delaware Economic Development Office (DEDO), through its financing subsidiaries, The Delaware Economic Development Authority and the Delaware Development Corporation, offers comprehensive assistance in loan "packaging" by utilizing existing State and federal programs. The Authority is skilled in generating financial options for the State's business community in conjunction with private financial institutions. By customizing loan packages for individual firms, DEDO's professional staff is able to match development needs with available financial resources. Contact DEDO at:
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Copyright © 2000 Michael D. Jenkins
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