Get your tax IDs in Delaware

An EIN, if you need one, takes minutes online. Delaware adds a state business license for most businesses, a gross receipts tax in place of sales tax, and employer registrations once you hire. Delaware One Stop covers the state ones in one application.

What’s different in Delaware

• No sales tax, but a gross receipts tax. The business pays it on what it takes in, with no deduction for costs. Rates run from 0.0945% to 1.9914%, depending on what you do (petroleum products can run higher).
• Most businesses need a state business license, including corporations and sole proprietors, and it renews by December 31 each year, or every third year on a three-year license. Qualifying nonprofits are exempt.
• One application, several agencies. Delaware One Stop registers you with the Division of Revenue, and, if you hire, with the Division of Unemployment Insurance and the Office of Workers’ Compensation.

Do this

1. Get an EIN from the IRS if you need one. The IRS requires one if you have employees and for partnerships, corporations, nonprofits and most LLCs. Delaware asks for one from every business except a sole proprietor with no employees. It’s free and, if approved, issued immediately online. Form your LLC or corporation first. Don’t pay a website to apply for you.
2. Get your Delaware business license on Delaware One Stop. Get it when you start doing business here. The fee is generally $75 a year for the first location, and most licenses are prorated in the first year. Each separate business activity needs its own license. You can print a temporary license as soon as you finish. After the first year, you can buy a three-year license instead, at three times the yearly fee.
3. Look up your gross receipts rate and exclusion. Both depend on your business activity. The Division of Revenue’s tax tips list them by business type. Most exclusions start at $100,000 a month, and only receipts above the exclusion are taxed.
4. File gross receipts returns online at tax.delaware.gov. New businesses file quarterly, due the last day of the month after each quarter ends. The Division of Revenue may move you to monthly later.
5. Register as an employer when you hire. In Delaware One Stop, add a withholding account with the Division of Revenue (no cost) and file Form UC-1 with the Delaware Division of Unemployment Insurance, which asks for it within 20 days after your first day of business. You generally owe unemployment tax once you pay $1,500 or more in wages in a calendar quarter, or employ someone in 20 different weeks of a year. Most employers also need workers’ compensation insurance.
6. Set up each new hire. On Form I-9, the employee completes Section 1 by their first day of work, and you complete Section 2 within three business days of the start date (by the first day if the job lasts less than three business days). Delaware uses the federal Form W-4 for withholding. Report every new hire to the Delaware State Directory of New Hires within 20 days of their start date.

What you get back

• EIN: a nine-digit federal tax ID, shown on screen when approved. Print the confirmation letter.
• Business license: a temporary license to print right away, then the permanent license by mail. It renews by December 31 each year, or every third year on a three-year license.
• Employer accounts: a withholding account with the Division of Revenue and, if the Division of Unemployment Insurance finds you liable, an unemployment insurance account. It mails a letter with its decision and a poster to display.

Not hiring yet? The business license and gross receipts returns may be all you need for now.