The names of the owners, LLC members and managers are not required to be made public. Delaware provides a favorable tax shelter for U.S. corporations. There are other states, such as Nevada, that also do this.

The tax is required to maintain the company’s good standing in Delaware. 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 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. Corporations must complete an annual report along with their Delaware Franchise Tax payment. Corporations, LLCs and LPs are taxed in arrears, meaning the tax due by each due date is for the previous calendar year.

  • If you’ve authorized 5,001 to 10,000 shares, your franchise tax is $250.
  • The registered agent will charge a small fee to complete the filing of your Delaware franchise tax.
  • The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has.
  • Delaware provides a favorable tax shelter for U.S. corporations.
  • The annual Franchise Tax is imposed by the State of Delaware and varies with the size of your business.
  • The corporate laws and cases decided in Delaware are often used by the Supreme Court to influence decisions.

When paying the annual report fee, corporations are sorted into two categories. If you don’t want to pay your Delaware franchise tax yourself, you can hire a registered agent to do it for you. The registered agent will charge a small fee to complete the filing of your Delaware franchise tax. Delaware franchise tax is a tax charged by the state of Delaware for the right to own a Delaware company.

Franchise taxes for partnerships and LLCs

The actual value of your business as estimated by the State of Delaware. If you’ve authorized 5,001 to 10,000 shares, your franchise tax is $250. The limited partnership or LP franchise tax is also due on June 1. 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. Filing your Delaware franchise tax is a simple, online process.

  • 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 your company is no longer active and you wish to close your business, be sure to follow the proper steps to Dissolve a Corporation, or Cancel an LLC.
  • The Delaware franchise tax for a corporation is slightly more complicated.
  • The Delaware Franchise Tax and the Registered Agent Fee are two separate, unrelated fees.
  • The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods.

This means that you’re likely to need to pay taxes in those states. Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company. Yes, regardless of your Delaware company activity or not conducting business, you are still required to pay the Delaware Franchise Tax to remain in Good Standing. If your company is no longer active and you wish to close your business, be sure to follow the proper steps to Dissolve a Corporation, or Cancel an LLC. For these reasons, more than a million businesses are incorporated in Delaware, including more than half of all publicly traded and Fortune 500 companies.

Delaware: Tax Haven

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. Foreign corporations, those that are formed outside of Delaware, cannot file online. With this type of business, your business income will be distributed to you as the sole proprietor. You will pay tax to the state on that income on your individual state tax return. The tax rate will depend on your overall taxable income that year. This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details.

Special Cases for Delaware Franchise Tax

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. For every additional 10,000 shares authorized after that, you pay another $85 in franchise tax, up to a maximum of $200,000. If your company has authorized 5,000 shares or fewer, your total Delaware franchise tax amount is $175.

How to Calculate Your Delaware Franchise Tax Fee

It is based on the corporation type and authorized shares. 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. A corporation with 5,000 how to word a request for payment for services rendered 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. The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has.

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. Keep in mind, this number could be different from the number of shares your company has actually issued. Your authorized share number is the maximum number of shares your corporation could sell based on your corporate bylaws or charter. 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 due date of your Delaware Franchise Tax payment varies, depending on your company type. Let’s also imagine it has authorized and issued 100,000 shares at a par value of $2.00 each, and 100,000 shares at par value of $10.00 each. Let’s also assume the number of shares issued and authorized is the same for simplicity’s sake.

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. The Delaware franchise tax is collected every year by the Delaware Department of State.

Harvard Business Services, Inc. guarantees your annual Delaware Registered Agent Fee will remain fixed at $50 per company, per year, for the life of your company. The Franchise Tax for a Delaware LLC or a Delaware LP is a flat annual rate of $300. Delaware lets you use whichever method amounts to the least tax owed. This allows the state to adjudicate corporate litigation. The corporate laws and cases decided in Delaware are often used by the Supreme Court to influence decisions.

Delaware LLCs do not have to complete the annual report, but still pay the $300 Delaware LLC Franchise Tax fee. The methods of calculating Delaware Franchise Tax are detailed below. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e.