Delaware Guide
for Small Business
Delaware Guide for Small Business in PDF
Delaware Economic Development Office
Delaware Small Business Development Center Network
Delaware District Office, U.S. Small Business Administration
Dear Small Business Owner:
On behalf of the State of Delaware, I am pleased to present to you this Small Business Start Up Guide and Resource Book. I hope this guide proves to be helpful in locating the resources you need as you move forward with your business.
My personal experience as a small business owner has shown me that Delaware is a great place to start and operate your small business. In fact some of our state's largest companies started as a small business. It can happen here in Delaware and it can happen for you.
This resource gives Delawareans basic information about how to start a business and was written with a specific focus on information about state services for small businesses. The guide has been written to be web friendly, there will be many references to web sites throughout the guide. These web sites will provide you with the most up to date information and other valuable data to assist you and your new business. However contact information is included to reach assistance by phone.
On behalf of the sponsors of this document, the Delaware Economic Development Office, the Delaware Division of Revenue, the U.S. Small Business Administration and the Delaware Small Business Development Center Network please enjoy the Small Business Guide and Resource Book with our best wishes.
Sincerely,
Ruth Ann Minner
Governor
Table of Contents
Section One: Frequently Asked Questions (FAQs) About Starting a Small Business in Delaware
What does it take to start a small business?.................
What kind of business entity is right for me?...............
What is an Employer Identification Number (EIN) and do I need one?......
Are there special requirements if I have employees?.............
Do I need a business license or permit to get started?............
What kind of taxes will I have to pay?.................
Are there any assistance programs for minority and/or disadvantaged businesses?
What is a business plan and do I really need one?.............
Who can help me get started?.....................
Where can I get financing for my new small business?............
What about insurance?.......................
Section Two: Steps to Starting a Business
Choosing a business structure.......................
How to set-up the business entity....................
Section Three: Small Business Assistance
Organizations That Can Help You Get Started
Small Business Development Center................
Central Delaware Economic Development Council.........
Wilmington Economic Development Corporation..........
Delaware State Chamber of Commerce Small Business Alliance
New Castle County Chamber of Commerce.............
Delaware Manufacturing Extension Partnership............
Service Core of Retired Executives (SCORE)...........
Delaware Innovation Fund....................
Sussex County Economic Development Office..............
U. S. Small Business Administration (SBA)...............
Small Business Resource Partnership................
Family Business Center................
Programs to Help Small Businesses
Delaware's financial incentives..................
Targeted industry tax credits..................
Targeted area tax credits.....................
How to apply for tax incentives.................
Permitting assistance.....................
Small Business and the Clean Air Act................
Minority business programs...................
Job Service Program.......................
Contracting with the State of Delaware..............
Workforce development....................
Occupational Safety and Health Administration Consultation Services...
Delaware Workplace Safety Program...............
Pollution Prevention......................
Section Four: Delaware Funding Resources
How to obtain financing........................
Financing Resources..........................
Section Five: Business Regulations
Basic Business Licenses, Permits, and Business Taxes
Basic business licenses and gross receipts tax.........
Federal income tax form requirements
Federal corporate income tax..................
State corporate income tax...................
State franchise tax.......................
Other taxes.........................
Regulatory Licenses and Permits
Regulatory licenses...........................
Local business licenses........................
Building and zoning codes.......................
Federal withholdings......................
Social Security........................
Federal employment tax.....................
State withholdings........................
Unemployment taxes.......................
Workers compensation.....................
U.S. Immigration and Naturalization.....................
Section Six: Resource Directory
Government Contacts..........................
Helpful Web Sites...............................
FAQ #1: What does it take to start a small business?The first thing to consider is the type of business you plan to operate. Examine your interests and abilities, as well as your previous business experiences. Research the industry, as well as potential locations to determine whether your proposed business is feasible in those areas. Do as much research as possible BEFORE you invest money into your business. Operating your own business may require you to use personal assets and to invest a minimum of 60-70 hours a week of your time.
Discuss your business plans with your family. Decisions you make about operating a business may have a significant impact on them. It is important that your family be as committed to your business as you are. Owning and operating a small business can be tremendously fulfilling and rewarding, but it is not easy.
Resources listed in this book can provide you with assistance during the formative and growth stage of your business. One such resource is the Small Business Development Center; a one-stop shop for helping you with your business. See Section Three for additional resources.
FAQ #2: What kind of business entity is right for me?Choose the type of organization that is best for you: sole proprietorship, corporation, sub-chapter 's' corporation, limited liability company or partnership. There are advantages and disadvantages with each one. It is highly recommended that you consult an accountant and an attorney. Accountants help with tax questions; attorneys advise with respect to liability and other legal issues. For specific information on the different types of business entities, see Section Two.
FAQ #3: What is an Employer Identification Number (EIN) and do I need one?
Every business needs a tax identification number, whether it is an Employer Identification Number (EIN) or a Social Security Number (ID). Employers, sole proprietors, corporations, partnerships, nonprofit organizations, trusts, estates of decedents, government agencies, and other business entities use EINs. Businesses with employees absolutely must have an EIN; whereas, sole proprietors with no employees have the option of using their social security number as the tax ID number. This number is needed for paying your employees' withholding taxes and depositing these funds with the IRS. In addition, the number is used for tracking social security and unemployment payments from your business.
Your EIN can be acquired from the IRS using Form SS-4. This form can be obtained from the Internal Revenue Service by calling 800-829-3676 or by visiting your local IRS, Social Security Administration office, or the IRS web site at www.irs.gov. More information on EIN's is available in IRS Publication 1635, Understanding Your EIN. See Section Two - Register with IRS.
FAQ #4: Are there special requirements
if I have employees?
If your business has employees, you are responsible to withhold federal, state and local taxes from your employees' pay. The federal portion of employment taxes falls into three categories: 1) Federal Income Tax Withholding, 2) Social Security and Medicare Taxes, and 3) Federal Unemployment Taxes. The Social Security taxes are 6.2% of wages with a maximum of $80,400 that is paid by the employer. Medicare Taxes are 1.45% of wages with no maximum. There is also a requirement for the employer to pay federal and state unemployment taxes and obtain worker's compensation insurance. More information is available in Section Five.
FAQ #5: Do I need a business license or
permit to get started?
A business license is necessary if you wish to do business in the State of Delaware. This license requires a fee which varies according to the business type you've chosen. 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. See Section Five for more information.
FAQ #6: What kind of taxes will I have
to pay?
As a small business operator, you pay personal income taxes and business taxes. There are five types of business taxes: Income Taxes, Self-Employment Taxes, Employment Taxes, Gross Receipts and Excise Taxes. (See chart on federal taxes in Section Five.) The amount and type of taxes you must pay vary according to the type of business entity you select, the amount of gross revenue, and the number of employees. It is very important to factor the payment of taxes into your business planning and financial forecasts. Using an accountant to help determine your tax liability is highly recommended. You can also reference IRS Publication 505, Tax Withholding and Estimated Taxes.
FAQ #7: Are there any special
programs for Minority and/or Disadvantaged Businesses?
Yes, such businesses are encouraged to contact the Office of Minority and Women Business Enterprise (M/WBE). Its primary responsibility is the fostering of continued economic development and growth for minority and women owned businesses in Delaware. To qualify as a DBE, your firm must meet the eligible standards established in Part 26, Title 49 of the Code of Federal regulations, and the Small Business Administration's 8(a) Program. The department evaluates the information you submit on a Certification Application to determine compliance with the criteria.
In addition, the City of Wilmington has a Disadvantaged Business Enterprise (DBE) Certification Program for businesses that are at least 51% owned by a minority and/or woman small business entrepreneur. The program is offered through the City of Wilmington, Minority Business Enterprise Office (MBO). The Minority Business Office maintains a database of certified minority and women-owned businesses that can be used as a referral by city purchasing officials prime contractors, private companies, organizations, and others.
In terms of contracting opportunities, the City of Wilmington has a program designed to encourage city-certified DBEs to participate in the city's procurement process. For example, prime contractors are required to make a documented "good faith effort" to solicit DBE participation in city construction projects. Many private sector companies that wish to do business with minority and women-owned businesses accept the certification.
See Section Three for more information about organizations and their programs to assist Minority and/or Disadvantaged Businesses.
FAQ #8: What
is a Business Plan and do I really need one?
A business plan is the blueprint to your success. By stepping through the process of writing a business plan, you will address most issues that confront new small businesses. The business plan is a flexible guide that will help you manage different operational areas of your business. You'll find it's an invaluable asset when you are ready to apply for financing. Many new, small businesses make a significant mistake by not taking the time to develop a business plan.
A good plan addresses the Who, What, When, Where, Why and How of your new endeavor. It forces you to examine your entire business concept, enabling you to find the areas that need rethinking. The plan will help you evaluate and define your goals logically and provide a road map to follow as you proceed to success.
The business plan is of the utmost importance when communicating with bankers, investors and others. Therefore, be specific about the needs of your business. When looking for financing, provide details about your business that will convince lenders or investors that their investment in your business is a sound decision. The Delaware Small Business Development Center (SBDC) and Senior Corps of Retired Executives (SCORE) offer classes that will help you develop your business plan. See Section Three.
FAQ #9: Who can help me get started?
There are a number of organizations and programs that can assist Delaware small businesses. For the most part, the services they provide are FREE! You are encouraged to seek out the organizations that are best suited to help your small business. See Section Three for descriptions.
In addition, web sites are referenced throughout this document. They provide a wealth of information and include links to other web sites. See Section Six for a complete list.
FAQ #10: Where can I get financing for
my new small business?
There is no such thing as 'free money' for small businesses. However, there are a number of specially designed loan programs for Delaware small businesses. These programs can provide financing in four different funding ranges:
Up to $25,000, $25,000 to $50,000,
$50,000 to $250,000 $250,000 and above.
Financing programs typically require cash contributions from the business, collateral from the business owner and/or a personal guarantee. See Section Four for a list of financial resources.
FAQ #11: What about Insurance?
Businesses should obtain several types of insurance. The most important of these is liability insurance without which the business and owner's assets are at risk in the event of a lawsuit. Depending upon the type of business you own, you should consider the benefits of having property insurance, auto insurance, and life insurance.
Generally, when large loans are issued to a business, the owner is required to have life insurance coverage, especially if he or she has personally guaranteed the loan.
Worker's compensation insurance and unemployment insurance are necessary if you have employees.
You may want to consider health insurance for yourself and your employees.
If you use your home or personal vehicles for business purposes, check your auto insurance policy to see if your coverage permits business use. Sometimes personal auto insurance policies do not cover business use at all -- or do so with limitations. Please see your insurance provider for your insurance needs.
Different Forms of Business Structures
There are four basic legal forms that are used for operating a business: sole proprietorships, partnerships, corporations and limited liability companies. Other forms of business organization include limited liability partnerships and joint ventures. Each form has its own advantages and disadvantages depending upon the nature of the business and the prospective owner's plan of operations.
It is important that you consider each form of business organization and carefully evaluate the most appropriate structure for your business. Proper planning can prevent difficulties caused by an unsuitable legal structure, although, it is possible for a business to start with one organizational form and change to another. We recommend that you seek guidance from an accountant and an attorney early on to determine the form of business organization that best suits your business. The legal form under which a business operates can greatly impact the owner's tax obligation, liability for business debts, control in business decision making, and financing alternatives.
Sole Proprietorship
The sole proprietorship is a business that is owned by a single individual. It is the easiest legal structure to adopt and the most common form of business organization. This type of business has no existence apart from the owner. Its liabilities are the owner's personal liabilities because all assets are personally owned, even though they may not be used for the business. Therefore, the owner undertakes the risks of the business. The income and expenses of the business are included on the owner's return. For more information on sole proprietorship, see IRS Publication 334, Tax Guide for Small Business.
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Partnership
A partnership is the combining of one or more individuals or businesses as co-owners under a partnership agreement. Each co-owner or partner becomes a contributor of money, labor, property or skills. As a partnership, each one shares in the profits and losses of the business; therefore, a written and signed partnership agreement is necessary. The agreement determines the powers, liabilities, and authorities of each of the partners. A partnership may have general and limited partners.
General partners actively participate in the management of the business and have unlimited liability. The income of the general partnership is directly taxable to individual partners based on proportionate interest each one has in the company.
Limited partners --or investors-- cannot actively participate in the management of the business and have limited liability. Limited partnerships must have at least one general partner who is responsible for all debts, liabilities, and obligations of the firm. Generally, the liability of the other partners is limited to the amount of the investment by each partner. Both general and limited partners share in the profits and losses of the business. For more information, see IRS Publication 541, Partnerships.
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Corporation
A Corporation is a separate legal entity that has duties, powers and responsibilities in and of itself. Usually, this means that when individuals act on behalf of a corporation, these actions are attributable to the corporation and not the individual. This limits the liability of the owners. Incorporation, however, will not exempt you from personal responsibility for business loans. Your banker, and possibly your suppliers and landlord, will require you to guarantee repayment personally and will ask you to pledge your personal assets as collateral. The profits of a regular corporation are taxed twice if distributed in the form of dividends, at the corporate as well as the individual level.
There are two types of corporations: regular or "C" corporations and Subchapter 'S' corporations. A regular corporation must file a tax return each year in order to pay tax on the corporation's income. After paying the taxes, profits are given to stockholders. Each stockholder must then pay tax on the amounts they receive. As for the 'S' corporation, it has the legal benefits of a regular corporation as it enjoys limited liability and the tax benefits of a partnership as it avoids the corporate federal income tax. Although it files a tax return, the income and expenses of the 'S' corporation are divided among its stockholders, who report the profits on their individual returns. It is taxed only once. Because the 'S' corporation avoids double taxation while providing stockholders the protection of a regular corporation, this form of organization is popular among small businesses. However, Subchapter 'S' status may create disadvantages that should be considered. Please seek advice from an attorney if you are considering this option. You can also obtain more information in IRS Publication 542, Corporation, and Form 2553, Election by Small Business Corporation.
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Limited Liability Company
A Limited Liability Company (LLC) is a relatively new form of business organization that incorporates components of both a partnership and a corporation. The Internal Revenue Service has issued 'Check the Box' regulations which permits an LLC to choose how it wishes to be taxed. The LLC can elect to be taxed as a corporation, to be disregarded as an entity or to be treated as a partnership in some cases. IRS Form 8832, Entity Classification Election, can be used. Special rules apply to LLC's who do not make an election. Please see Division of Revenue Regulation 98-1 and Addendum for State treatment of LLC's.
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Limited Liability Partnerships
Current limited liability partnership (LLP) laws provide for an entity similar to an LLC. It has limited liability that can be formed simply by registering an existing partnership.
Joint Venture
A joint venture is a partnership of one or more sole proprietorships, partnerships, or corporations for the purpose of pursuing a specific business activity or transaction. The main advantage of a joint venture is that existing businesses can join together without having to form a new entity and without having any continuing obligations to each other beyond the joint venture agreement. The primary disadvantage is that parties of the joint venture are liable for the actions of each partner.
How to Set-Up the Business Entity
This section can save you time and trouble. The list given below includes what you need to properly begin a business in Delaware. If you follow each step, you will be registered with all of the correct tax authorities, and you will receive all of the proper forms at the proper time. As you follow the steps in sequence, you will always have the needed information for the next steps. Please consult your tax and legal advisor before proceeding.
Step 1 - Determine business entity type
Choose the type of organization that is best for you: sole proprietorship, corporation, sub-chapter 'S' corporation, limited liability company or partnership. For assistance with tax or accounting questions, contact your accountant. For legal questions, see your attorney. For information on incorporating or forming your business entity in Delaware, call the Secretary of State, Division of Corporations Office at (302) 739-3073 or go to www.state.de.us/corp/index.htm.
Step 2 - Determine legal status
Except for operating as a sole proprietorship, you must form your business entity under the laws of a state. For information concerning forming your business entity in Delaware, call the Secretary of State, Division of Corporations Office at (302) 739-3073 or go to www.state.de.us/sos/corp.htm
Step 3 - Register with Prothonotary Office
By law, any non-incorporated business entity (sole proprietorship, or partnership) must also register with the Prothonotary at the local county office of the Superior Court. This registration must be done separately in each county where you do business. Before registration you need to verify that your chosen name is not in use. For more information on trade names, go to the web site www.courts.state.de.us/superior/formspublic.htm. Once verified, take a $15 check, identification and a notarized form to the respective prothonotary offices. This protects your trade name from use by others within each county. In case of a lawsuit, a non-registered business could be fined $500 and lose use of the name to whoever registered it properly. Some banks require registration of names by their business customers.
New Castle (302) 577-6470 Kent (302) 739-3184 Sussex (302) 856-5740
Step 4 - Register with the Internal Revenue Service
To get an IRS Employer Identification Number (EIN), call or visit your local IRS office, or call 1-800-TAX-FORMS (1-800-829-3676) or go to www.irs.com. Ask for form SS-4. (This is not a requirement for sole proprietors with zero employees; they can use their social security numbers.) It will take the IRS approximately six weeks to reply after they receive the application. To save time, you can get your EIN by telephone. After you have received the SS-4 and completed it, call the IRS Tele-Tin on weekdays from 7:30 a.m. - 2:30 p.m. at 215-516-6999. They will ask you for the information on your SS-4 and will request that you write the new number on the form, sign it, and mail it back to the IRS. Be sure to make a copy before mailing.
Step 5 - Determine if you will have employees
If you operate your business as a sole proprietorship or as a partner in a partnership, you are not considered an 'employee.' You are personally responsible for paying estimated taxes to the IRS and the Division of Revenue. In the event that you decide to have employees, you need to register with the Division of Revenue, the Department of Labor and the IRS. When hiring employees, they must fill out Form I-9 and Form W-4. If your employees qualify for Advanced Payments of Earned Income Credit, they must also give you a Form W-4. Form I-9 verifies that an employee is legally eligible to work in the United States. If you have questions regarding Form I-9, contact INS at 800-375-5283. If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for purposes of Federal Employment Taxes and Income Taxes Withholding, with IRS. For more information, see Publication 15, Employer's Tax Guide.
Step 6 - Register with Division of Revenue and the Department of Labor
In addition to registering with the Division of Revenue as a withholding agent, you will need to obtain a business license to conduct an active trade or business. To register and apply for a business license, request Form CRA, Combined Registration Application or go to www.state.de.us/revenue.
If the business is located in a town or city, call the local government to determine local business requirements. See Section 6 for more information about local business license requirements.
If the business will have employees, call the State Unemployment Insurance Office and get an UC-1 form required for unemployment insurance. The telephone number is (302) 761-8446 or go to www.delawareworks.com/divisions/unemployment/welcome.htm . If you are a corporation (C or S), also ask for a copy of UIS-39, "Coverage of Corporate Officers."
Obtain Workman's Compensation Insurance for your employees through an independent insurance agency. Prepare an employee policy manual.
Step 7 - Satisfy Local Zoning and License Requirements
Before starting a new business, you should contact the local zoning or planning office. They can determine if your activity is permitted at the chosen location. Many cities and towns also require a business license to operate in the respective jurisdiction. The City of Wilmington imposes a net profit tax on businesses located within the city. It is suggested that you contact the local government office in the area where you intend to conduct business.
Step 8 - Contact other State Agencies
The Division of Revenue business license is not a regulatory license nor does it attest to the workmanship of the licensee who performs the listed activity or the quality of goods sold. The Division of Professional Regulation does issue regulatory licenses for some types of businesses that require certification of the applicant. Additionally, other Delaware agencies require licensing and certification of selected business activities such as Division of Public Health and Department of Natural Resources and Environmental Control (DNREC). For help determining what permits you are required to obtain you can contact the Development Advisory Service (DAS). The DAS is comprised of representatives of Dept. of Natural Resources and Environmental Control, Dept. of Health and Social Services, Dept. of Transportation, Dept. of Agriculture, Dept. of State, the Public Service Commission, The State Fire Marshal, and the Delaware Economic Development Office. DAS can arrange a meeting with you that would involve the representatives from all of the agencies listed above. Discussion would include permits that are required, standards that need to be met and procedures you should follow. To arrange for a meeting, call (302) 739-6400.
Step 9 - Other Registration Considerations
You should register your trademark(s) with the U. S. Patent & Trademark Office (PTO) if your business uses a name or symbol you want to protect, especially if it may someday sell beyond the local area. In this way, you maintain your common law rights to the name, even if it is not a federally registered trademark. To be eligible, your business must engage in interstate commerce. For example, you qualify if your goods and services are sold over state lines or if any customers come from out of state to purchase these goods and services. The PTO number is (800)-786-9199. Their web site is a great source of information: www.uspto.gov.
If you plan to use the Internet to sell or market your products and services you will want to register your domain name. There are a variety of ways to search and see if a name is registered to someone else and reserving it if it is not. One suggestion is www.networksolutions.com.
Organizations that Can Help You Get Started
Delaware Small Business Development Center
The Small Business Development Centers (DSBDC) will answer your questions about managing a small business. The DSBDC provides information, training and free one-on-one business advice for small business owners and those interested in starting a business. Free classes are offered throughout the state on the basics of starting a business. After that, experienced business advisors can help with business plans, cash flow projections, marketing tactics and loan packages. Web site: www.delawaresbdc.org. The DSBDC Government Marketing Assistance Program can help your business locate, research and bid on government contracts. Call (302) 571-1555 or check out the web site: www.delawarecontracts.com.
Newark: Technology Center & Dover Center
Administrative Headquarters Delaware State University
University of Delaware 146 S. Governors Ave.
One Innovation Way Dover, DE 19904
Newark, DE 19711 Phone: (302) 678-1555
Phone: (302) 831-1555 Fax (302) 730-5077
Fax: (302) 831-1423
University of Delaware University of Delaware
1318 N. Market St. 103 W. Pine St.
Wilmington, DE 19801 Georgetown, DE 19947
Phone: (302) 571-1555 Fax: (302) 854-697
Fax: (302) 571-5222
* The DSBDC is a partnership program with the U. S. Small Business Administration.
Central Delaware Economic Development Council
The Central Delaware Economic Development Council assists small businesses located in Kent County with demographic and community information, reference materials, project assistance as well as referrals to other business organizations and businesses in central Delaware.
9 Loockerman Street, Suite 2B
Dover, DE 19901
Phone: 302-678-3028
Fax: 302-678-0189
Web site: www.conway.com/de/cdedc
Wilmington Economic Development Corporation (WEDCO)
WEDCO provides small business owners with access to capital, financial counseling and other types of financial support. Established in 1979, WEDCO is a unique non-profit organization that provides assistance to small business entrepreneurs who are seeking to establish, expand or relocate their operations. WEDCO has provided assistance to many small business owners and helped to create jobs within the City of Wilmington. Its funds are geared to assist Wilmington-based businesses with financing up to $100,000. In most cases the financing is in conjunction with the borrower’s bank but often it is stand-alone financing.
Wilmington Local Development Corporation (WLDCO)
Also established in 1979, WLDC is a Certified Development Company (“CDC”) authorized by the U.S. Small Business Administration to provide financing through the SBA’s 504 loan program throughout the State of Delaware. The 504 program provides growing businesses with long-term, fixed rate financing for major fixed assets, such as land, buildings, leasehold improvements or large equipment purchases. Loan parameters and requirements for the loan program are set out in detail on our web site at www.wedco.org.
Community Service Building City
of Wilmington
100 West 10th Street, Suite 706 Minority Business Enterprise
Wilmington, DE 19801 302-571-4093
Phone: 302-571-9142 Micro Loan Program
Fax: 302-652-5679 302-571-5884
Web site: www.wedco.org
First State Community Loan Fund
The First State Community Loan Fund (FSCLF) promotes and provides creative opportunities for access to capital for small businesses throughout Delaware. FSCLF offers loans of $300 to $50,000 for equipment, inventory, real estate and working capital The FSCLF is a U.S. Treasury certified not-for-profit Community Development Financial Institution.
FSCLF
Community Services Building
100 West 10th Street
Suite 1005
Wilmington, DE 19801
Phone: 302-652-6774
800-652-4779
Fax: 302-656-1272
Web site: www.firststateloan.org
Delaware State Chamber of Commerce Small Business Alliance
The Delaware State Chamber's Small Business Alliance was created to enhance the competitiveness of the small business community by providing cost-effective services, information, legislative advocacy and money-saving benefits to companies with fewer than 150 employees. With 2,800 members statewide, the alliance is the largest small business organization in Delaware.
1201 N. Orange Street, Suite 200
Wilmington, DE 19899
Phone: 302-576-6578
Fax: 302-654-0691
Web site: www.dscc.com
New Castle County Chamber of Commerce
The Small Business Department at the New Castle County Chamber of Commerce serves as a vital resource for the small and mid-sized business community. Through executive roundtables, networking breakfasts, Chamberworks seminars, business publications, and one-on-one counseling, the New Castle County Chamber keeps its members informed and helps them to grow their businesses.
630 Churchman's Road
P.O Box 11247
Wilmington, DE 19850-1247
Phone: 302-368-5700 Ext. 235
Fax: 302-737-8450
Web site: www.ncccc.com
Delaware Manufacturing Extension Partnership
The Delaware Manufacturing Extension Partnership (DEMEP) is a statewide non-profit resource organization offering affordable, confidential technical and business solutions to the almost 1,000 small and medium sized manufacturers of Delaware. DEMEP provides experienced technical field specialists and consultants who specialize in solving problems that are unique to manufacturers.
400 Stanton/Christiana Rd.
Newark, DE 19713
Phone: 302-283-3131
Fax: 302-283-3137
Web site: www.demep.org
Service Core of Retired Executives (SCORE)
SCORE provides one-on-one counseling for current business owners and those who are thinking about starting a small business. The organization also offers low-cost business skills workshops throughout the state provided by volunteers who are retired executives and entrepreneurs.
824 N. Market St., Suite 610
Wilmington, DE 19801
Phone: 302-573-6552
Fax: 302-573-6092
Web site: www.scoredelaware.com
Delaware Innovation Fund
The Delaware Innovation Fund is a seed and early-stage venture capital firm established as a public/private sector initiative to assist Delaware companies in the critical pre-seed and early stages of formation. The fund provides financial and technical assistance to Delaware-area based businesses which have the potential to launch innovative products and processes into national markets, to create new jobs, and to make a significant contribution to the economic diversity and the technology base of Delaware's communities. They are the local organizers for Early Stage East one of the largest early stage venture capital fairs in the Mid-Atlantic. Web site: www.earlystageeast.org
Three Mill Road, Suite 201
Wilmington, DE 19806
Phone: 302-777-1616
Fax: 302-777-1620
Email: Info@difonline.com
Web site: www.delawareinnovationfund.com
Sussex County Economic Development Office
The Sussex County Economic Development Office is committed to promoting the elimination of unemployment, poverty and sub-standard housing by attracting new businesses, encouraging expansion of existing businesses in Sussex County.
West Annex Office Building
P.O. Box 589
Georgetown, Delaware 19947
Phone: 302- 855-7770
Fax: 302- 855-7773
E- mail: econdev@sussexcounty.net
Web site: www.sussexcounty.net
Small Business Administration (SBA)
The mission of the U.S. Small Business Administration (SBA)Delaware District Office is to aid, counsel, assist and advocate the interests of the state's small business community, utilizing various financial, investment, procurement, as well as business development programs and resources. This group publishes a Small Business Resource Guide with key contact numbers for organizations that are available to assist in the start-up and development of a small business.
107 N. Orange St., Suite 1120
Wilmington, DE 19801-1232
Phone: 302-573-6382
Phone: 302-573-6294
Fax: 302-573-6060
Web site: www.sba.gov
Small Business Resource Partnership
This organization is a consortium of state and federal government agencies and non-profit organizations that assist the community with programs that benefit small and growing businesses. The mission of the Partnership is to provide Delaware small businesses with easy access to providers of business information, services and assistance.
Web site: www.state.de.us/sbrp
Family Business Center
The Family Business Center at the University of Delaware is a non-profit organization dedicated to promoting the well being and understanding of families in business. The objective of the FBC is to educate, inform and encourage its members in areas of unique interest to family owned businesses through a stimulating program that provides the best sources of information and professional advice available.
Capital Works
The Capital Works is a nationally and internationally recognized program for micro-enterprise (businesses with 50 or less employees). This partnership between the First State Community Loan Fund and the YWCA of New Castle County provides training, technical assistance, access to markets, networking and loans throughout Delaware. Loans range from $300 - $15,000.
FSCLF YWCA of NCCC
Community Services Building 233 King Street
100 West 10th Street Wilmington, DE 19801
Suite 1005 Phone: 302-658-7161
Wilmington, DE 19801 Fax: 302-658-7548
Phone: 302-652-6774
800-652-4779
Fax: 302-656-1272
Web site: www.firststateloan.org
Delaware Business
Climate Advantages
No state or local general sales tax
No state or local personal property or inventory tax
No fixtures tax
No unitary tax
No state-level real property tax and local real property taxes which are among the lowest in the United States
During the last several years Delaware reduced its personal income taxes and business taxes and at the same time maintained low local property tax rates. Worker's compensation rates and unemployment insurance costs have also been kept below national averages.
Delaware Tax Incentives
Targeted Industry Tax Incentives
Corporate income tax credits, gross receipts tax reductions and public utility tax rebates are available to:(a) manufacturers; (b) wholesalers; (c) laboratories or similar facilities used for scientific, agricultural or industrial research, development or testing; (d) computer processing services; (e) engineering services; (f) consumer credit reporting services; (g) aviation services; (h) wholesaler of computer software; (i) telecommunication services; (j) any combination of these activities; and (k) the administration, management or support operations including marketing required for any of these activities.
Expansions With Employment
The program requires that a taxpayer in a 'targeted industry' invests a minimum of $200,000 in a new or expanded facility and hires a minimum of five new employees. The program provides corporate income tax credits of $400 for each new qualified employee and $400 for each $100,000 investment. During the 10-year life of credits, the credits may not exceed 50 percent of the company's pre-credit tax liability in any one-year. However, unused credits may be carried forward.
Expansions Without Employment
Any taxpayer engaging in the activities of manufacturing or wholesaling, whose investment in the new or expanded facility equals or exceeds the greater of: (a) $1 million or (b) 15% of the unadjusted basis of the facility, is eligible for corporate income tax credits. The amount of the credit is equal to 75% of the credit described above, subject to the carry-over provisions, and further limited to a maximum lifetime credit of $500,000. In order to qualify for this credit, the employer must maintain employment at the expanded facility equal to 85% of the wages paid during the previous year.
Replacement Facilities
Investment in replacement facilities are considered qualified investment for the corporate credits and license gross receipt reductions to the extent that the investment in the replacement facility exceeds the greater of: (1) 150% of the unadjusted cost basis of the facility which is being replaced or (2) 100% of the market value of the facility being replaced.
Gross Receipts Tax Reductions
In addition to the corporate income tax credits, qualifying firms may reduce their gross receipts taxes. Taxes are reduced on a 10-year declining scale beginning with a 90% reduction during the first year of operations and ending with a 5% reduction in the tenth year. Firms qualifying for credits under the 'Expansions Without Employment' qualify for the Gross Receipt Reductions, but are limited to 75% of such reductions.
Public Utility Tax Rebates
Firms meeting the criteria for targeted industry tax credits are eligible for a rebate of 50% of the public utilities tax imposed on new or increased consumption of gas and electricity for five years. The public utilities tax rate is 4.25%. The utility tax on the consumption of electric by qualified manufacturers and food or agribusiness processors is reduced from 4.25% to 2%. Additionally, electric and gas consumed in the manufacture of automobiles is exempt from the utility tax.
Green Industries
Businesses can increase profits and gain a competitive edge through recycling resources. The Green Industries effort of the Delaware Economic Development Office (DEDO), helps businesses find and recycle their waste materials. A recycling directory is available.
In addition to helping companies save money and conserve natural resources like oil, water, wood and aggregates, DEDO also works to conserve Delaware's land by helping companies locate properties that may be environmentally challenged. Also known as Brownfields, these sites are typically located near prime transportation networks and have existing infrastructure. To overcome the additional challenges inherent with Brownfields redevelopment, DEDO offers matching grants for investigating, and if necessary, cleaning up these sites.
Delaware Economic Development Office (DEDO)
99 King's Highway
Dover Del 19901
(302) 739-4271
Web site: www.state.de.us/dedo
Manufacturers may be entitled to claim credits against the Delaware corporate income tax for the following activities:
Category A
$400 for each 10% increment in waste reduction, with a minimum total reduction of 20% for chemicals reported under the Toxics Release Inventory, or 50% for other wastes
Category B
$650 for each new employee, plus $650 for each $100,000 qualified facility investment for companies whose inputs are comprised of at least 25% (by weight) recycled materials removed from Delaware's solid waste stream
Category C
$650 for each new employee, plus $650 for each $100,000 qualified facility investment for companies who are engaged in the processing of materials removed from Delaware's solid waste stream for resale as an input to manufacturers.
Category D
$650 for each new employee, plus $650 for each $100,000 qualified facility investment for companies that collect and distribute recycled materials, and/or materials prevented from entering Delaware's solid waste stream for the purpose of recycling.
Companies that qualify under category B, C, or D can apply for enhanced tax credits from $650 to $900 if they locate or expand their operations within a targeted census tract.
Brownfield Facility Credit
Any taxpayer that meets the qualification for a facility placed in service and locates the facility on a "brownfield" site may be eligible for a credit against the Delaware corporate income tax. "Brownfield" means any vacant, abandoned or underutilized real property, the development or redevelopment of which may be hindered by the reasonably held belief that the real property may be environmentally contaminated, as certified by the Department of Natural Resources & Environmental Control. A "qualified facility" is any business, trade, commerce, profession or vocation carried on or in connection with the "brownfield" site. The amount of the investment in this facility shall include all amounts expended by the taxpayer for environmental investigation and remediation of the "brownfield." Any corporate taxpayer hiring new permanent and full time employees at a qualified "brownfield" site is allowed a credit equal to the sum of $650 times the number of qualified employees, plus $650 times each $100,000 (or major fraction thereof) of qualified facility investment. If the "brownfield" site is located in a targeted area, the credits are increased to $900 times the number of qualified employees plus $900 times each $100,000 unit of investment.Corporate Income Tax Credits
Firms which qualify for targeted industry credits and locate in a targeted area, qualify for corporate income tax credits of $650 for each new employee and $650 for each new $100,000 investment. Targeted areas are defined as: (a) real property that is owned by any level of government or any of their agencies; (b) real property owned by a non-profit organization which is organized and operated solely for the purpose of fostering economic development; (c) real property which has been approved as a Delaware Foreign Trade Zone and (d) 30 targeted Census tracts throughout the State. (Contact the Division of Revenue to determine if your business is located in a targeted census tract. For a general map type 'Delaware Targeted Census Tracts' into your search engine.)
Gross Receipts Tax Reduction
In addition to the corporate income tax credits, qualifying targeted industry firms will not be subject to gross receipts taxes for the first five years. The gross receipts taxes will be reduced on a declining scale for a period of ten years beginning with a 90% reduction on the sixth year and ending with a 5% reduction the 15th year.
Commercial, Retail Business Tax Credits and Reductions
Selected commercial and retail businesses that locate in one of the 30 targeted Census Tracts and meet the minimum investment and employment criteria qualify for corporate income tax credits of $400 for each new qualified employee and $400 for each $100,000 investment. These businesses also qualify for the 10-year reduction in gross receipts taxes.How to Apply for Targeted Industry/Targeted Area Tax Incentives
Before any corporate income tax credits or license gross receipts reductions can be taken for the activities described above, the business must apply to the Division of Revenue by completing Form 402AP, Application for New Business Facility Tax Credits. The Division of Revenue will review the application and arrange for a site visit of the facility if necessary.
If the facility is approved, Form 1100CR, Worksheet for Credit for Approved New Business Facilities, will be used to take the corporate income tax credits and/or Form 402LTR, Computation Schedule for Claiming License Tax Reduction for Approved New Business Facility Gross Receipts, to take the reduction in license gross receipts taxes. All of the necessary forms are available at the Division of Revenue. Web site: www.state.de.us/revenue .Neighborhood Assistance Act Program Tax Credits
This program offers up to a 50% tax credit to Delaware businesses that invest in economic development, housing development, education, job training or crime prevention in impoverished neighborhoods. Businesses partner with non-profit tax exempt Neighborhood Organizations, Community-Based Development Organizations and Community Development Corporations throughout the state of Delaware to revitalize impoverished neighborhoods. Contact the Workforce Development Unit of the Delaware Economic Development Office at (302) 577-8478 or (302) 739-4271. Web site: www.delawareworkforce.com/publications/nap/community.htm
Programs That Help Small Businesses
Voluntary Tax Compliance Program
The Division of Revenue has developed a program to assist business taxpayers in complying with their filing requirements. New licensees are sent a 'welcome letter' which advises them when their first returns are due, provides Tax Tips about their respective business, and offers the personal assistance of a representative to answer questions and resolve tax processing issues. Call (302) 577-8447.
Health Systems Protection Section is the business permitting and professional certification arm of Division of Public Health, standing ready to assist those desiring to start-up or expand operations in a number of industries as well as practicing professions within those industries. They include: Body Art, Cosmetology, Drinking Water, Food Establishments, Retail Ice Manufacturing, Non-alcoholic Beverage Bottling, Lead Removal, Pharmacy, Radiation Equipment and Technicians, Recreation Camps, Swimming Pools and Spas and more.
For more information call (302) 739-4731 or visit the Health Systems Protection Section's web site: www.state.de.us/dhss
Department of Natural Resources & Environmental Control (DNREC) Pollution Prevention and Compliance Assistance Program is a central point of contact for general questions about permitting and other environmental requirements. They offer confidential help in finding the right people to talk to about permitting questions and pollution prevention. They also operate the Development Advisory Service (DAS) for projects involving more than one permit or branch within DNREC.
Small Business and the Clean Air Act
A Small Business Assistance Program is available confidentially through the Pollution Prevention and Compliance Assistance Program to help small businesses understand and comply with the requirements of the Clean Air Act. The small business Ombudsman/Advocate is the initial contact within this non-regulatory program, which offers:
Industry specific compliance information.
On-site visits to determine compliance status and if necessary, a plan of action to achieve compliance.
Input at the legislative level on matters that impact small business.
Delaware Department of Natural Resources and
Environmental Control
89 Kings Hwy
Dover, DE 19901
(302) 739-6400
Email at kfinch@dnrec.state.de.us
The Department of Natural Resources Pollution Prevention Program has developed a series of Pollution Prevention Guides for various types of businesses. Because the most effective way to minimize losses associated with waste is to avoid producing the waste in the first place.
Delaware Department of Natural Resources and
Environmental Control
89 Kings Hwy
Dover, DE 19901
(302) 739-4403
Email at bpalmer@dnrec.state.de.us
Web site: www.dnrec.state.de.us/dnrec2000/P2/PPGuide.htm
Minority Business Programs
The Office of Minority and Women Business Enterprise's (M/WBE) primary responsibility is the fostering of continued economic development and growth for minority and women owned businesses in Delaware. In an effort to ensure that women and minority owned businesses take advantage of the services and technical assistance offered by the state, the office works with other state agencies and organizations to develop a favorable climate for entrepreneurship. The office sponsors activities ranging from training workshops for agencies, regional workshops for minority and women-owned businesses to orientation sessions for newly certified minority-owned business enterprises. The M/WBE office assists government agencies to use certified minority and women-owned businesses when purchasing and contracting for the state. The office serves as a state clearinghouse for information and data regarding concerning the current number of WBE/MBE's who have participated in the state procurement process. They makes recommendations to the Governor, the General Assembly and all state departments and agencies regarding ways to improve programs and activities that are intended to encourage the participation of WBE/MBE businesses in the state. The development of an online directory of certified minority and women business enterprises is underway.
Office of Minority and Women Business Enterprise (M/WBE)
Dept. of Administrative Service
410 Federal Street
Margaret O'Neill Bldg.
Dover, DE 19901
(302) 739-7830.
The Delaware Department of Transportation, in an effort to encourage businesses owned and controlled by disadvantaged persons to participate in transportation-related contracts, has developed a certification application to determine whether your firm is eligible to participate. To qualify as a Disadvantaged Business Enterprise (DBE), a firm must meet the eligible standards established in Part 26, Title 49 of the Code of Federal regulations, and the Small Business Administration's 8 (a) Program. Upon receipt of the Certification Application, the Department will evaluate the information submitted to determine compliance with the criteria. It is therefore imperative that an application and any attached documentation provide evidence of ownership and control of the firm. Only those firms, which have been certified under this process, can be considered for participation in the Departments DBE Program.
DelDOT's DBE Program
P. O. Box 778
Dover, Delaware 19903.
(302) 760-2035
Fax (302) 739-2254
Web site: www.deldot.net/static/business/dbe/prog_plan.html
The City of Wilmington has a Disadvantaged Business Enterprise (DBE) Certification Program for businesses that are at least 51% owned by minority and/or women small business entrepreneurs. The program is offered through the City of Wilmington, Delaware's Minority Business Enterprise Office (MBO). The Minority Business Office maintains a database of certified businesses that is used by city purchasing officials, prime contractors, private companies, and organizations and individuals seeking minority and women-owned businesses. In terms of contracting opportunities, the city of Wilmington has a program designed to encourage city-certified DBE's to participate in the city's procurement process. Prime contractors, for example, are required to make a documented "good faith effort" to solicit BDE participation in city construction projects. Many private sector companies that wish to do business with minority and women-owned vendors accept this certification.
City of Wilmington
Minority Business Enterprise Office, 3rd Floor
Louis L. Redding Building
800 French Street
Wilmington, DE 19802
(302) 571-4169
Fax (302) 571-4326
E-Mail: tmoyer@ci.wilmington.de.us
Web site: www.ci.wilmington.de.us/business.htm
Job Service Program - The Department of Labor
The Job Service Program will pre-screen all applicants to match job vacancies - for initial staffing and ongoing labor needs. Each job seeker is carefully assessed via a personal interview and (in specific cases) professional employment counselors and job placement specialists conduct testing. Only those with skills best meeting the employer's needs are referred to the employer for consideration. All referrals are by appointment and are limited to the number specified by the employer. Contact any of the following offices for this free service:
Division of Employment and Training
Web site: www.vcnet.net
Contracting Opportunities with the Government
A government agency can be a very lucrative addition to your customer base. Federal, state, and local agencies purchase goods and services covering every industry. The opportunities can be tremendous; however, you must be sure your business is well prepared to cover the constant attention that must be given to the government as a customer. Your company must be very stable and have some operating reserves. You should also have custo mers from both the private and public sector to offset any complications with a contract.
Your state or local paper has a public notice section that lists contracting information. The State of Delaware is required to put bids and proposals over $25,000 for materials and nonprofessional services and bids and proposals over $50,000 for professional services in the Delaware Capital Review. Many county and local bids and proposals are listed in The News Journal or the Delaware State News. State and local agencies also have bidders' lists. You can contact the agency, fill out the form and mail or fax it back to them. They will then send you an invitation to bid or request for proposal for you to respond to. If you are not able to bid on the good or service, you may respond by stating no thank you at this time. This will ensure that you stay on the bidder's list for the next solicitation. The federal government is required to put all solicitations in the Commerce Business Daily. This publication is available online at www.govcon.com.
For more information about marketing your goods and services to the government, please contact: Government Marketing Assistance Program at (302) 571-1555 or go to www.delawarecontracts.com
They have a free bid-match service, where registered companies will receive notices via email when a federal or state agency releases a bid opportunity. They can also help you research past contract histories and prepare proposals. In addition the website http://www.state.de.us/purchase/index.htm includes a publication designed for small businesses called "Selling to the State of Delaware."
The Workforce Development Division of the Delaware Economic Development Office's Web site contains information regarding their complete complement of services. This site contains information on recruitment sources, services and strategies to recruit the best talent available - to meet your company's specific needs. For more information call (302) 739-4271.
Email: winfo@state.de.us Web site: www.delawareworkforce.com
Sources - Public and private; temporary agencies and specialized sources.
Services - Register Delaware jobs on line -and get responses on line - and at no cost!
Strategies - Tax credits to transit maps and much more.
Recruitment - Contacts and strategies to recruit
employees
Training - Trainer and training grant information
Retention - Proven strategies to keep valuable employees
Education - Contacts for all Delaware schools, K through post-secondary
Four basic training grant programs:
Blue Collar Jobs Training,
Training Grants for Delaware's A Better Chance Welfare Reform Program
Basic Skills Training
Governors Workforce Development Grant
Occupational Safety and Health Administration (OSHA) Consultation Services
On-site OSHA-type inspections are conducted by consultants or inspectors from the Division of Industrial Affairs from the Department of Labor. This free service is available statewide and must be requested by the employer. Written recommendations following the inspection will be mailed to the firm for action. A complete consultation service and safety training for the employer and employees are now available. Unlike regular OSHA inspections, firms will not be cited or fined by the State. The consultation service offers businesses an opportunity to meet compliance standards without the risk of being cited and fined.
Delaware Workplace Safety Program
The Delaware Insurance Department, through coordination with the Delaware Compensation Rating Bureau, offers employers an opportunity to lower workers' compensation insurance premiums by participating in the Delaware Workplace Safety Program. Businesses with exposure within the state may earn discounts up to 19% by providing and maintaining a safe place to work. Safety in the workplace is not an option; however, the opportunity to earn rewards by meeting this responsibility has given employers needed incentives. Since the program's inception in 1989, employers have saved millions of dollars in premiums, and more importantly, have enhanced the safety and health of their employees. Only benefits can be gained by participating in the Workplace Safety Program. Failure to qualify cannot be the basis for premium increases or sanctions imposed by other safety enforcement authorities. There are no penalties for failing to qualify.
Delaware Insurance Department
841 Silver Lake Boulevard
Dover, DE 19904
(302) 739-4251
E-mail: safety@deins.state.de.us
Web site: www.state.de.us/inscom/wrksafety.htm
Most people do not have sufficient funds to finance their own business. Sources of funding for starting a business primarily come from the owner, friends, and family. Most banks are not anxious to assume the risk associated with a start-up business. Therefore, if bank financing is needed, the business owner needs to demonstrate to the bank that the business represents a good investment.
What a Lender needs to know
How much money do you need?
How much is the business owner investing?
How will the money be used?
How long will you need the money?
How will you repay the loan?
If the original plan does not work, how will the lender get its money back?
The Biggest Problems Facing Lenders in Approving Small Business Loans
Entrepreneurs with poor credit histories
Unlicensed businesses seeking funds
Undocumented cash flow
Unwillingness of owner to take personal financial risk
Lack of equity, the small business is looking for 100 % financing
Lack of experience running a business and/or in the industry
Contents of the Loan Package
Business plan
Cash-flow projections
Personal financial statement
Three years-personal tax returns (include all schedules)
Three years-business financial statements and/or tax returns
Copy of lease (may be proposed)
Copy of sales contract (if purchasing)
Partnership agreement or corporate bylaws
Resume of principals and key management
Other pertinent information
HOW A LOAN IS EVALUATED: The Four C's of Credit
Character/Credit - Previous history in debt repayment (Credit Report)
Capital - How Much Equity is the owner investing
Cash flow/Capacity
For an Existing Business = Net Profit plus Depreciation
For Start-Ups - the cash flow projections provide this information. The banker will
evaluate the potential success of the business. They will consider