Annual Reporting Requirement for Delaware Corporations
The Ebright Azimuth, the highest geographic point in the state of Delaware, may barely clear 448 feet over sea level, but the First State has managed to reach the top in other ways: It has some of the most business-friendly incorporation laws in the U.S., which is why it is home to 64% of Fortune 500 companies. Like finding the Ebright Azimuth, however, managing a corporation in Delaware still requires some navigation.
Which Corporations Must File an Annual Report?
Domestic and foreign corporations must file. (Be advised that some states use the word “foreign” for corporations registered outside the state, not only those registered outside the country.) The limited liability companies, limited partnerships, and general partnerships do not need to file an Annual Report. They are, however, required to pay a $300 tax. The deadline for LLCs, LPs, and GPs to pay this tax is June 1st.
Our Corporation Is a Nonprofit. Do We Still Have to File an Annual Report?
Yes. Even if your corporation is one of the many types of civic, charitable, religious, and other nonprofits that are exempt from franchise taxes, you must still file a report.
Wait a Second. I Don’t Remember That from Last Time.
The State of Delaware imposed the Annual Report requirement on January 1, 2018. Large Corporate Filers may owe retroactive franchise fees for 2017, even if they paid the 2017 rate in full.
Our Corporation Is New. Do We Have to File?
According to the Delaware Department of Corporations, a franchise tax is assessed “if the corporation is active in the records of the Division of Corporations anytime during January 1st through December 31st of the current tax year.”
Is There a Fee to File Our Annual Report?
Yes, there is a US$25 fee for exempt corporations and a $50 fee for other corporations.
What Is the Deadline?
March 1 for all corporations.
Is There a Minimum or Maximum Tax?
Yes. The minimum franchise tax is $400 for companies using Assumed Par Value and $175 for those using the Authorized Shares Method. The maximum for most companies is $200,000. Large Corporate Filers have a maximum of $250,000.
How Much Is Our Company’s Franchise Tax?
The State of Delaware offers resources for calculating your corporation’s total tax, including an online Franchise Tax Calculator. Instructions are available in text and audio at Delaware.gov.
Will We Have to Pay Estimated Tax?
You will only be required to pay estimated tax for the current year if your total franchise tax is more than $5000. 40% of your tax will be due on June 1, 20% each on September 1 and December 1, and the remainder on March 1.
Is There a Penalty for Late Filing?
Delaware imposes a penalty for failure to file before March 1. It is $200 plus interest on taxes not already paid.
Did Someone Contact Me About This?
Yes. All agencies registered in Delaware are informed during December before the report is due.
Where Do I Fill Out the Papers?
Delaware requires electronic filing for all domestic corporations. You may do so here. You may also seek the assistance of a tax filing professional.