What Happens If You Don't Pay Delaware Franchise Tax

The State of Delaware requires that all entities, including corporations, limited liability companies, limited partnerships, general partnerships, etc, maintain a valid Delaware registered agent. 

Corporation tax notices are mailed to all registered agents in December and are due March 1 of each year. LLC tax notices are mailed to all registered agents in March and are due June 1. 

Corporations are required to complete and file an annual report. The State requests basic information about your corporation, i.e. name and addresses of officers, par value, number of shares authorized, and number of shares issued. If you pay the Delaware franchise tax but not complete the annual report, your corporation will still be considered "not in good standing". 

LLCs are NOT required to file an annual report. This is one reason for there widespread popularity.  In addition, LLCs are required to pay an annual franchise tax.

Late payment and/or filing of your Delaware annual report will result in a late fee of $200 being assessed by the State plus interest at the rate of 1.5% per month.

Failure to pay a Delaware franchise tax for your corporation or LLC will eventually cause your company to be marked as "void" with the State of Delaware. "Void" status will prevent you from obtaining a certificate of good standing. In addition, interest and penalties will accrue until your franchise tax is paid up to date. If your LLC or corporation has become VOID, you'll need to renew and revive your company. 

This article has been brought to you by Delaware Business Incorporators, Inc.