The calculator below will help you estimate how much you’ll need to pay. The deadline is typically the last day of February – scroll down to access links to visit the Delaware Division of Corporations webpage where you can pay. Franchise Tax is the fee imposed by the State of Delaware for the right or privilege to own a Delaware 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.
- The new number will very likely be lower than the original number you saw.
- Most VC backed startups will have very low par value shares, meaning that you’ll end up using the assumed par value in the franchise tax calculation.
- If you pay your Delaware franchise tax late, you’ll be charged a late fee.
- The method is any that recovers more than $1 in tax for ever $1 spent within a four-year period.
- If you don’t want to pay your Delaware franchise tax yourself, you can hire a registered agent to do it for you.
The tax is required to maintain the company’s good standing in Delaware. This calculator is designed to estimate your 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. 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 didn’t conduct any activity or lost money.
What happens if I don’t pay?
However, they must still file an annual report and pay the filing fee. Non-stock or non-profit companies are considered exempt from tax in Delaware. 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. A corporation has to pay a $50 filing fee plus the franchise tax. The franchise tax can be calculated based on one of two methods.
If you’re not working with an accounting firm, you’ll need to total up your asset base and enter that number. Then you need to hit the “recalculate” button and wait while the system generates a new balance. The new number will very likely be lower than the original number you saw. Corporations must complete an annual report along with their Delaware Franchise Tax payment. The Delaware franchise tax is collected every year by the Delaware Department of State.
- Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.
- If you’ve received a bill for $75K, it is because Delaware has calculated the tax using the Authorized Shares Method.
- Grew from a 2-person startup to a NASDAQ listed public company.
- Although not as common, the Investor Rights Agreement may also make reference to the par value of preferred shares.
- The Delaware Division of Corporations provides two methods to calculate Delaware franchise tax.
- If you’ve raised $10M in VC funding, you are going to owe closer to $4,000.
The limited partnership (LP) Franchise Tax is also due by June 1 of every year. 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%. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. The franchise tax is paid online at the Division of Corporations website. Business that are formed out of state but are registered to do business in Delaware must pay a $125 registration fee.
Delaware: Tax Haven
Filing your Delaware franchise tax is a simple, online process. Since 1981, Harvard Business Services, Inc. has helped form 387,739 Delaware corporations and LLCs for people all over the world. Since 1981, Harvard Business Services, Inc. has helped form 387,741 Delaware corporations and LLCs for people all over the world. The due date of your Delaware Franchise Tax payment varies, depending on your company type.
This agreement outlines the terms and conditions under which shares are sold and purchased. The par value of the preferred shares being transacted is usually specified here, along with other particulars like the issue price, number of shares, and payment terms. For most VC backed startups, the par value will be listed in one or more of the following legal documents. (Make sure you work with experienced attorneys so they don’t mess up important items like par value!) Your lawyer may also have put your par value into your cap table software. The minimum payment using the Assumed Par Value Capital method is $400, and there is no maximum. If you incorporated in Delaware, you need to pay a Delaware Franchise Tax.
Authorized Shares Method
This return or “Annual Report” must be filed by March 1st with the state of Delaware each year, regardless on income or activity, as long as the business is registered in the state. 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.
Make sure to use the recalculate button on the Delaware Franchise Tax website
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. The annual franchise tax is required and paid to the state of Delaware.
Where should I file the DE Franchise Tax?
Also at Kruze, another option is working with a PEO; that is how you “Incorporate in a state.” Hope that helps, thanks. We often get the question, “why should my startup consider incorporating out-of-state and become a Delaware C-corp? Here are a few reasons why you would want to initially incorporate in Delaware. Please enter your Business Entity File Number below to start filing your Annual Report or Pay Taxes. If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less.
This leads to a high number of businesses being incorporated in those tax shelter states. 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. hard costs vs soft costs for office construction budgets This portal is intended for Annual Report filing and tax payments for Corporations and Alternative Entities. Excessive and repeated searches that may have a negative impact on our systems and customer experience are also prohibited.
If you’ve raised $10M in VC funding, you are going to owe closer to $4,000. If you’ve received a bill for $75K, it is because Delaware has calculated the tax using the Authorized Shares Method. Don’t freak out; recalculate using the Assumed Par Value Capital Method. The term “Franchise Tax” does not imply that your company is a franchise business. For every additional 10,000 shares authorized after that, you pay another $85 in franchise tax, up to a maximum of $200,000. Under this method, your franchise tax is based on how many shares your corporation has authorized.
