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%. Corporations that neglect or fail to pay the franchise tax, or to file a complete franchise tax report, for more than one year will have their charters voided.
- This foundational document is filed with the state to legally form the corporation.
- To use this method, you must supply the company’s total gross assets and the total number of issued shares.
- Keep in mind, this number could be different from the number of shares your company has actually issued.
- Payment can be submitted with an electronic check or credit card.
- When you file your Delaware franchise tax, an annual report must also be filed.
- When filing a franchise tax in Delaware, all the must be submitted is the physical address of the business and the name of the registered agent.
Filing your Delaware franchise tax is a simple, online process. Since 1981, Harvard Business Services, Inc. has helped form 387,739 Delaware corporations and LLCs for people all over the world. Since 1981, Harvard Business Services, Inc. has helped form 387,741 Delaware corporations and LLCs for people all over the world. The due date of your Delaware Franchise Tax payment varies, depending on your company type.
Why is my DE Franchise Tax getting rejected?
This return or “Annual Report” must be filed by March 1st with the state of Delaware each year, regardless on income or activity, as long as the business is registered in the state. 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.
- If your Delaware franchise tax is submitted late, a $125 late fee and interest fee of 1.5 percent will be charged.
- 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.
- (Make sure you work with experienced attorneys so they don’t mess up important items like par value!) Your lawyer may also have put your par value into your cap table software.
- The late fee is $125.00 and a 1.5 percent monthly interest afterward.
A franchise tax, sometimes called a privilege tax, is a fee you pay for the privilege of doing business in a certain state. You will also be charged a 1.5 percent monthly interest on the amount due. Your Delaware franchise tax due date depends on the type of business how to write an annual report you own. This article focuses on businesses that are operating solely in Delaware. If your business is operating in multiple states, your business may have “nexus” with those other states. This means that you’re likely to need to pay taxes in those states.
Deadline: Delaware Franchise Tax
This document outlines the rights of the investors, including anti-dilution protections and information rights, among others. If you incorporated in Delaware, yes, you need to file and pay the Delaware Franchise Tax. Most VC backed startups are Delaware C-Corps, which means that most VC-backed startups DO need to file.
Franchise taxes for partnerships and LLCs
This leads to a high number of businesses being incorporated in those tax shelter states. 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 portal is intended for Annual Report filing and tax payments for Corporations and Alternative Entities. Excessive and repeated searches that may have a negative impact on our systems and customer experience are also prohibited.
Make sure to use the recalculate button on the Delaware Franchise Tax website
To use this method, you must supply the company’s total gross assets and the total number of issued shares. This foundational document is filed with the state to legally form the corporation. It often includes details about the classes of stock the corporation is authorized to issue, including the par value of each class. For VC-backed startups, it will specifically mention the par value of preferred shares. Any changes to these details typically require an amendment to the Certificate of Incorporation. Most VC backed startups will have very low par value shares, meaning that you’ll end up using the assumed par value in the franchise tax calculation.
Assumed Par Value Capital Method
Delaware corporations, whether foreign or domestic, are required to pay an annual Franchise Tax. When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report. 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.
The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods. Let’s imagine a Delaware-incorporated company reported total gross assets of $1,000,000 on their federal taxes this year. Keep in mind, this number could be different from the number of shares your company has actually issued.
When filing a franchise tax in Delaware, all the must be submitted is the physical address of the business and the name of the registered agent. When paying the annual report fee, corporations are sorted into two categories. If you pay your Delaware franchise tax late, you’ll be charged a late fee. The late fee is $125.00 and a 1.5 percent monthly interest afterward.
