The Delaware franchise tax for a corporation is slightly more complicated. It is based on the corporation type and authorized shares. The total cost also includes an annual report fee. The Delaware franchise tax is beneficial to corporations because it is a simple process to submit and calculate payment. The Delaware franchise tax is also beneficial to businesses as it is a small fee in comparison to other states.
- When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report.
- The Delaware franchise tax for a corporation is slightly more complicated.
- Delaware allows you to pay the lower of the two methods.
- By not requiring more information, businesses that file their franchise tax in Delaware can maintain privacy.
This means that you’re likely to need to pay taxes in those states. Foreign corporations, those that are formed outside of Delaware, cannot file online. Delaware allows you to pay the lower of the two methods. This means that if you receive a high bill that was calculated under the first method, you can request a recalculation using the second method. 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.
Reasons to consider using Delaware Franchise Tax
Often, the tax is then calculated to the minimum payment of $350, with a $50 annual report fee. 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 your Delaware franchise tax is submitted late, a $125 late fee and interest fee of 1.5 percent will be charged. When paying the annual report fee, corporations are sorted into two categories.
The tax does not affect income or company activity. The tax is required to maintain the company’s good standing in Delaware. 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. You will also be charged a 1.5 percent monthly interest on the amount due.
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. 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.
Deadline: Delaware Franchise Tax
Every company incorporated in Delaware is required to file and pay the annual Franchise Tax report to maintain a good standing existence. When you submit your Delaware franchise tax payment, you’ll also need to submit an annual report. Non-stock or non-profit companies are considered exempt from tax in Delaware. These types of companies must file an annual report fee.
Delaware Annual Report
The tax rate will depend on your overall taxable income that year. Whether your business is physically in Delaware or not, you don’t pay any state taxes. Your Delaware franchise tax is due on June 1 for an LLC. The limited partnership or LP franchise tax is also due on June 1.
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. 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 so, that document can be sent directly from the Delaware Secretary of State. This document certifies the date the company was formed, that the company is current, and that the company is in good standing.
When you file your Delaware franchise tax, an annual report must also be filed. Don’t forget to include the $50 annual report fee. Along with your business’s annual Delaware small business bookkeeping 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.
Delaware is considered a tax haven or tax shelter. Delaware also has no personal property tax or value-added taxes. For questions, contact the Harvard Business Services, Inc. A report of the calculation can be emailed to you.
How to Calculate Your Delaware Franchise Tax Fee
The annual franchise tax is required and paid to the state of Delaware. By not requiring more information, businesses that file their franchise tax in Delaware can maintain privacy. 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. This leads to a high number of businesses being incorporated in those tax shelter states.
What is Delaware Franchise Tax?
Filing your Delaware franchise tax is a simple, online process. Our office processes thousands of annual Franchise Tax reports each year. In order to make sure all the filings are processed on time, we must enforce a cut-off time for accepting any new orders. Once we have received your online order, we will submit the filing to the state of Delaware. You will receive an email copy of the documentation for your records.
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. If your business was formed or is located in another state but generates income in Delaware, you may need to pay Delaware taxes. If you own a business that operates in multiple states, you will greatly benefit from the knowledge of a tax professional. Multistate taxes and determining nexus can be very complicated.
To reduce the taxes paid by a startup, use the Assumed Par Value method. This method calculates the taxes by total assets. Delaware franchise tax is a tax charged by the state of Delaware for the right to own a Delaware company.