After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer. The Franchise Tax for a Delaware LLC or a Delaware LP is a flat annual rate of $300.
- Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer.
- Instead of doing hours of research on how to calculate Delaware franchise tax, use our tool to get answers in minutes.
- A corporation with 5,000 authorized shares or less is considered a minimum stock corporation.
- 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.
- This report must list the company’s physical address (not a P.O. box and not your Registered Agent’s address); the name and physical address of all directors; and, if there are any officers, the name, title and physical address of one of the officers.
- The annual Franchise Tax is imposed by the State of Delaware and varies with the size of your business.
In addition to the franchise tax, there is also a $100 filing fee for the annual report. The California franchise tax, for example, is equal to the larger of your California net income multiplied by the 8.84 percent tax rate or the $800 minimum tax. The minimum tax is due the first quarter of each accounting period and must be paid whether your startup is active, inactive, operates at a loss or files a return for a short period of less than 12 months. The minimum tax is waived on newly formed or qualified corporations filing an initial return for their first taxable year. A corporation with 5,000 authorized shares or less is considered a minimum stock corporation.
Authorized Shares Method
The Delaware annual report fee is $50 and the tax is $175 for a total of $225 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. If you decide to pay your Delaware Franchise Tax for a corporation with us over the phone, the annual report would need to be separately submitted to us by email, fax or mail. 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.
Is My Delaware Franchise Tax the Same As My Annual Registered Agent Fee?
This report must list the company’s physical address (not a P.O. box and not your Registered Agent’s address); the name and physical address of all directors; and, if there are any officers, the name, title and physical address of one of the officers. 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.
Delaware Franchise Tax FAQ
Your notification of annual report and franchise tax due is sent to a corporation’s registered agent in December or January of each year. Our Delaware Franchise Tax Calculator was developed to help you understand and plan for how much you’ll likely need to pay your Delaware Franchise taxes for your Delaware business. Delaware’s taxation structure has different tiers for LLCs, LPs, non-profit corporations, and for-profit corporations. Instead of doing hours of research on how to calculate Delaware franchise tax, use our tool to get answers in minutes. 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.
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%. The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics. If the tax is not paid on or before June 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.
Two Methods to Calculate Franchise Tax for a Maximum Stock Company
There are two methods that you can use to calculate the amount of Delaware franchise tax due for your corporation (the Authorized Shares Method and the Assumed Par Value Capital Method), which result in vastly different amounts due. For corporations using the Authorized Shares Method, the minimum franchise tax is $175 and the maximum franchise tax is $200,000. For corporations using the Assumed Par Value Capital Method, the minimum franchise tax is $350 and the maximum tax is $200,000; however, for the 2018 tax year, the minimum will increase to $400. 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. 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. If you are a startup that has chosen Delaware as its state of incorporation, you are likely aware that you are subject to Delaware franchise tax.
Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company. Harvard Business Services Inc. offers the lowest Registered Agent fee in the industry, and it is guaranteed to remain fixed at $50 per year, as long as the fee is paid on time and your company remains in good standing with the State of 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.
In order to utilize this filing method, you will need to provide the company’s total gross assets (as reported on Form 1120, Schedule L) and the total number of issued shares. 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. To use this method, you must provide figures for all issued and outstanding shares and total gross assets in the spaces provided in your annual franchise tax report.
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. This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details. Delaware LLCs do not have to complete the annual report, but still pay the $300 Delaware LLC Franchise Tax fee.
Total gross assets shall be those “total assets” reported on the US Form 1120, Schedule L (Federal Return) relative to the corporation’s fiscal year ending the calendar year of the report. The tax rate under this method is $350 (to be increased to $400 effective for the 2018 tax year) per million or portion of a million. If the assumed par value capital is less than $1 million, the tax is calculated by dividing the assumed par value capital by $1 million then multiplying that result by $350. The default payment amount listed on your notification is set by Delaware using the Authorized Shares Method, which will almost always result in a much higher amount due for startups with limited assets. There is a helpful Franchise Tax Calculator on the Delaware website to assist in estimating your franchise taxes (note there is a different calculator for each of the 2017 and 2018 tax years).
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. The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods. Therefore, if you receive a tax bill for tens of thousands of dollars, it may be in your best interest to try calculating your Delaware Franchise Tax with the assumed par value capital method. The term “Franchise Tax” does not imply that your company is a franchise business.
While this article provides an overview of the Delaware franchise tax, startups that are based in other states or that conduct business in other states should be aware that they may also be subject to franchise taxes in those other states. While the typical franchise tax is based on a corporation’s net worth or capital, the tax can also be based on other criteria such as income or gross receipts. Corporations must complete an annual report along with their Delaware Franchise Tax payment.
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. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. LLC/LP’s benefit by only having to pay a $300 flat fee for Franchise Tax (not including any filing fees paid electricity bill by cheque journal entry from a Registered Agent). Since 1981, Harvard Business Services, Inc. has helped form 395,342 Delaware corporations and LLCs for people all over the world. If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less. The due date of your Delaware Franchise Tax payment varies, depending on your company type.
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 https://intuit-payroll.org/ 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.
