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. This is the first method that is typically used to calculate tax.

Method of Filing Your Annual Franchise Tax can only be paid online and cannot be filed by mail. You can make payment using a credit card or your checking account. Corporations are required to pay the Franchise Tax and an additional $50 fee. If you do not file on time, there is a $200 late fee and a 1.5% interest assessed on the tax balance. 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.

When you file your Delaware franchise tax, an annual report must also be filed. To reduce the taxes paid by a startup, use the Assumed Par Value method. Along with your business’s annual Delaware franchise tax, your business is required to submit a Delaware annual report.

Paying Delaware Franchise Tax Online

You can find more comprehensive information about franchise tax rates, how to calculate Delaware franchise tax, and tax calculators here. Or you can go directly to the Delaware Secretary of State franchise tax calculator(s) here. Every company incorporated in Delaware is required to file and pay the annual Franchise Tax report to maintain a good standing existence. Even if your company has not conducted any business, generated any income, obtained an EIN, or opened a bank account, the annual Franchise Tax report must be filed and paid. This means if you have a Delaware corporation and have not yet filed and paid for the annual Franchise Tax report, then it needs to be filed right away. The state of Delaware will impose a $200 late penalty plus assess 1.5% monthly interest if the annual report is not filed and paid by the March 1 due date.

• Failure to meet this deadline can result in late fees and penalties and put the business entity at risk of losing its good-standing status.
• For Franchise Taxes not paid by March 1 for corporations, the state imposes a late penalty of $125 and a 1.5 percent monthly interest fee.
• The actual value of your business as estimated by the State of Delaware.
• In this section, we’ll discuss some of the most common mistakes corporations make when paying their Delaware Franchise Tax and provide tips on how to avoid them.
• The fastest and easiest way to proceed is by paying the Franchise Tax online on our website.

A second method for calculating taxes, called the Assumed Par Value Method, requires a corporation to report total issues plus total gross assets. The math here is a little more complicated since, in addition to the number of issued shares, the filing will need to also include the corporation’s gross assets. The Delaware annual report due date for corporations is on March 1 but can be filed before this due date. Just as with LLCs, failure to file and submit tax payments will result in a penalty of $200 plus 1.5% interest each month. Note that only one Delaware annual report is required to be filed by March 1st, even for corporations paying quarterly franchise taxes.

Filing Information

Title 8 Chapter 5 § 503 (i) states such total assets and total gross assets shall be those “total assets” reported to the United States on U.S. Form 1120 Schedule L, relative to the company’s fiscal year ending in the calendar year prior to filing with the Secretary of State pursuant to this section. If such schedule is no longer in use, the Secretary of State shall designate a replacement.

Delaware is known for having a low tax rate, making it a popular state for incorporating a business. However, Delaware corporations are required to pay a franchise tax annually, which is a fee for the right to do business in the state. The franchise tax is calculated based on the corporation’s authorized shares, issued shares, and/or assets in Delaware. If a corporation fails to pay the franchise tax or files late, then penalties and interest will be assessed. When it comes to paying the Delaware Franchise Tax, there are a few things to keep in mind. First and foremost, it is important to understand what the Delaware Franchise Tax is and how it is calculated.

About LLCU

The lowest tax you’ll pay with the Assumed Par Value Method is $350. The lowest tax you’ll pay with the Authorized Shares Method is $175. This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e. The actual value of your business as estimated by the State of Delaware. Kiplinger is part of Future plc, an international media group and leading digital publisher. Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments.

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. This lesser-known requirement can be quite frustrating when it delays time-sensitive filings. We recommend identifying the tax due in these cases well in advance of the date of filing for a dissolution or merger. A professional registered agent company can assist with identifying total taxes due on any given date when you are handling a merger or dissolution. All non-exempt non-stock corporations pay a franchise tax of $175.

Delaware Franchise Tax: How to Calculate and Pay

The Franchise Tax is a fee that all corporations incorporated in Delaware must pay annually to maintain their status as a Delaware corporation. The amount of the tax owed is statements is true based on the company’s authorized shares, par value, and total gross assets. It’s important to note that the Franchise Tax is separate from the state’s corporate income tax.

When are franchise taxes due for my Delaware corporation?

Knowing the exemptions and credits can be very beneficial, especially to small businesses that are struggling financially. Since LLCs do not need to file an annual report, they don’t have a filing fee each year. (Corporations, on the other hand, submit a report and pay a $50 filing fee; nonprofits pay $25). The main obligation of the LLC is to pay the franchise tax ($300). Requirements for the main entity types — corporations, limited liability companies, and nonprofits — may vary.

Who is authorized to the file the Annual Report?

Filing your Delaware franchise tax is a simple, online process. Business Entity File Number You’ll need your Business Entity File Number (also known as your “File Number”) in order to make payment online. You can find your LLC’s File Number by searching the database here. Delaware LLCs do not have to file an Annual Report (like Corporations do), but they do have to pay a flat-rate Annual Franchise Tax of $300 each year. After you form a Delaware LLC, you will have annual requirements to keep track of. By law, you are required to have a Delaware Registered Agent.