When Are Delaware LLC Taxes Due? DE Franchise Tax Guide

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You will pay tax to the state on that income on your individual state tax return. The tax rate will depend on your overall taxable income that year. When paying the annual report fee, corporations are sorted into two categories.

  • Your Delaware franchise tax due date depends on the type of business you own.
  • Even if you are a foreigner located out of the U.S., you do not have a foreign Delaware corporation.
  • When you file your Delaware franchise tax, an annual report must also be filed.
  • For Delaware C-Corporations – are due by March 1 of every year.

Even if you are a foreigner located out of the U.S., you do not have a foreign Delaware corporation. If the corporation was formed in Delaware, it is a domestic Delaware corporation, no matter where you actually live. Since 1981, Harvard Business Services, Inc. has helped form 387,739 Delaware corporations and LLCs for people all over the world. The methods of calculating Delaware Franchise Tax are detailed below. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer.

Delaware corporation franchise tax: What you need to know

The form is issued directly from the office of the Delaware Secretary of State. Two methods are used to calculate taxes for a corporation with stock. There are 2 methods that DE C-Corporations can structure their annual franchise tax.

  • If using the Assumed Par Value calculation, the annual report must also include a list of issued shares and the company’s gross assets.
  • The annual due date of Delaware LLC taxes is March 1st each year [1].
  • Whether your business is physically in Delaware or not, you don’t pay any state taxes.
  • The report must be filed online and received by the Division of Corporations on or before March 1st.

The annual franchise tax is required and paid to the state of Delaware. 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.

All LLCs registered in Delaware are subject to the Delaware Franchise Tax. Taxpayers owing $5,000 or more pay estimated taxes in quarterly installments with 40% due June 1st, 20% due by September 1st, 20% due by December 1st, and the remainder due March 1st. Taxpayers subject to the quarterly payment requirement will receive a reminder notice each quarter.

Special Cases for Delaware Franchise Tax

For corporations with 5,001 to 10,000 shares, the tax is $250. For corporations with over 10,000 shares, the tax is $250 plus $85 for each additional 10,000 shares (or portion thereof) to a max annual tax of $200,000. 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.

I haven’t started doing business yet. Do I still have to file a report and pay taxes?

There is a penalty of $200 for paying late, and a 1.5 percent monthly interest fee is imposed by the state for Franchise Taxes not paid by June 1 for Delaware LLC or LP companies. If a company fails to pay the Delaware franchise tax, it can be subject to penalties and interest charges. The state can also revoke the company’s legal status, which can lead to further legal and financial issues. The Delaware franchise tax can be a burden for many businesses. However, there are exemptions and credits available that can help reduce the tax burden.

Delaware Annual Report and Franchise Tax Costs

The report must be filed online and received by the Division of Corporations on or before March 1st. For information about other states with delayed tax filing deadlines, see 9 States Where You Can File Your State Tax Return sales journal entry After April 15. Our office processes thousands of annual Franchise Tax reports each year. In order to make sure all the filings are processed on time, we must enforce a cut-off time for accepting any new orders.

How to Calculate Your Delaware Franchise Tax Fee

Delaware domestic corporations must file a fully completed annual report and pay both the annual report filing fee and franchise tax by Tuesday, March 1st, 2022. The Franchise Tax Department will be available to assist on Saturday, February 26th, by email and chat from 8 am to 4 pm. The Delaware franchise tax is an essential part of doing business in Delaware. While it may seem like an unnecessary expense, it is important to pay the tax on time to avoid penalties and maintain a company’s legal status. By understanding the requirements and calculations behind the franchise tax, business owners can ensure that they are meeting their obligations and avoiding any potential issues.

Common Mistakes to Avoid When Paying Delaware Franchise Tax

For Delaware LLCs – Franchise Taxes are due by June 1 of every year. For Delaware C-Corporations – are due by March 1 of every year. This calculation is based on the total number of shares authorized, not the number of shares issued to shareholders.

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