6 Del. C. § 18-103 explained: § 18-103 Reservation for Delaware LLC founders (2026)

What 6 Del. C. § 18-103 says

Section 18-103 lets you reserve an available LLC name with the Delaware Division of Corporations for 120 days.

The reservation costs $75 and prevents other applicants from claiming the name during the reservation period.

Why this section matters

Useful when you have settled on a name but are not yet ready to file the full Certificate of Formation (still finalizing co-founder agreements, completing trademark searches, etc.).

What this means for non-resident Delaware LLC founders

Most non-resident founders skip name reservation and file the Certificate directly. Reservation makes sense if you are building a brand and need to lock in the name before formation is otherwise ready.

Common pitfalls

• Reservation does not transfer USPTO trademark rights.
• Reservation lapses after 120 days; no automatic renewal.

How 6 Del. C. § 18-103 interacts with the Operating Agreement

The Delaware LLC Act is largely a set of default rules that apply when the Operating Agreement is silent. Section 18-1101 directs courts to give "maximum effect to the principle of freedom of contract," meaning members can contract around most defaults via their Operating Agreement. The implied covenant of good faith and fair dealing always applies and cannot be eliminated by contract.

Practical implication: 6 Del. C. § 18-103's default rule applies only if your Operating Agreement does not address the same topic. A well-drafted Operating Agreement supersedes most Delaware Act default rules. For solo single-member LLCs, this matters less; for multi-member LLCs and complex structures, it matters significantly.

Primary source

The text of 6 Del. C. § 18-103 can be read at the official Delaware Code website: delcode.delaware.gov/title6/c018/. The Delaware Division of Corporations publishes guidance and forms at corp.delaware.gov.

Related Delaware LLC Act sections

Related sections in the name & office category and adjacent topics include the formation sections (§ 18-201 to § 18-213), member rights (§ 18-301 to § 18-306), management (§ 18-401 to § 18-402), distributions (§ 18-501 to § 18-507), and dissolution (§ 18-801 to § 18-803). For a full mapping, see the Delaware LLC Act glossary entry.

See all Delaware LLC statutes →

What does Section 18-103 actually let you do?

Section 18-103 of the Delaware Limited Liability Company Act gives a person the option to reserve a specific LLC name with the Delaware Division of Corporations before a Certificate of Formation is filed. The mechanism is simple in concept. You confirm that a name is available, you submit a reservation application with the required fee, and the Division holds that name aside so that no other applicant can claim it for the length of the reservation period. Under the statute the reservation lasts 120 days, and the fee associated with this filing is $75. The reservation is a placeholder, not a formation. It does not bring an LLC into existence and it does not give the reserved name any of the legal attributes that an actual entity carries once a Certificate of Formation is accepted under Section 18-201.

It helps to read this section as a scheduling tool rather than a rights-creating tool. The reservation answers a narrow question, which is whether the Division will let someone else file under the same name during a defined window. It does not answer broader questions about brand ownership, trademark protection, or whether the name can be used in commerce outside Delaware. The reservation is recorded with the state and ties the name to the person who applied for it. When the 120-day window closes, the hold ends. There is no language in this section that grants an automatic renewal, so the practical effect is that the name returns to the available pool unless a new reservation is filed or a Certificate of Formation has been submitted in the meantime.

Why would a non-resident single-member owner care about reserving a name?

For a non-resident founder running a single-member Delaware LLC, name reservation is usually a convenience rather than a necessity. The most common path is to file the Certificate of Formation directly and let the name become attached to the entity at the moment of formation. That approach skips the $75 reservation fee entirely, because once the Certificate is accepted the name is held by the entity itself. Reservation becomes worth considering when timing is the obstacle. If you have settled on a name but are not ready to file, perhaps because you are still finalizing a co-founder arrangement or completing a trademark clearance search, the reservation keeps the name from being taken while you finish the rest of your preparation.

The value of this section for a non-resident owner is therefore tied to a specific situation rather than a general rule. Consider a few cases where reserving makes sense:

• You are building a brand and want the legal name and the trade name to match, and you cannot file yet.
• You are coordinating across time zones with a partner or an advisor and need a short hold on the name.
• You are running a trademark search and do not want to commit to formation until the results come back.
• You expect a delay in funding the $110 Certificate of Formation filing but want to protect the name today.

If none of those apply, most non-resident founders file directly and treat reservation as an optional step they can safely skip.

How does name reservation interact with the Certificate of Formation?

The Certificate of Formation is the document that creates the LLC under Section 18-201, and the name stated in that Certificate is the legal name of the entity. Section 18-103 sits in front of that step in the timeline. A reservation does not create the entity and does not substitute for the Certificate. Instead, it preserves the chosen name so that when you do file the Certificate, the name you reserved is still available to be used. Once the Certificate of Formation is accepted by the Division and the filing fee of $110 is paid, the name belongs to the entity and the separate reservation is no longer doing any work.

This relationship matters because the two filings serve different functions and carry different consequences. The reservation is temporary and does not place the LLC on the public record as a formed entity. The Certificate is permanent in the sense that it brings the LLC into legal existence and starts the obligations that come with being a Delaware entity, including the annual $300 flat franchise tax due each June 1. A founder who reserves a name but never files a Certificate has an LLC name on hold but no LLC. A founder who files a Certificate without ever reserving has a fully formed LLC and never needed the reservation at all. The reservation is best understood as a bridge between deciding on a name and committing to formation.

Does the Operating Agreement have anything to do with name reservation?

The Operating Agreement is the internal contract that governs how the LLC is run, how members share profits, how decisions are made, and how the entity can be dissolved. Section 18-103 operates entirely outside that document. Name reservation is a transaction between an applicant and the Delaware Division of Corporations, and it does not depend on the existence of any Operating Agreement. A single-member non-resident owner can reserve a name long before drafting an Operating Agreement, because at the reservation stage there may not even be an entity for the Operating Agreement to govern.

That said, the two can connect in practice once the LLC is formed. After formation, founders often want their Operating Agreement, their Certificate of Formation, and any public-facing brand name to be consistent. Reserving the name early can make that alignment easier, because it reduces the chance that the desired name is claimed by someone else while the Operating Agreement is being negotiated. The Operating Agreement itself does not control or extend the 120-day reservation window, and nothing in the agreement can renew a lapsed reservation. The agreement governs the relationship among members and the entity, while Section 18-103 governs only the temporary hold on a name with the state.

What are some practical scenarios where this section comes up?

Real situations make this section easier to understand. Imagine a non-resident founder who has chosen a name and wants to use it across a website, a payment processor, and eventually a Delaware LLC, but who is still waiting on a trademark clearance opinion. Reserving the name for 120 days gives breathing room to complete that work without worrying that another applicant will file under the same name first. Another scenario involves two co-founders in different countries who have agreed on a name but have not finished negotiating their economic split. A reservation holds the name while the negotiation continues.

Other scenarios show why reservation is often unnecessary:

• A solo founder who is ready to form today can file the Certificate of Formation and skip reservation.
• A founder who only needs a generic name with low competition may find the name available whenever they file.
• A founder who reserves but then changes the name has paid the $75 fee for a hold they no longer use.
• A founder who lets the 120 days lapse without filing must re-reserve or risk losing the name.

The recurring theme is that reservation is a timing instrument. It is valuable when there is a gap between choosing a name and forming the entity, and it adds little when those two steps happen close together.

What do people most often misunderstand about Section 18-103?

The most frequent misunderstanding is treating name reservation as if it grants trademark or brand rights. It does not. Reserving a name with the Delaware Division of Corporations only stops other applicants from filing under that name in Delaware during the reservation period. It does not create any rights under the federal trademark system administered by the USPTO, and it does not protect the name in other states or in commerce generally. A founder who wants enforceable brand protection still needs to pursue trademark registration separately, and that process is entirely independent of this section.

A second misunderstanding is assuming the reservation renews on its own. The statute provides a 120-day window and does not include an automatic renewal, so the hold ends when the period closes unless a new reservation is filed. A third misunderstanding is believing the reservation forms the LLC. It does not. Only the Certificate of Formation does that. Finally, some founders assume reservation is required before forming an LLC. It is optional. The direct path of filing the Certificate of Formation is fully valid and is what most non-resident single-member owners choose. Keeping these limits in mind prevents founders from relying on a reservation to do more than the statute allows.

What happens if the reservation is ignored or allowed to lapse?

Ignoring name reservation is not a violation of anything, because the section is permissive rather than mandatory. A founder who never reserves a name simply forms the LLC by filing the Certificate of Formation, and the name attaches at that point. There is no penalty for skipping reservation, and there is no statutory consequence for choosing the direct route. This is an important contrast with obligations that do carry penalties, such as the federal tax filing requirements that apply to a foreign-owned single-member LLC, where a missed Form 5472 filed with Form 1120 can trigger a $25,000 penalty. Section 18-103 carries no such exposure because using it is a choice.

Letting a reservation lapse has a narrower consequence. When the 120-day window closes without a Certificate of Formation being filed and without a new reservation, the name returns to the available pool. At that point another applicant could reserve or use it. The lapse does not harm the founder beyond the loss of the hold and the $75 fee already paid. The practical risk is purely about the name. If protecting the name matters and formation is still not ready, the founder can file a new reservation. If the name is no longer needed or has been changed, the lapse simply ends a hold that no longer serves a purpose.

How does reservation compare to the default rule of filing directly?

The default behavior for forming a Delaware LLC does not involve name reservation at all. The standard path is to confirm the name is available and then file the Certificate of Formation, paying the $110 filing fee, at which point the name is bound to the new entity. Section 18-103 is an optional layer that sits before this default path. It exists for founders who need to separate the act of choosing a name from the act of forming the entity. When those two acts happen together, the default path already protects the name, and the reservation adds a fee without adding much benefit.

Comparing the two helps clarify when each makes sense:

• Direct filing: no $75 reservation fee, name attaches at formation, suits founders ready to file.
• Reservation first: $75 fee, name held for 120 days, suits founders who need time before filing.
• Direct filing creates the entity immediately, while reservation creates no entity at all.
• Reservation must be renewed if the 120 days pass, while a filed Certificate needs no such renewal.

For a non-resident single-member owner, the decision usually turns on timing and on how much competition the chosen name faces. If the name is distinctive and formation is imminent, the default path is typically enough.

How does the 120-day window work in practice?

The 120-day reservation period is fixed by the statute and is measured from the date the reservation is granted. During that window the reserved name is unavailable to other applicants who try to file in Delaware. The window is meant to be long enough to complete the preparatory work that often delays formation, such as legal review, trademark searching, or coordination among partners. It is not meant to be a long-term parking spot for a name. Because there is no automatic renewal in the section, a founder who needs more time must take deliberate action before the period ends.

Planning around the window is straightforward if you treat the 120 days as a deadline rather than a guarantee. A founder who reserves a name should aim to file the Certificate of Formation, or to file a fresh reservation, well before the window closes. Waiting until the final days creates a risk that a small delay in funding or paperwork causes the hold to lapse. Because the underlying decision is about timing, the safest approach is to start the formation work early enough that the reservation comfortably covers it. The reservation gives the founder room to maneuver, but the section does not extend that room without a new filing.

How does name reservation relate to other early-stage formation costs?

It helps to see the $75 reservation fee in the context of the other costs a non-resident founder encounters when forming a Delaware LLC. The reservation is optional and one-time. The Certificate of Formation costs $110 and creates the entity. After formation, the LLC owes a $300 flat franchise tax each year, due June 1. On the federal side, obtaining an EIN through Form SS-4 is free, and a foreign-owned single-member LLC generally must file Form 5472 along with Form 1120, where a missed filing can carry a $25,000 penalty. The name reservation fee is small by comparison and is spent only when the timing benefit is worth it.

Seeing these costs together clarifies where reservation fits. It is an early, optional expense that protects a name before the larger and mandatory steps begin. A founder who reserves and then forms will have paid the $75 reservation fee plus the $110 formation fee, while a founder who files directly pays only the $110. Neither path changes the later obligations, such as the annual franchise tax or the federal filing requirements. The reservation sits at the very front of the timeline and influences only whether the chosen name is held during the gap before formation. The other costs apply regardless of whether a reservation was ever filed.

Is name reservation connected to any reporting or compliance obligations?

Name reservation under Section 18-103 is not tied to ongoing reporting or compliance. It is a single, time-limited filing that holds a name and then expires. It does not create any duty to report to Delaware, and it does not start any compliance clock. This sets it apart from obligations that do involve ongoing duties, such as the annual franchise tax or federal tax filings. The reservation is a one-off action with a defined endpoint, and once it lapses or is replaced by a Certificate of Formation, it has no further role.

It is also worth noting what reservation has nothing to do with on the federal compliance side. Beneficial ownership information reporting under the Corporate Transparency Act drew a great deal of attention, but US-formed LLCs have been exempt from BOI reporting since the FinCEN Interim Final Rule of March 26, 2025. Whether or not a founder reserved a name has no bearing on that exemption, because reservation is a state name-holding step and BOI rules concern federal ownership reporting. Keeping these layers separate prevents confusion. Section 18-103 governs a narrow, optional, temporary hold on a name, and it does not pull the founder into any reporting framework, state or federal.