Delaware business license: who needs one, what it costs, and how to get one

Does Delaware require a business license?

Yes. Any person or company conducting a trade or business in Delaware needs a Delaware business license from the Division of Revenue, no matter where the business was formed. The license is issued for each business activity and each location. You must get it when you start the business, not after you make your first sale. 

This guide is part of Nav’s series on business license guides, and some businesses may need multiple state business licenses. 

What if you form a Delaware LLC but your business is based somewhere else? Simply forming an LLC or corporation in Delaware doesn’t automatically require your business to get a Delaware business license. If you don’t have property or employees in Delaware, or don’t have what qualifies as a substantial presence in the state, you are likely exempt.  Delaware’s Division of Revenue offers a nexus questionnaire that can help you understand whether one is required, or you can call 302-577-8778 to ask. You can also get free training and one-on-one business consulting through the Delaware SBDC, or you can consult your business advisors. 

The license also comes from a different office than Delaware entity formation paperwork. The Division of Corporations forms and maintains LLC’s, corporations, and other entities, while the Division of Revenue licenses the business activity. 

What is the Delaware business license?

A Delaware business license is the state’s general license to carry on a business or profession in Delaware. It is issued by the Department of Revenue, which is part of the Department of Finance. 

Your license category depends on what your business does. Categories include retailers, wholesalers, manufacturers, contractors, commercial lessers, and general occupational and professional services. A separate license is required for each business activity so a business with multiple activities may need two licenses. 

After your first year you can buy a three-year license instead but there's no discount. You just pay three times the annual fee.

Do Delaware businesses pay sales tax?

Delaware does not have a sales tax. However, a gross receipts tax is charged on total revenue, not profit. It's levied on the seller instead of the customer, and you can't subtract costs like materials, labor, or interest. Rates currently range from 0.0945% to 1.9914% depending on your business activity, and petroleum products can run as high as 2.4218%.

Most businesses also get an exclusion, which generally starts at $100,000 a month or $300,000 a quarter, and can go as high as $1,250,000 a month, depending on the type of business. Receipts under the exclusion aren't taxed.

New businesses start as quarterly filers, with returns due by the last day of the month after each quarter ends. Monthly filers pay by the 20th of the following month. Returns are filed online through the Delaware taxpayer portal. And because Delaware taxes the seller and has no sales tax, there's no sales tax permit to apply for.

How to get a Delaware business license in 5 steps

Here’s how to get a business license in Delaware:

1. Set up your legal structure. Legal entities file with the Division of Corporations. Nav’s guides on how to start an LLC and business formation options can help. sole proprietorships don't file with the Division of Corporations.
2. Get an employer identification number (EIN).  Most businesses, though not all, need an EIN. Read Nav’s guide to understanding EINs and find out how to get an EIN. 
3. Complete the One Stop application. Create an account on Delaware One Stop and register your business with the Delaware Division of Revenue. If you have employees, the same session walks you through unemployment insurance, workers compensation, and payroll withholding.
4. Pay the license fee. The fee is generally $75 for a first location, and it's prorated for your first year. Payments run through the state's Go DE payment gateway.
5. Print your temporary license. If you apply online you can print a temporary license at the end. It's valid for up to 60 days, and the permanent license is generally mailed within 10 working days.

You can skip online registration and file a combined registration application with the Division of Revenue with the fee, but mailed applications don't get a temporary license.

After you get your business license number, set up your gross receipts tax account in the Delaware taxpayer portal. And if you want to operate under a trade name (also called a DBA), you can register one in One Stop for a one-time $25 fee. 

Do you also need a city business license in Delaware?

Sometimes  you also need a city business license. Wilmington, Dover, and Newark each require a city business license on top of the state license.

• Wilmington: You need a city license to operate inside Wilmington city limits. These are set by business category, and a license with gross receipts of $10,000 or less for the prior calendar year can elect to pay $30 instead. 
• Dover: You need a city license if you're working within the city limits. It runs from August 1 to July 31, and the cost depends on the license type and the month you buy it.
• Newark: A license is required for businesses operating in the city. These are based on estimates of the demand and cost for municipal services. 

Other towns can set their own rules. Delaware's Business First Steps site tells you to contact the county, city, or town where you operate. 

In short: Get your state license through One Stop first. Then contact the licensing and/or finance office where you'll operate, because local licenses are separate from State requirements.

Which Delaware occupations need a state license?

Many states require professional licenses for certain professions, and Delaware is no different. You can contact these agencies through One Stop:

• Contractors: Register with the Department of Labor's Office Of Contractor Registration before work begins, in addition to your Division of Revenue Contractor License.
• Licensed trades: Electricians are licensed by the Division of Professional Regulations Board of Electrical Examiners. Plumbing and HVACR licenses are issued by the Board of Plumbing, Heating, Ventilation, Air Conditioning and Refrigeration Examiners.
• Professions and Healthcare: The Division of Professional Regulation licenses many professions, and Business First Steps lists cosmetologists, real estate professionals, accountants, and many healthcare rules among them..
• Alcohol: The Office of the Alcoholic Beverage Control Commissioner issues liquor licenses.
• Childcare: The Office Of Child Care Licensing licenses child care homes and centers.
• Food service: The Division of Public Health Office of Food Protection permits food establishments.

What about cleaning and landscaping businesses? Delaware doesn't list a cleaning specific state license. In the case of landscaping, Delaware's contractor registration law defines construction services to include landscaping and tree cutting. 

Landscape architects are licensed professionals, which is different from running a landscaping crew. And if you apply pesticides on someone else's property, the Department of Agriculture requires a pesticide business license, which costs $50 for one year. 

If you’re checking whether another business is licensed, the Division of Revenue offers a business license search.

How much does a Delaware business license cost?

Most businesses pay $75 a year for a first location, plus the gross receipts tax once their receipts passed the exclusion amount. Some categories are priced differently. A travel agent license, for example, is $225 for the first location. General retail licenses are $90 because they include a $15 Retail Crime Fee. Some categories add $25 for each location, such as commercial lessors.

A few other costs to know:

• Your first year fee is prorated based on how many full months of the license year have passed
• Delaware offers a 75% discount on annual license fees for people 65 or older who meet specific requirements
• License fees aren't refundable for any unexpired term

These fees are separate from fees to form an LLC, corporation or other entity in the state, as well as annual report fees. 

How to renew a Delaware business license

Most Delaware business licenses expire on December 31 each year, and three-year licenses expire by December 31 of the third year. You'll need to renew by December 31 of the year before the new license starts. 

You can renew online through One Stop, which the state recommends, or mail in a renewal with the fee. When you renew, you pay the fee in effect at the time, and a three-year renewal is three times that fee.

The Division of Revenue mails renewal coupons each year for one year licenses. A license can't be transferred to a new owner, and changing your legal entity means applying for a new license.

A few filings run on their own schedules:

• Gross receipts returns continue monthly or quarterly no matter when your license renews.
• City licenses follow each City's calendar. Dover's, for example, runs August one to July 31.
• Your entity's annual filing is separate and goes to the Division of Corporations. LLCs, LPs, and GPS pay their annual tax by June 1, and domestic corporations file their annual report and franchise tax return by March 1.

How long does it take to get a Delaware business license?

If you apply online, you can print a temporary license right away, and most businesses have their permanent licenses within a month. The temporary license is valid for up to 60 days and permanent licenses are generally mailed within 10 working days. mailed applications don't get a temporary license.

Other timelines depend on the agency. Approved trade names show up in the state's trade name search on a one-day leg. City licenses and professional licenses vary by office and whether an exam is required.

Why licensing matters for financing and business credit

Many lenders will request a copy of your business license if one is required for your type of business. This is especially true with SBA loans or bank loans which often involve larger amounts of financing. 

Staying in good standing with state agencies like the Division of Revenue and the Division of Corporations helps your business build and keep a solid business foundation.

Nav’s guide on how to establish business credit, covers what comes next, and you can use Nav’s marketplace to compare business loan options when you need financing. 

Nav is not a lender or a credit bureau. Credit information is provided by third-party sources.

The bottom line

Delaware licenses businesses that operate in the state and taxes gross receipts, while a Delaware-formed company that operates only outside the state typically won't need either. 

If your business needs a Delaware business license, apply through One Stop, then put the renewal on your calendar. Be sure to check local license and professional license requirements as well. 

Nav can help with financing and credit  once your business is set up, and Nav’s guides for Georgia, New York, Florida, Washington, California, Texas, and Nevada cover the rules in other states.

Frequently asked questions