Do I Need a Delaware Tax Professional?

Tax ProOn a daily basis, Harvard Business Services, Inc. (HBS) is asked by clients if they can form a Delaware company even though they’re based and plan to operate in a different state. The answer to this question is, yes, as you do not have to live in, or even visit, the state of Delaware in order to form a Delaware company. And while Delaware continues to be the most popular state to form companies in, other common questions we generally receive during the formation process include “What are the taxes I will pay in Delaware?” “What other fees will I have to pay?” And one of the most popular questions we receive daily is, “Do I have to work with a Delaware tax professional if I have a Delaware company?”

Many times, clients feel that if they form a Delaware company, they have to work with a Delaware-based accountant which is simply not the case. Keep in mind, for Delaware companies that do not conduct business physically in Delaware, there generally is no state income tax or income tax report required in Delaware. Clients can generally consult with a tax professional convenient to their location for help with other specific tax questions and matters.

For example, Joseph Smith from California wants to form a tech start-up, ABC Technical Consulting, Inc. in Delaware as he wants his company to be protected by the strong corporate law structure of Delaware. He completes the initial formation process, obtains the EIN for the company, and inquires about foreign qualifying his Delaware company in California. He then inquires about the taxes he will potentially owe for his company. Joseph may ask, “What will my taxes be in California?” or “If I make this much money for the year, how much will I pay in taxes? And, “Do I have to contact a Delaware accountant for help with my questions?”

The process of selecting a tax professional is entirely an internal decision and while sometimes, clients may prefer to work with a CPA located in Delaware, it is not a necessary requirement. We consult with clients on a daily basis that already work with an accountant located in their physical location of operation or someone that they may already be familiar with that they’ve worked with in the past.

If clients form a Delaware company and plan to physically operate inside of Delaware by opening a storefront, office, or some type of physical location and plan to hire employees in Delaware, then clients will traditionally work with a Delaware-based tax professional.

As a Delaware Registered Agent, HBS can certainly assist with the annual Delaware Franchise Tax. The company will need to maintain a Delaware-based Registered Agent and pay the Delaware Franchise Tax to remain active and compliant in Delaware. Traditionally, the franchise tax is typically the only tax paid to Delaware if not physically here in Delaware operating. For assistance with other specific tax questions outside that of the Delaware Franchise Tax, clients will generally consult with a tax professional or accountant for guidance as HBS is not a tax expert and does not offer Delaware tax services as a Registered Agent.

If you plan on forming a new Delaware company and obtaining an EIN, or if you have any questions regarding the formation process, we can be reached at 1-302-645-7400 or 1-800-345-2677 ext. 6900 or via email at info@delawareinc.com. We can also be reached via skype at delawareinc.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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There is 1 comment left for Do I Need a Delaware Tax Professional?

Ljubisa Pejin said: Wednesday, November 16, 2022

I have one question. Maybe some one asked I am not sure. So let' say I form LLC in Delaware. obtain EIN and bank account. So let say I buy goods in California, from California based company , store in logistics warehouse in California and then sell to client outside USA, meaning this LLC makes papers and export goods outside USA. Profit made on this type of trade, which tax do I pay ? Delaware tax on profit ? Do I need to register also in California as Foreign company. Second if we sell online goods trough lets say Amazon or Ebay or NewEgg, I am obliged to collect sales tax, but then tax on profit do I still pay in Delaware? In all situations I am not resident in USA. Thank you for your answer.

HBS Staff replied: Thursday, November 17, 2022

Hi Ljubisa,

Thank you for reading our article and for your questions. We are happy to further assist and one of our representatives will reach out to further assist.

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