Non-stock or non-profit companies are considered exempt from tax in Delaware. These types of companies must file an annual report fee. The Delaware franchise tax for a corporation is slightly more complicated. It is based on the corporation type and authorized shares.
- The goal of the Delaware franchise tax is to make owning a business in Delaware simple.
- The Delaware franchise tax for a corporation is slightly more complicated.
- A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment.
- To use this method, you must supply the company’s total gross assets and the total number of issued shares.
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. The term “Franchise Tax” does not imply that your company is a franchise business. 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. To file as a foreign corporation, mail in the necessary documents.
Delaware: Tax Haven
A non-stock/non-profit company is considered exempt by the State of Delaware. 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. 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. 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.
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. The tax does not affect income or company activity.
What Is Delaware Franchise Tax?
You will also be charged a 1.5 percent monthly interest on the amount due. 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. Payment can be submitted with an electronic check or credit card.
This leads to a high number of businesses being incorporated in those tax shelter states. A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment. The method is any that recovers more than $1 in tax for ever $1 spent within a four-year period. A tax shelter can be created by an individual or a corporation. When you file your Delaware franchise tax, an annual report must also be filed.
How to Calculate Your Delaware Franchise Tax Fee
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 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.
How Do I Pay My Delaware Franchise Tax?
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. 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.
Often, the tax is then calculated to the minimum payment of $350, with a $50 annual report fee. The Delaware Franchise Tax for a corporation is based on your corporation type irs receipts requirements 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.
Since 1981, Harvard Business Services, Inc. has helped form 382,463 Delaware corporations and LLCs for people all over the world. The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics. If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less. After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing. The due date of your Delaware Franchise Tax payment varies, depending on your company type. For questions, contact the Harvard Business Services, Inc.
The Delaware franchise tax for foreign corporations is due by June 30 every year. 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 LLCs do not have to complete the annual report, but still pay the $300 Delaware LLC Franchise Tax fee.
Corporations must complete an annual report along with their Delaware Franchise Tax payment. 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. 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. If your business was formed or is located in another state but generates income in Delaware, you may need to pay Delaware taxes.
Special Cases for Delaware Franchise Tax
The Franchise Tax for a Delaware LLC or a Delaware LP is a flat annual rate of $300.