Filing the annual report and paying the franchise tax as soon as possible help you avoid frustration and delays with other time-sensitive filings. Owners of multiple corporations will need to pay Delaware Franchise Tax for each entity separately as each entity is required to file an annual report. Corporations must complete an annual report along with their Delaware Franchise Tax payment. As your Registered Agent, we will send you tax reminders both by mail and email, well in advance of the due date. We offer a tax filing service for a small fee in addition to your Franchise Tax amount. For a discounted rate you can submit your Delaware Franchise Tax payment via our online Franchise Tax form.
- For business owners who come to the State of Delaware for low incorporation and annual fees (no Delaware Income Tax for companies that run outside Delaware), they reach another important compliance deadline.
- The Delaware Franchise Tax has no bearing on income or company activity; it is simply required by the State of Delaware to maintain the good standing status of your company.
- All businesses formed in Delaware, including tax-exempt businesses, need to file an annual franchise tax report by March 1st of each year, and pay a filing fee of $50.
- To be compliant, the owner of a Delaware LLC needs to pay the Delaware franchise tax in the coming weeks.
The Delaware Franchise Tax and the Registered Agent Fee are two separate, unrelated fees. The annual Franchise Tax is imposed by the State of Delaware and varies with the size of your business. The annual Registered Agent Fee is a fixed amount paid to Harvard Business Services, Inc. to act as an agent for your entity in the state. Each year, Delaware Limited Liability Companies, Limited Partnerships, and General Partnerships pay a franchise tax of $300 by June 1st to remain in good standing with the Division of Corporations. Payment information and a payment voucher are sent to the Delaware Registered Agent.
Two Methods to Calculate Franchise Tax for a Maximum Stock Company
The tax is then often calculated to the minimum payment of $400 tax plus the $50 annual report fee, for a total of $450 due per year. Most of us know that April is the month when we file personal income tax returns with the Internal Revenue Service. For business owners who come to the State of Delaware for low incorporation and annual fees (no Delaware Income Tax for companies that run outside Delaware), they reach another important compliance deadline. Franchise taxes on businesses formed under the laws of Delaware are due for Corporations on March 1, and for Limited Liability Companies and Partnerships on June 1.
- This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details.
- In order to utilize this filing method, you will need to provide the company’s total gross assets (as reported on Form 1120, Schedule L) and the total number of issued shares.
- The franchise tax is due even if the business didn’t conduct any activity or lost money.
- Filing the annual report and paying the franchise tax as soon as possible help you avoid frustration and delays with other time-sensitive filings.
- Tax-exempt businesses do not pay the Delaware franchise tax or penalties, but they still need to file and pay the annual report fee to remain in compliance.
The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has. The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due. Delaware corporations or Delaware LLCs that are actively conducting business need to stay compliant with the Delaware Division of Corporations to keep a business in good standing.
Do other business entities that incorporate in Delaware pay a Delaware franchise tax?
It’s important your Delaware Registered Agent has the correct contact information so they can provide you with a timely notice. The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods. Therefore, if you receive a tax bill for tens of thousands of dollars, it may be in your best interest to try calculating your Delaware Franchise Tax with the assumed par value capital method. If the tax is not paid on or before March 1, the state imposes a $200 late penalty, plus a monthly interest fee of 1.5%.
To be compliant, the owner of a Delaware LLC needs to pay the Delaware franchise tax in the coming weeks. This type of company does not pay the standard annual Delaware Franchise Tax, but must still file and pay the annual report fee of $25 per year. A corporation with 5,000 authorized shares or less is considered a minimum stock corporation. The Delaware annual report fee is $50 and the tax is $175 for a total of $225 due per year.
A Delaware Corporation’s franchise tax is the lesser of the two amounts under the authorized shares and assumed par value capital method calculated using total gross assets, not income. Therefore, the minimum Delaware franchise tax and annual report payment total is $225 a year for Delaware domestic corporations. In order to utilize this filing method, you will need to provide the company’s total gross assets (as reported on Form 1120, Schedule L) and the total number of issued shares.
What happens if I don’t pay my Delaware Limited Liability Company franchise tax?
All businesses formed in Delaware, including tax-exempt businesses, need to file an annual franchise tax report by March 1st of each year, and pay a filing fee of $50. Tax-exempt businesses do not pay the Delaware franchise tax or penalties, but they still need to file and pay the annual report fee to remain in compliance. The Delaware franchise tax for Corporations can vary depending on the number of stock shares, the number of stock shares issued, and their par value.
Do I Need to Submit Anything Else With My Delaware Franchise Tax Payment?
Harvard Business Services, Inc. guarantees your annual Delaware Registered Agent Fee will remain fixed at $50 per company, per year, for the life of your company. If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less. The Franchise Tax for a Delaware LLC or a Delaware LP is a flat annual rate of $300. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer.
Yes, regardless of your Delaware company activity or not conducting business, you are still required to pay the Delaware Franchise Tax to remain in Good Standing. If your company is no longer active and you wish to close your business, be sure to follow the proper steps to Dissolve a Corporation, or Cancel an LLC. Franchise Tax is the fee imposed by the State of Delaware for the right or privilege to own a Delaware company.
The Delaware Franchise Tax has no bearing on income or company activity; it is simply required by the State of Delaware to maintain the good standing status of your company. Since 1981, Harvard Business Services, Inc. has helped form 382,566 Delaware corporations and LLCs for people all over the world. The HBS Blog offers insight job costing vs process costing on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics. After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing. The due date of your Delaware Franchise Tax payment varies, depending on your company type.
Corporations, LLCs and LPs are taxed in arrears, meaning the tax due by each due date is for the previous calendar year. The franchise tax is due even if the business didn’t conduct any activity or lost money. If your company is no longer operating, it’s important to close your Delaware business and end these fees. Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.
A corporation with 5,001 authorized shares or more is considered a maximum stock corporation. The annual report fee is $50 and the tax would be somewhere between $200 and $200,000 per year, as illustrated below. If the Delaware Franchise Tax calculation uses the assumed par value capital method, the gross assets and issued shares are also to be listed. If you decide to pay your Delaware Franchise Tax for a corporation with us over the phone, the annual report would need to be separately submitted to us by email, fax or mail.
If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. If the tax is not paid on or before June 1, the state imposes a $200 late penalty, plus a monthly interest fee of 1.5%. This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details. Delaware LLCs do not have to complete the annual report, but still pay the $300 Delaware LLC Franchise Tax fee.