The Annual Franchise Tax Report and payment for the prior year must be submitted by March 1st annually. Failure to file the report and pay the required franchise taxes by the due date will incur a penalty of $200.00, in addition to a 1.5% interest per month on both the tax and penalty. This emphasizes the importance of adhering to the given deadline to avoid accumulating penalties and additional financial burdens. To pay your Delaware franchise tax online, visit the Delaware Department of State’s Division of Corporations website. Follow the activity driver prompts for filing your annual report and submitting the franchise tax payment. Payment methods generally include credit cards and ACH transactions.
Delaware Franchise Tax: How to Calculate and Pay
- All incorporated entities in Delaware must file an annual report and pay the corresponding franchise tax.
- Corporations may be charged a penalty of $200 and accrue a 1.5% monthly interest for late payments.
- The minimum tax for the Authorized Shares method is $175.00, while the minimum tax for the Assumed Par Value Capital Method is $400.00.
- However, it does not take into consideration the actual value of issued shares, making it potentially less accurate in some cases.
- Prolonged non-payment can lead to the loss of good standing status or even administrative dissolution of the business entity.
For instance, corporations can choose between the Authorized Share Method and the Assumed Par Value Capital Method. Companies are also obligated to file an annual report, which goes hand-in-hand with the payment of franchise tax, to ensure the accuracy of the entity’s information on record. The Delaware Franchise Tax Calculator is a convenient tool available for calculating the annual annual financial reports tax owed by corporations operating in the state of Delaware.
Resources
Prolonged non-payment can lead to the loss of good standing status or even administrative dissolution of the business entity. To get the specific calculations for your business, visit the Division of Corporations website and follow the instructions provided. Provide all relevant documentation such as proof of payment and the reason for the refund request. Refunds are processed on a case-by-case basis, and approvals are not guaranteed. S Corporations, as well as large corporate filers, governed by the state of Delaware are subject to Franchise Tax, with different considerations for calculating the amount due.
What is the due date for Delaware franchise tax payments?
Various tools and resources, including the Franchise Tax Calculator, have been designed to assist companies in estimating their franchise tax due accurately. If your company has authorized 5,000 shares or fewer, your total Delaware franchise tax amount is $175. Under this method, your franchise tax is based on how many shares your corporation has authorized.
Corporations owing $5,000.00 or more in franchise tax must make estimated tax payments with 40% due June 1st, 20% due by September 1st, 20% due by December 1, and what are accrued liabilities definition and explanation the remainder due March 1. In this case, the tax will be flat at $175 and a $50 report fee, so the total tax of $225 is due and payable. If authorized shares are 5000 or less, you must pay the minimum $175 tax.
Filing the Annual Franchise Tax Report involves providing the corporation’s file number and other relevant information to the Delaware Secretary of State. 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. Delaware lets you use whichever method amounts to the least tax owed. If the tax is not paid on or before the above due dates, the state imposes a flat $200 late penalty plus a monthly interest of 1.5% for each month of delay.
Special Considerations for Specific Entities
Your authorized share number is the maximum number of shares your corporation could sell based on your corporate bylaws or charter. The franchise tax is $400 for each $1,000,000 of “assumed par value capital.” For calculation purposes, round up to the next million if the assumed par value capital is over $1,000,000. Issued shares are the total number of shares allotted to all company shareholders.
Interestingly, corporations incorporated in Delaware but not conducting business within the state are not subject to the Corporate Income Tax1. However, they are still required to pay the Franchise Tax, which is administered by the Delaware Division of Corporations2. All incorporated entities in Delaware must file an annual report and pay the corresponding franchise tax. Exempt domestic corporations are not subjected to the tax but still need to file an annual report with a filing fee of $253.