Delaware LLC Annual Franchise Tax Step-by-step LLCU®

The Delaware franchise tax for Corporations can vary depending on the number of stock shares, the number of stock shares issued, and their par value. The minimum tax ranges from $175 to $400 depending on specific circumstances. A Delaware Corporation’s franchise tax is the lesser of the two amounts under the authorized shares and assumed par value capital method calculated using total gross assets, not income. Therefore, the minimum Delaware franchise tax and annual report payment total is $225 a year for Delaware domestic corporations. Delaware Corporations, Limited Liability Companies (LLCs), and Limited Partnerships (LPs) are required to pay the annual Delaware Franchise Tax.

This article focuses on businesses that are operating solely in Delaware.
Note that electing S-Corp taxation imposes significant restrictions on the ownership and operations of an LLC.
But this comes with a lot of questions, including details about Delaware taxes.
As a business owner, you are free to work with a tax professional in your home state.
This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details.

The amount of tax that a corporation has to pay depends on the number of shares that the corporation has. If a corporation has more than 1,500 shares, it has to pay $175 for every 1,000 shares. If a corporation has less than 1,500 shares, it has to pay $350 for every 1,000 shares. The amount of the tax is based on the gross receipts net terms of the business, which means that it goes up as a business makes more money. The tax is typically paid annually, but businesses can choose to pay it quarterly or monthly if they prefer. Non-profit organizations are exempt from the tax, but they still have to file a return with the state showing their gross receipts.

Delaware Franchise Tax: Everything You Need to Know

Whether your business is physically in Delaware or not, you don’t pay any state taxes. You will also be charged a 1.5 percent monthly interest on the amount due. 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.

Also, a single member LLC can elect C-Corp taxation or, if it meets the eligibility requirements, S-Corp taxation and status. Note that electing S-Corp taxation imposes significant restrictions on the ownership and operations of an LLC. These requirements are very restrictive and limit the size and investor base of the LLC significantly.

By not requiring more information, businesses that file their franchise tax in Delaware can maintain privacy.
The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due.
It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.
Your business may require a Delaware Certificate of Good Standing.

The tax rate will depend on your overall taxable income that year. When paying the annual report fee, corporations are sorted into two categories. 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. The goal of the Delaware franchise tax is to make owning a business in Delaware simple. Since the tax payment process is simple, businesses are more likely to want to be incorporated in Delaware.

Delaware Franchise Tax: What Is It and How Do I Pay It

The tax is based on the value of the corporation’s franchise, which is the sum of the value of its capital stock, surplus, and undivided profits. The tax rate varies depending on the value of the franchise, but it is generally lower than the corporate income tax rate. 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.

How do I pay the Delaware Franchise Tax online or by mail?

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. No corporation shall consolidate with its assets the assets of another entity for purposes of this section. Corporations must complete an annual report along with their Delaware Franchise Tax payment. 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.

Does Delaware have a franchise tax?

Penalty If you do not file your Annual Franchise Tax by June 1st, you will be charged a late fee of $200. Your account will also be penalized at 1.5% interest for every month it remains unpaid. The $300 tax must be paid by every LLC formed in Delaware, regardless of income or business activity.

Hawaii will impose a 70 percent tax on the wholesale price of all e-cigarette, e-liquid, and other electronic smoking devices. Situation 2 – If you are NOT expecting to raise funds within the next 1 year from the date of registration of your DE C-Corporation, go for 5000 shares at $0.02 par value per share. Issued shares are the number of shares actually given or allotted to the shareholders.