Delaware franchise tax: an overview

franchise tax delaware

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. Our Delaware Franchise Tax Calculator was developed to help you subledger vs general ledger 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.

Accounting Services

If your company is no longer operating, it’s important to close your Delaware business and end these fees. Notification of Annual Report and Franchise Taxes due are sent to all Delaware Registered Agents in December of each year. Delaware has mandated electronic filing of domestic corporations Annual Reports.

Delaware Franchise Tax: How to Calculate and Pay

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. Failing to pay your franchise tax by March 1st for corporations or June 1st for LLCs will result in a late penalty and interest.

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. Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.

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. All active Domestic Corporation Annual Reports and Franchise Taxes for the prior year are due annually on or before March 1st and are required to be filed online. Failure to file the report and pay the required franchise taxes will result in a penalty of $200.00 plus 1.5% interest per month on tax and penalty. 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.

Is My Delaware Franchise Tax the Same As My Annual Registered Agent Fee?

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. Certain exempt domestic corporations like charities, civic organizations and religious organizations do not have to pay the franchise tax.

franchise tax delaware

Click Here to Pay Taxes / File Annual Report

Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report. The tax rate under this method is $400.00 per million or portion of a million. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $400.00.

If payment is by credit card click submit only once, clicking multiple times may result in duplication of charges to your credit card. Let’s also imagine it has authorized and issued 100,000 shares at a par value of $2.00 each, and 100,000 shares at par value of $10.00 each. Let’s also assume the number of shares issued and authorized is the same for simplicity’s sake.

  1. The example cited below is for a corporation having 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares of stock with a par value of $5.00 , gross assets of $1,000,000.00 and issued shares totaling 485,000.
  2. 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.
  3. A corporation with 100,000 shares authorized pays $1,015.00($250.00 plus $765.00$85.00 x 9).
  4. Let’s also imagine it has authorized and issued 100,000 shares at a par value of $2.00 each, and 100,000 shares at par value of $10.00 each.

This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e. Learn how to build, read, and use financial statements for your business so you can make more informed decisions. Bench simplifies your small business accounting by combining intuitive software that automates the busywork with real, professional human support.

Tags: No tags

Leave a Comment