Delaware Franchise Tax: How to Calculate and Pay

If your company is no longer active and you wish to close your business, be sure to follow the proper steps to Dissolve a Corporation, or Cancel an LLC. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. To reduce the taxes paid by a startup, use the Assumed Par Value method.

  • Please treat this article as general guidance, not as legal or tax advice, and consult with your accountant when in doubt or refer to the resource links provided below.
  • Keep in mind, this number could be different from the number of shares your company has actually issued.
  • Let’s also imagine it has authorized and issued 100,000 shares at a par value of $2.00 each, and 100,000 shares at par value of $10.00 each.
  • A corporation with 5,001 authorized shares or more is considered a maximum stock corporation.
  • Our all-star team does your monthly bookkeeping for you and sends your financials to trusted tax professionals for a stress free filing experience.
  • Is your LLC or Corporation owned predominantly (51% or more) by a veteran or veterans?

Non-stock or non-profit companies are considered exempt from tax in Delaware. These types of companies must file an annual report fee. The Franchise Tax for domestic Delaware corporations requires that businesses submit an annual report every March 1st. The annual report is filed online, and you can pay a fee to a Delaware Registered Agent who can then file the corporation’s annual report.

What Should I Do After Paying My Delaware Franchise Tax?

By law, you are required to have a Delaware Registered Agent. The agent’s responsibility is https://capitalprof.team/ to accept service of process. Their annual fee is included in your yearly compliance costs.

  • The online fee will vary depending on when the online payment is submitted.
  • The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due.
  • All Delaware-incorporated businesses must, however, still pay the annual franchise tax, submit an annual report, and pay a filing fee.
  • After your payment, you can download your filed Delaware state annual report that shows the information you entered, as well as confirmation of the payment.

If you have all the above information available, you can start your Delaware State Franchise Tax Annual Report filing. If you are not sure what these are and/or the governance, please consult with your company’s lawyer or accountant. Mailing address and the principal place of business address may be two different addresses or the same. Please ensure that you type your Company name to match the exact name as used in the incorporation documents. You will see a list of Company names matching your search criteria, choose your own Company and note the File ID number.

You will also be charged a 1.5 percent monthly interest on the amount due. Foreign corporations, those that are formed outside of Delaware, cannot file online. 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. The address written on your SS-4 form sent to IRS may not reflect your current address information.

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. When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report. 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.

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DO NOT be shocked to see a high USD value for the franchise tax payable! Please bear in mind that these are the addresses of the individuals and for most non-US owned businesses, these are non-US addresses. Gross assets may differ for accrual basis and cash basis balance sheets. If you have filed tax returns previously, you would know whether you are cash or accrual basis.

The Assumed Par Value Capital method: an example

The Delaware state site URL to file your annual report and pay the franchise tax is also listed below for easy access. If you’re trying to figure out if you owe Delaware franchise tax, Bench can help. We provide small businesses with a tax filing and bookkeeping solution. Our all-star team does your monthly bookkeeping for you and sends your financials to trusted tax professionals for a stress free filing experience. We file both your state and federal business taxes for you.

When you file your Delaware franchise tax, an annual report must also be filed. When paying the annual report fee, corporations are sorted into two categories. Along with your business’s annual Delaware franchise tax, your business is required to submit a Delaware annual report. equipment leasing the ultimate guide for small business owners Both the Delaware annual report and the Delaware franchise tax are due by March 1 each year. 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 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. The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due. The Delaware franchise tax is beneficial to corporations because it is a simple process to submit and calculate payment. The Delaware franchise tax is also beneficial to businesses as it is a small fee in comparison to other states.

Delaware Annual Report

The late fee is $125.00 and a 1.5 percent monthly interest afterward. The goal of the Delaware franchise tax is to make owning a business in Delaware simple. Since the tax payment process is https://capitalprof.space/ simple, businesses are more likely to want to be incorporated in Delaware. The franchise tax you will pay depends on the value of the gross assets, as well as the number of issued shares.

Delaware Franchise Tax FAQ

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%. Delaware Franchise Taxes for corporations are due by March 1 of every year. 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%. A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment. The method is any that recovers more than $1 in tax for ever $1 spent within a four-year period.

If you can not file on or before March 1st deadline, you can file later but would have to pay some penalty and interest. Let’s also imagine it has authorized and issued 100,000 shares at a par value of $2.00 each, and 100,000 shares at par value of $10.00 each. Let’s also assume the number of shares issued and authorized is the same for simplicity’s sake. This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e.

How Do I Calculate My Delaware Franchise Tax?

A Service-Disabled Veteran Owned Small Business (SDVOSB) may benefit even greater (up to 3% of government contracts are set aside for these businesses). There are other benefits as well, such as the addition of government surplus property to your company. Certified veteran-owned small businesses also have opportunities to apply for sole-source and set-aside contracts with the Department of Veterans Affairs (The VA). Once the Franchise Tax is paid, business owners can request a Delaware Certificate of Good Standing that certifies the date of formation of the company in the state of Delaware.

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