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, home inspection report samples depending on your company type. For questions, contact the Harvard Business Services, Inc. The methods of calculating Delaware Franchise Tax are detailed below.
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%. 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. The annual Registered Agent fee is paid to Harvard Business Services, Inc. for you to act as an agent of your business in the state of Delaware. This is the lowest Registered Agent fee in the industry.
What is Delaware Franchise Tax?
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 you own. Business that are formed out of state but are registered to do business in Delaware must pay a $125 registration fee. Payment can be submitted with an electronic check or credit card.
Corporations, LLCs and LPs are taxed in arrears, meaning the tax due by each due date is for the previous calendar year. The franchise tax is due even if the business didn’t conduct any activity or lost money. If your company is no longer operating, it’s important to close your Delaware business and end these fees. Delaware Franchise Taxes for corporations are due by March 1 of every year.
- The term “Franchise Tax” does not imply that your company is a franchise business.
- You will pay tax to the state on that income on your individual state tax return.
- The names of the owners, LLC members and managers are not required to be made public.
- Franchise Tax is the fee imposed by the State of Delaware for the right or privilege to own a Delaware company.
- If you don’t want to pay your Delaware franchise tax yourself, you can hire a registered agent to do it for you.
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. The term “Franchise Tax” does not imply that your company is a franchise business. 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. The goal of the Delaware franchise tax is to make owning a business in Delaware simple.
How to Calculate Your Delaware Franchise Tax Fee
To use this method, you must supply the company’s total gross assets and the total number of issued shares. 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. Both the Delaware annual report and the Delaware franchise tax are due by March 1 each year. 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 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. 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.
Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer. Delaware also has no personal property tax or value-added taxes. The Franchise Tax for a Delaware LLC or a Delaware LP is a flat annual rate of $300.
What Is Delaware Franchise Tax?
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. If the Delaware Franchise Tax calculation uses the assumed par value capital method, the gross assets and issued shares are also to be listed. 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. A corporation with 5,001 authorized shares or more is considered a maximum stock corporation.
The Delaware franchise tax for a corporation is slightly more complicated. It is based on the corporation type and authorized shares. Often, the tax is then calculated to the minimum payment of $350, with a $50 annual report fee.
When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report. If your company falls into the maximum stock option of 5001 or more shares, there are two possible methods to calculate the Delaware franchise tax. 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. If you don’t want to pay your Delaware franchise tax yourself, you can hire a registered agent to do it for you.
Is My Delaware Franchise Tax the Same As My Annual Registered Agent Fee?
The annual franchise tax is required and paid to the state of Delaware. Delaware provides a favorable tax shelter for U.S. corporations. There are other states, such as Nevada, that also do this. This leads to a high number of businesses being incorporated in those tax shelter states. A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment.
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. 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. 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.