Frequently asked questions

Division of Revenue Business Licenses Frequently Asked Questions.

Any person or entity conducting a trade or business in the State of Delaware is required to obtain a Delaware business license from the Delaware Division of Revenue. This includes entities located in Delaware who conduct their business outside the state. A business license must be obtained at the time business commences in Delaware. If you are unsure of whether or not you have substantial presence in Delaware to be subject to licensing and taxation, complete and submit our Nexus Questionnaire and the Delaware Division of Revenue will provide guidance: Nexus Questionnaire

No, depending on your business and where you live you may also be required to register with other local, state and federal entities.

In addition to registering with the Delaware Division of Revenue and obtaining a Delaware business license:

  • All businesses (except sole proprietors with no employees) must additionally register with the federal government and obtain an Employee Identification Number (EIN). Businesses can comply with federal requirements by contacting the Employer ID Numbers section of the IRS website.
  • Depending on where you are located in Delaware, your city and/or county may also require a city and/or county business license, in addition to a State of Delaware business license. Please contact your local government offices for more information about local requirements.
  • Businesses with employees must additionally register with the Delaware Division of Unemployment Insurance and the Delaware Office of Workers Compensation
  • Corporations, Partnerships, Limited Liability Companies, etc who conduct business in Delaware must additionally register with the Delaware Division of Corporations.
  • Certain professions must additionally register and obtain a license with the Delaware Division of Professional Regulations. Please visit the Division of Professional Regulations for a list of applicable professions.

There are two ways to obtain a Delaware Business License:

  • Complete your registration online using the One Stop Business Licensing and Registration Service. This service will allow you to register simultaneously with other state and federal entities.
  • Complete and mail a Combined Registration Application Form (Form CRA) with the appropriate license fee before business operations begin.

Most businesses receive their Delaware business license within a month of registering with the Delaware Division of Revenue.

Licenses obtained using the  One Stop Business Licensing and Registration Service and/or Revenue's Online Renewal may print a temporary license at the end of the registration or renewal process. Permanent licenses are generally sent within 10 working days.

There are two ways to renew a Delaware Business License:

  • Renew your license online using Revenue's Online Renewal.
  • Complete and mail a business license renewal with the appropriate license fee before business operations begin. If you do not receive your business license renewal in the mail, you can obtain one by contacting the Delaware Division of Revenue's Public Service Office at (302) 577-8200.

The license fees for the particular type of business activity can be found in the CRA form or by calling one of our Public Service Offices at (302) 577-8200.

Most licenses are proratable for the first year of activity. The CRA form outlines those licenses eligible for proration or you may contact one of the Delaware Division of Revenue's Public Service Offices for your specific license fee amount due.

Generally, most Delaware business licenses are good for one year and expire each December 31st. Three-year business licenses expire on December 31st of the third year.

After the first year of being licensed in Delaware, a business may opt, but is not required, to obtain a three-year Delaware business license, decreasing paperwork and mitigating the opportunity for license-renewal oversight.

The cost of a three-year Delaware license is not discounted; businesses will pay three times their regular yearly license fee for a three-year license.

Businesses will receive one license document for all three years.

You can also renew your Delaware business license online using our Online Renewal.

One of the benefits of online business registration and renewal is that Temporary Delaware Business Licenses can be obtained and printed right from your desktop computer.

If you are obtaining a Delaware business license for the first time, please access Delaware's One Stop Business Licensing and Registration Service. This service will allow you to register and print a temporary license.

If you already have a Delaware business license and need to renew, you may complete an Online Renewal. Revenue's online renewal will allow you to print a temporary license.

You may also obtain a temporary license in person at one of our Public Service Offices.

Permanent licenses will be subsequently mailed.

There are no temporary licenses available for those who mail their business license registration or renewal.

Yes, a State of Delaware business license is needed in addition to any professional licenses. Please visit the Division of Professional Regulations to see which professions require additional licensure.

All Delaware business licenses expire on December 31st of each year or December 31st of the third year for 3-year licenses. Business Licenses for the forthcoming year are required to be renewed no later than December 31st of the proceeding year.

There are two ways to renew a Delaware Business License:

  • Renew your license online using Revenue's Online Renewal.
  • Complete and mail a business license renewal with the appropriate license fee before business operations begin. If you do not receive your business license renewal in the mail, you can obtain one by contacting the Delaware Division of Revenue Public Service Office.

The Division of Revenue will send renewal coupons each year for one year licenses and every three years for those licensees who have opted to renew for three years. However, if you fail to receive a renewal coupon by December 1st, please contact one of our Public Service Offices for assistance in renewing your license prior to the December 31st expiration.

You may also renew online using our Online License Renewal.

You will want to consider what type of entity your business will be. For example, will you register your business as a sole proprietorship, a partnership, a corporation or a Limited Liability Company?

Please note that the Division of Revenue cannot assist you with this choice. If you are unsure how you should register, you may need to contact an accountant, a lawyer or Delaware's Small Business Administration for assistance. Also, please visit Step 1: Determine Your Business Type on the Delaware Division of Revenue website.

A business license may not be transferred from one owner to another. New owners of a business must apply for their own business license by completing a new license application (Form CRA). It is the responsibility of the owner(s) to advise the Business License Department of ownership changes or legal entity changes.

Any change of legal entity (i.e., sole proprietorship to corporation, etc.) requires a new business license. It is the responsibility of the business owner to advise the Business License Department that the former legal entity is "Out of Business".

Delaware does not impose a state sales tax; however, Delaware does impose a tax on the gross receipts of most businesses. Gross receipts are the total amount received from the sale of goods or services sold by the business.

Gross receipts tax rates range from 0.1037% to 2.0736%, depending on your business activity. The CRA form outlines the rate and allowable exclusion in more detail and Tax Tips are available for each business category.

If you have employees you are required to withhold State of Delaware "withholding tax" for each employee and submit this to the Delaware Division of Revenue. To register as a withholding agent, complete Part B of the CRA form.

Please access our Withholding Guide for more information.

Depending on your entity type, you may have an income tax return obligation as well. Sole Proprietors report business income on their individual tax returns. Partnerships report income on a partnership return. Corporations report income on a corporation return.

For more information on business licenses, please contact the Delaware Division of Revenue's Business Master File at (302) 577-8778. Our customer service representatives will provide you with detailed information and answers to your specific tax questions.

Division of Revenue Withholding Tax Frequently Asked Questions.

To open a withholding account, you have two options. Both options are free of charge. You can either:

  1. Register online using the One Stop Business Licensing and Registration system

    OR

  2. Fax or mail a completed Form CRA (Combined Registration Application for State of Delaware Business License and/or Withholding Agent) to:

    Fax: (302) 577-8203
    Mail: Delaware Division of Revenue, c/o Withholding Tax Unit 820 N. French St., Wilmington, DE 19801

    Part A of the CRA is to be completed by all taxpayers.

    Part B of the CRA must be completed by any person or company paying Delaware withholding tax.

If you would like to close your withholding tax account, you must first file a final year-end Withholding Tax Reconciliation form, and then complete the process by filing a Request for Change form indicating your account as closed. If you should have any further questions, please contact our withholding tax unit at (302) 577-8779.

There is no cost to open a State of Delaware withholding account.

After a withholding application is filed with the Division of Revenue (either online using One Stop or via a paper Form CRA), you should receive your personalized withholding tax forms within a few weeks.

NOTE: In order to reduce printing and mailing costs, the Delaware Division of Revenue will no longer mail paper booklets to Withholding taxpayers who file their Delaware State Withholding tax electronically. File or pay Withholding Tax online using ACH Debit or Electronic Funds Transfer.

No. Each entity liable for paying State of Delaware withholding tax is required to file its own individual withholding tax return, and must file using its own Federal Employer Identification Number. Please do not make payments under one identification number and then issue Forms W-2/1099 or file Form W-3 for multiple identification numbers.

Please visit Delaware's Employer's Guide for withholding regulations and Employer's duties.

The annual form, accompanied by copies of Forms W-2, is due on or before the last day of January of the following year or on or before the 30th day from the date on which the last payment of wages was made.

Section 1151 of Title 30 of the Delaware Code Annotated requires State withholding if the wages or other remuneration is subject to Federal withholding. The easy rule is "If you withhold Federal tax, then you must withhold State tax."

The recommended withholding for payments of deferred compensation is 5%. If your company makes deferred compensation payments to Delaware residents, you should be registered as a withholding agent. A Combined Registration Application must be completed and mailed to the Division of Revenue, and appropriate withholding coupons will be mailed to you.

Delaware accepts Federal Form W-4 for an employee to claim personal exemptions.

Delaware does not have reciprocity with any state. Withholding is only required in the "duty assigned state", e.g. your state. Delaware provides a credit against the state liability for taxes paid by its residents to other states. If your state has a lower marginal tax rate than Delaware, your employee(s) may need to have additional tax withheld to meet his/her Delaware liability.

All withholding agents having no prior record of withholding will file on a monthly basis until the next "lookback period".

Withholding tax returns filed late are subject to a penalty of 5% per month, plus interest of 0.5% per month from the original due date until paid. In addition to the above penalties and interest, an additional penalty of 1% per month (not to exceed 25%) is imposed for failure to pay (in whole or in part) the tax liability shown to be due on a timely filed return. (30 Del.C., Sec. 533 & 534)

Department of Labor Frequently Asked Questions.

Delaware employers are assigned one of four different types of tax rates: the new employer rate, the delinquent rate, the earned rate and the transfer of experience rate.

New Employer Rate

'New Employer' means an employing unit that does not qualify for an earned rate. The tax rate for a new employer will be the average of the rates for all employers in the State during the last 12 months. Construction companies will be assigned a tax rate that is the average of the rates for all construction employers in Delaware during the year for which the rate is assigned.

Delinquent Rate
  • If any liable employer fails to file its quarterly tax and wage reports due, the employer is assigned the Penalty rate if the delinquency is from the second quarter of the previous year and prior.
  • Please note- A delinquent rate reduction can only be made effective in the year and quarter the delinquency is resolved in.
Earned Rate

The earned rate is calculated by using the three most recent experience years; the experience year starts from July 1 to June 30. The basic rate is determined by finding the ratio between the benefits charged to your account and the taxable wages that you reported in three experienced years prior to the computation date ( benefits charged/taxable wages = benefit ratio). The ratio is then used in conjunction with the State Experience Factor Tables in Title 19 § 3350 (5) to determine the basic tax assessment rate for the current calendar year.

In addition, the supplemental assessment rate of .02% which is based on the balance in the UI Trust Fund, will be added to determine the final tax assessment rate for the current calendar year.

Transfer of Experience Rate

Frequently, an employer will acquire a business from a previous owner or the employer will reorganize a business. All Employer 'Merit Rate Notices' are issued in January for tax year January 1 through December 31. The effect of various transactions on the employer's contribution rate are summarized below:

  • Reorganizations - This is when a new employing unit is formed. The assets, employees, and business or trade are the same under the new organization as they were under the old. The new organization retains the contribution rate and has the same liabilities as before the changeover.
  • Successorship - If an existing employing unit acquires the assets, business, organization, or trade of another employing unit, the acquiring employing unit is known as a successor employer.
  • An employing unit transferring by sale or otherwise, all or part of the organization, trade, business, or assets to another employing unit or employing units is known as a predecessor employer.
  • Commencing January 1 after the transfer, the successor's rate of contributions for each calendar year is based on its experience with payrolls and benefit charges combined with the experience with payrolls and benefit charges of the predecessor. The successor is liable for all contributions, interest and penalties owed by the predecessor employer at the time of the transfer.
  • A person who is not an employing unit at the time of acquisition of a business, trade, or organization whether in full or in part will be assigned a new account rate.
  • A person who is not an employing unit at the time of transfer of a business, trade, or organization and is substantially the same ownership, will be given the experience rate of the previous business, trade, or organization. For example, in a partnership when one partner buys out another partner and the remaining partner retains the majority interest in the previous business.

Note: Pursuant to legislative change regarding the transfer of experience rate, the following will be effective January 1, 2006:

  • If an employer transfers its trade or business, or a portion thereof, to another employer and, at the time of the transfer, there is any common ownership, management or control of the two employers, then the unemployment experience attributable to the transferred trade or business shall be transferred to the employer to whom such business is so transferred. The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer of trade or business.
  • Whenever a person who is not an employer under Delaware's Unemployment Insurance Law at the time the trade or business of an employer is acquired, the unemployment experience of the acquired business shall not be transferred to such person if the division finds that such person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, such person shall be assigned the applicable new employer rate under §3348 of Delaware's Unemployment Insurance Law. In determining whether the business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the division shall use objective factors which may include the cost of acquiring the business, whether the person continued the business enterprise of the acquired business, how long such business enterprise was continued, or whether new employees were hired for performance of duties unrelated to the business activity conducted prior to acquisition.

For additional information regarding employer tax rates, call the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.

Services performed within this state, or both within and without this state are to be reported to Delaware if:

  • The service is localized in Delaware; or,
  • When there is employment in more than one state and some service is performed in the state where the base of operations is located, then the earnings are to be reported to that state where the individual's base of operations is located. If no services are performed in the state with the base of operations and some services are performed in the state where direction or control is received, then the earnings are to be reported to the state where the individual's direction or control is received. If there are no services performed in the state where the base of operations is located or where direction or control is received, then the individual's state of residence is to be used.

The objective is for all services performed by an individual for a single employer to be covered under one state law, wherever the services are performed. Employers may elect to cover an employee through a Reciprocal Coverage Agreement between states. For additional information, contact the Unemployment Insurance Employer Contributions Unit (302) 761-8484.

Nonprofit organizations operated exclusively for religious, charitable, scientific, literary or educational purposes (those exempt under Section 501(c)(3) of the Internal Revenue Code) and governmental entities may elect to reimburse the Division for benefits paid to their former employees on a dollar for dollar basis in lieu of tax assessments. The State of Delaware is itself a reimbursable employer for its merit system employees.

Questions concerning not-for-profit status and/or requirements may be directed to the Unemployment Insurance Employer Contributions Unit at (302) 761-8484.

Taxable wages include total remuneration paid up to the taxable wage base limit of $16,500 before any deductions are made.

The following wages are taxable:

  1. Meal and lodging provided by an employer to an employee, unless the meals and lodging are provided on the employer's premises for the employer's convenience.
  2. Tips which are reported pursuant to Section 6053 of the Internal Revenue Code.
  3. Payments to workers for: (a) dismissal; (b) vacations; (c) sick leave; and (d) Bonuses

The following payments are not to be reported:

  1. Employer payments, without deduction from the employee's wages, for Retirement, Sickness or Accident disability insurance or medical insurance.
  2. Payment by the employer, without deduction, of the employee's Social Security Taxes
  3. Vacation pay paid incident to or during a period of unemployment
  4. Attendance bonus paid during or incident to any period of unemployment.
  5. Wages of a sole proprietor, his/her spouse and children of the sole proprietor under 18 years old, and owner's parents.
  6. Wages of partners.
  7. Wages earned by an individual who is enrolled in a full-time educational program that combines academic instruction with work experience, which is an integral part of the educational program.

If you have questions concerning the inclusions and exclusions listed, please call the Unemployment Insurance Employer Contributions unit at (302) 761-8484.

We only require 1099 information for contractors working in Delaware.

Yes, a physical address is required.

The address of the business location in Delaware where the work will be performed.

  1. If you are a single entity, an organizational chart of the single entity is required.
  2. If you are owned by another entity, an organizational chart of the parent company is required.

No, the full social security number is required.

  1. For identification purposes.
  2. To determine if an employer qualifies for the combining of accounts or transfer of experience.

If you choose as a way to reduce the overall cost of your policy with your insurer you can exclude up to a maximum number of individuals from the business's workers compensation coverage. For an LLC entity type maximum 4 exclusions and a corporation maximum 8 exclusions are allowed.

Division of Corporations Frequently Asked Questions.

For legal entities (corporations, LLCs, LPs, etc.), check name availability online through the Division of Corporations name reservation service. The name you choose must be unique from corporations or other entities reserved or registered under the laws of Delaware.

Please note, business names for sole proprietors are different than ones for legal entities. Sole proprietors must use their personal name or register a trade name (also called a Doing Business As Name).

Sole proprietors, register your business name with the Prothonotary's Office for each county in which you plan to transact business.