If your company is no longer operating, it’s important to close your Delaware business and end these fees. 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%. Paying a franchise tax is a legal requirement for business incorporated in the state of Delaware. Failure to pay the annual franchise tax can result, in penalties, fines, or even the loss of right to conduct lawful business.

Who Must File Delaware franchise tax?

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 sole practitioner $225 due per year. 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.

Is My Delaware Franchise Tax the Same As My Annual Registered Agent Fee?

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. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. The Delaware Franchise Tax also applies to LLCs and partnerships, but it does not apply to sole proprietorships or non-profit organizations. For more information about the Delaware Franchise Tax, please visit the Delaware Department of Revenue website.

1. A corporation with 5,000 authorized shares or less is considered a minimum stock corporation.
2. Non-profit organizations are exempt from the tax, but they still have to file a return with the state showing their gross receipts.
3. Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.
4. The tax is used to fund the state’s government and its various programs and services.

Owners of multiple corporations will need to pay Delaware Franchise Tax for each entity separately as each entity is required to file an annual how do i start a nonprofit organization report. You can reduce your Delaware franchise costs in certain circumstances if you use the Assumed Par Value method. This calculation saves taxes by total assets, as long as issued shares constitute a third to half of the authorized ones and it will save money for startups with this technique.

Since 1981, Harvard Business Services, Inc. has helped form 427,401 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. After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer. 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.

How Do I Pay My Delaware Franchise Tax?

The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due. The amount of the tax is based on the gross receipts of the business, which means that it goes up as a business makes more money. The tax is typically paid annually, but businesses can choose to pay it quarterly or monthly if they prefer.

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. The Delaware Franchise Tax for a corporation is based on your managing sales tax corporation type and the number of authorized shares your company has.