Licenses

Basic Business Licenses, Permits

Most occupations and businesses require the purchase of a license in order to operate legally in Delaware. If you do not have a business license, you will be operating illegally in the State and will be subject to stiff penalties levied by the State Division of Revenue. Further, without a business license, you cannot sue in small claims court to collect money that is owed your business. Some professional licenses may require testing, and criminal background checks, and certain business activities may require a special license.

Any business operating as a sole proprietor, partnership, or corporation engaged in business activity in Delaware must obtain a Delaware business license. The annual license fee is $75 for most businesses. Most business are liable for a monthly gross receipts tax at varying tax rates depending on the business activity as described below. Licenses and gross receipts tax information for general categories are listed below:

1. Occupational/Professional/General Services License - Most occupations are charged a $75 annual fee and $25 for each separate branch or additional business location, plus a fee of 0.384% on the taxable gross receipts in excess of $50,000 per month.

2. Contractor’s License - $75 annual fee, plus a fee of 0.624% on taxable gross receipts reduced by payments made to subcontractors (as reflected on Form 1280) in excess of $50,000 per month. Special rules apply to persons engaged in the business of acquiring land (raw or developed), building structures and selling such structures. Persons performing such activities are considered Real Estate Developers and reduce their gross receipts by the cost associated with the development of the property. Non-resident contractors must supply a surety bond. Special rules also apply to Construction Transportation contractors.

3. Retailer’s License - $75 annual fee and $25 for each separate branch or additional business location, plus a fee of 0.720% on the taxable gross receipts in excess of $50,000 per month. Sales to the U.S. Government or the State of Delaware and its agencies are considered wholesale sales.

4. Grocery Supermarket Retailer - $75 annual fee and $25 each separate branch or location and the payment of a fee of 0.384% on taxable gross receipts on the first $2.0 million per month and a fee of 0.72% on all receipts in excess of $2.0 million per month. In determining taxable receipts, the first $50,000 per month of gross receipts are exempt.

5. Restaurant License - $75 annual fee and $25 for each separate branch or additional business location, plus a fee of 0.624% on the taxable gross receipts in excess of $50,000 per month.

6. Wholesaler’s License - $75 annual fee for each place of business, plus a fee of 0.384% on the gross receipts of all goods physically delivered within Delaware in excess of $50,000 per month. Manufacturers who also wholesale their products are subject to both the manufacturing and wholesale tax on gross receipts. Sales to the U.S. Government or the State of Delaware and its agencies are considered wholesale sales.

7. Manufacturer’s License - $75 annual fee for each place of business, plus a fee of 0.18% on the gross receipts for all goods manufactured in Delaware in excess of $1,000,000 per month, regardless of the location of the sale. Manufacturers who also wholesale their products are subject to both the manufacturing and wholesale tax on gross receipts. Persons performing manufacturing services on goods owned by another are licensable under the General Services category. Persons rendering manufacturing services on goods owned by another manufacturer for subsequent inclusion in a product manufactured within this state shall be considered a manufacturer.

8. Food Processor’s License - $75 annual fee for each place of business, plus a fee of 0.192% on the taxable gross receipts of all goods sold within Delaware in excess of

$50,000 per month.

9. Commercial Feed Dealer’s License - $75 annual fee for each place of business, plus a fee of 0.096% on the taxable gross receipts of all goods physically delivered within Delaware in excess of $50,000 per month.

10. Farm Machinery Retailer’s License - $75 annual fee for each place of business, plus a fee of 0.096% on the taxable gross receipts of all goods sold within Delaware in excess of $50,000 per month.

11. Lessor of Tangible Personal Property License - $75 annual fee, plus $25 for each separate branch or additional business location, plus a fee of 0.288% of the lease rental payments received in excess of $50,000 per quarter. In addition, Lessors of Tangible Personal Property are responsible for collecting from the lessee and paying over to the State the 1.92% Use Tax on the lease of any tangible personal property that is not specifically exempt. Lessors who have a Retailer’s License are not required to pay the annual fee or the 0.288% tax. However, they are to report their lease rental payments with the Retailer’s Gross Receipts.

12. Commercial Lessor’s License - $75 annual fee, plus $25 for each separate branch or additional business location, plus a fee of 0.384% on the taxable gross receipts in excess of $50,000 per month.

Combined Registration Application for State of Delaware Business License and/or Withholding Agent - These forms can be obtained by contacting any Division of Revenue office or by visiting their website: www.state.de.us/revenue . All businesses must file Gross Receipts Tax returns. Also, you will need a city business license if your business is in Wilmington, Newark, and some other municipalities.

Regulatory Licenses and Permits

Regulatory Licenses

In addition to the Division of Revenue license requirements previously described, many occupations and businesses require a Regulatory License. For environmental and natural resources regulatory permitting information you may contact the Development Advisory Service (DAS) at (302) 739-6400. The DAS coordinator can arrange for you to meet with representatives of all agencies requiring environmental permits and other approvals. This should be done early in the planning stages. The following is a list of State agencies where licenses can be obtained:

Department of Administrative Services Department of Agriculture

Department of Finance Office of Fire Marshal

Department of Health and Social Services Office of Insurance Commissioner

Department of Labor Department of State

Department of Natural Resources and Environmental Control Department of Education

Department of Public Safety Department of Transportation

Department of Services for Youth and Their Families

Local Business Licenses

Each town may have individual business licenses that could apply to your new business. Please

contact the Town Manager or Town Council for verification.

Building / Zoning Codes and Restrictive Covenants

Each county and some towns and cities in Delaware have specific requirements or prohibitions

relating to operating a business or practicing a profession out of your home. Please consult the county and town or city regarding your location and their zoning requirements before starting a business in your home. Also, some communities have restrictive covenants prohibiting specific practices as a property owner.

County Zoning Offices

New Castle County Department of Land Use

87 Reads Way

Corporate Commons

Newark, DE 19711

(302) 395-5400

Web site: www.co.new-castle.de.us/

Kent County Department of Planning

County Administration Building, Room 320

414 Federal Street

Dover, DE 19901

(302) 744-2471

Web site: www.co.kent.de.us/

Sussex County Planning and Zoning Dept.

Room 147 – Sussex County Adm. Bldg.

P. O. Box 417 – The Circle

Georgetown, DE 19947

(302) 855-7878

Web site: www.co.sussex.de.us

(Source:Delaware Guide For Small Business - DEDO)