In addition to corporations, Delaware limited liability companies (LLCs), general partnerships, limited partnerships (LPs) and limited liability partnerships (LLPs) must also pay franchise taxes. 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. Franchise taxes are generally due in arrears for the prior calendar year.
The minimum tax is waived on newly formed or qualified corporations filing an initial return for their first taxable year. However, any first-year net income is still subject to the 8.84 percent tax rate. A corporation with 5,001 authorized shares or more is considered a maximum stock corporation.
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. Since 1981, Harvard Business Services, Inc. has helped form 427,231 Delaware corporations and LLCs for people all over the world. 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. If incorporated in another state but doing business in Delaware, you must still register with the Delaware Division of Corporations. Tier 2 Delisting – In order to remove a Corporation from Tier 2 status please supply Franchise Tax with the delisting form the Corporation filed with the SEC removing them from the stock market.
IMPORTANT CONSUMER ALERT ABOUT TAX AND ANNUAL REPORT SCAMS
Choose your entity type below to begin your Delaware Franchise Tax calculation. Keep in mind, this number could be different from the number of shares your company has actually issued. Your authorized share number is the maximum number of shares your corporation could sell based on your corporate bylaws or charter. The Delaware Secretary of State’s Office and the Delaware Division of Corporations recently learned of a deceptive solicitation that has been mailed to numerous Delaware corporations from a company named Corporate Records Service. These solicitations urge corporations to file information and send payment in the amount of $125.00 by a certain date in order to complete corporate meeting minutes on behalf of the corporation.
Doing Business in Delaware
While the typical franchise tax is based on a corporation’s net worth or capital, the tax can also be based on other criteria such as income or gross receipts. Let’s imagine a Delaware-incorporated company reported total gross assets of $1,000,000 on their federal taxes this year. If you’re trying to figure out if you owe Delaware franchise tax, Bench can help. Our all-star team does your monthly bookkeeping for you and sends your financials to trusted tax professionals for a stress free filing experience.
What Happens if Delaware Franchise Tax Is Paid on Time?
- If your company has authorized 5,000 shares or fewer, your total Delaware franchise tax amount is $175.
- Delaware Franchise Taxes for corporations are due by March 1 of every year.
- If you are a startup that has chosen Delaware as its state of incorporation, you are likely aware that you are subject to Delaware franchise tax.
- If incorporated in another state but doing business in Delaware, you must still register with the Delaware Division of Corporations.
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. The limited partnership (LP) Franchise Tax is also due by June 1 of every year. 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%.
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If your company has authorized 5,000 shares or what is the break-even point definition formula and examples fewer, your total Delaware franchise tax amount is $175. A franchise tax, sometimes called a privilege tax, is a fee you pay for the privilege of doing business in a certain state. Corporations must complete an annual report along with their Delaware Franchise Tax payment.