If the tax is not paid on or before June 1, a late fee of $200 and a monthly interest of 1.5 percent will be charged. To file as a foreign corporation, mail in the necessary documents. The Delaware franchise tax for foreign corporations is due by June 30 every year. This means that if you receive a high bill that was calculated under the first method, you can request a recalculation using the second method.
Business that are formed out of state but are registered to do business in Delaware must pay a $125 registration fee. Filing your Delaware franchise tax is a simple, online process. Since 1981, Harvard Business Services, Inc. has helped form 382,565 Delaware corporations and LLCs for people all over the world. The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics. If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less. After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing.
All Delaware-incorporated businesses must, however, still pay the annual franchise tax, submit an annual report, and pay a filing fee. Here’s how to figure out how much you need to pay, how to file, and what happens if you don’t. 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. In addition to paying the franchise tax, businesses incorporated in Delaware must also file an annual report and pay a small filing fee. You must file your annual report if your business is a corporation and pay your franchise tax and filing fee by March 1.
- Your Delaware franchise tax due date depends on the type of business you own.
- When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report.
- This leads to a high number of businesses being incorporated in those tax shelter states.
- If your company is no longer operating, it’s important to close your Delaware business and end these fees.
- This is the first method that is typically used to calculate tax.
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. For every additional 10,000 shares authorized after that, you pay another $85 in franchise tax, up to a maximum of $200,000. If your company has authorized 5,000 shares or fewer, your total Delaware franchise tax amount is $175.
Two Methods to Calculate Franchise Tax for a Maximum Stock Company
Since the tax payment process is simple, businesses are more likely to want to be incorporated in Delaware. 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. The online fee will vary depending on when the online payment is submitted.
- You must file your annual report if your business is a corporation and pay your franchise tax and filing fee by March 1.
- The Delaware franchise tax is also beneficial to businesses as it is a small fee in comparison to other states.
- Delaware also has no personal property tax or value-added taxes.
- To use this method, you must supply the company’s total gross assets and the total number of issued shares.
We file both your state and federal business taxes for you. Incorporating a business in Delaware comes with certain advantages. By not requiring more information, businesses that file their franchise tax in Delaware can maintain privacy. The names of the owners, LLC members and managers are not required to be made public.
Delaware franchise tax is a tax charged by the state of Delaware for the right to own a Delaware company. The tax is required to maintain the company’s good standing in Delaware. 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.
Along with your business’s annual Delaware franchise tax, your business is required to submit a Delaware annual report. Both the Delaware annual report and the Delaware franchise tax are due by March 1 each year. The term “Franchise Tax” does not imply that your company is a franchise business.
Delaware Annual Report
All LLCs, Limited Partnerships, and General Partnerships formed in Delaware are required to pay the annual franchise tax by June 1. If the Delaware Franchise Tax calculation uses the assumed par value capital method, the gross assets and issued shares are also to be listed. Certain exempt domestic corporations like charities, civic organizations and religious organizations do not have to pay the franchise tax. However, they must still file an annual report and pay the filing fee. The Delaware franchise tax for a corporation is slightly more complicated. It is based on the corporation type and authorized shares.
What Should I Do After Paying My Delaware Franchise Tax?
This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e. The actual value of your business as estimated by the State of Delaware. If you’ve authorized 5,001 to 10,000 shares, your franchise tax is $250. The limited partnership or LP franchise tax is also due on June 1. Your Delaware franchise tax due date depends on the type of business you own.
What about the annual report?
A tax shelter can be created by an individual or a corporation. If you don’t file your Delaware franchise tax on time, you will be charged a late fee. If your business was formed or is located in another state but generates income in Delaware, you may need to pay Delaware taxes. If you own a business that operates in multiple states, you will greatly benefit from the knowledge of a tax professional. Multistate taxes and determining nexus can be very complicated. To use this method, you must supply the company’s total gross assets and the total number of issued shares.
The Delaware franchise tax is also beneficial to businesses as it is a small fee in comparison to other states. 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. A non-stock/non-profit company is considered exempt by the State of Delaware. 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. When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report. The goal of the Delaware franchise tax is to make owning a business in Delaware simple.
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. A corporation with 5,000 authorized shares or less is us accounting 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. The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has.