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Delaware Franchise Tax - FAQs

delaware franchise tax - frequently Asked Questions

When are franchise taxes due for my Delaware corporation?

The deadline for paying Delaware franchise taxes for corporations is March 1 each year. The current minimum amount due is $225. ($175 for franchise tax and $50 for Delaware annual report fee.) You must compledte and file an annual report.

When are franchise taxes due for my Delaware LLC?

Franchise taxes for LLCs are due June 1 each year. The current LLC franchise tax fee is $300 per year. The last fee is $200 plus 1.5% interest per month. LLCs do not have to file a Delaware annual report.

Where can I find the Delaware Franchise Tax calculators?

You can find more comprehensive information about franchise tax rates, how to calculate Delaware franchise tax, and tax calculators here. Or you can go directly to the Delaware Secretary of State franchise tax calculator(s) here.

How are Delaware franchise taxes calculated?

Delaware offers two methods of calculating taxes due: 1) Authorized Share Method and 2) Assumed Par Value Method. Both methods are for companies that have "par value" stock. The state of Delaware uses the authorized share method as the default. As an alternative you can use the assumed par value method to possibly lower your franchise tax. You'll need to know your "gross assets" and "total issued shares" to calculate using the assumed par value method.

I am not a Franchise. Why do I owe a franchise tax?

Title 8 Chapter 5 § 501 of the Delaware code requires that every corporation now existing or hereafter to be incorporated under the laws of this State, shall pay an annual tax, for the use of the State, by way of license for the corporate franchise as prescribed in this chapter.

I haven't started doing business yet. Do I still have to file a report and pay taxes?

Title 8 Chapter 5 § 503 states that all corporations accepting the provisions of the Constitution of this State and coming under Chapter 1 of this title, and all corporations which have heretofore filed or may hereafter file a certificate of incorporation under said chapter, shall pay to the Secretary of State as an annual franchise tax whichever of the applicable amounts as prescribed by Title 8 Chapter 5 § 503 (1) and (2).

What if I don't have a Federal Tax Identification Number (aka EIN)?

You may file your annual report and pay taxes without having a Federal Tax Identification Number. This number is assigned by the Internal Revenue Service. We can obtain a Employer Identification Number (Federal ID#) for your entity.

Where do I get my total gross assets?

Title 8 Chapter 5 § 503 (i) states such total assets and total gross assets shall be those "total assets" reported to the United States on U.S. Form 1120 Schedule L, relative to the company's fiscal year ending in the calendar year prior to filing with the Secretary of State pursuant to this section. If such schedule is no longer in use, the Secretary of State shall designate a replacement. The Secretary of State may at any time require a true and correct copy of such schedule to be filed with the Secretary of State's office.

No corporation shall consolidate with its assets the assets of another entity for purposes of this section. If such schedule or its replacement reports on a consolidated basis, the reporting corporation shall submit to the Secretary of State a reconciliation of its reported total assets or total gross assets to the consolidated total assets reported on the schedule.

Where are my notices sent and how do I get a duplicate?

All tax notices are printed in December of the year that tax is due and sent to the Registered Agent. The Registered Agent is designated by the corporation through the initial formation or a filing submitted by the corporation that designates another Delaware Registered Agent. Please contact Delaware Business Incorporators, Inc. if you require another copy of your notice.

Do I have to list all of my officers and directors? Which officer do I have to list?

Title 8 Chapter 5 § 502(a)(4) states that the Annual Report shall list "The names and addresses of all the directors as of the filing date of the report and the name and address of the officer who signs the report."

Who is authorized to the file the Annual Report?

Title 8 Chapter 5 § 502 (a) states that the report shall be made on a form designated by the Secretary of State and shall be signed by the corporation's president, secretary, treasurer or other proper officer duly authorized so to act, or by any of its directors, or by any incorporator in the event its board of directors shall not have been elected.

Why are there penalties and/or interest on my account?

Title 8 Chapter 5 § 502 (c) states that a penalty of $125.00 is assessed for failure to file the Annual Franchise Tax report by March 1st. Title 8 Chapter 5 § 504 (c) states if the tax of any corporation remains unpaid after the due dates established by this section, the tax shall bear interest at the rate of 1.5 percent for each month or portion thereof until fully paid.

I am going out of business or my business is closed. Do I still owe Delaware franchise taxes?

Taxes continue to accrue on a corporation until a legal document filing is received and filed with the State of Delaware. The document needs to officially terminate the existence of the corporation in the State of Delaware. (i.e. Certificate of Dissolution, Certificate of Merger, etc…)

 

We hope you found this section beneficial to you. If you have any questions, please do not hesitate to call us at 1-800-423-2993 or 302-996-5819. Thank you for your interest in Delaware Franchise Tax.


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