Your Effective Date Affects Your Franchise Tax

By Andrew Millman Monday, November 12, 2018

Delaware Franchise TaxDid you know that you can file your new company now with an effective date of January 1, 2019? 

For a short time, at the end of each year, the State of Delaware Secretary of State Division of Corporations allows effective date filings for new Delaware Corporations, LLCs, and LP. In other words— you file now, and your company is effective starting the 1st of next calendar year.

You may be asking yourself, “Why would I consider an effective date filing for my new Delaware company?” The simple answer is, you delay your first Franchise tax due date. When filing the Certificate of Formation for a Delaware LLC, a Certificate of Limited Partnership for a Delaware LP, or a Certificate of Incorporation for a Delaware Corporation, the clock starts for the Franchise Tax deadline. The Franchise Tax for Delaware LLCs and Delaware LPs is due on or before June 1st of each year, and the Delaware Franchise Tax and annual report for Delaware Corporations is due by March 1st each year. This cycle is triggered the second your company is officially on the books with the Delaware Secretary of State.

If you file your company in 2018, the Franchise Tax will be due in 2019. Alternatively, if you file your company now with an effective date of January 1st, 2019, the Delaware Franchise Tax for your Delaware Corporation, Delaware LLC, or Delaware LP is not due for the first time until 2020. 

As an added bonus, your company will be one of the very few that is able to get a January 1st birthday as the official date of incorporation, since the State of Delaware is traditionally closed on New Year’s Day. This is a great way to get your new Delaware entity filed, approved and ready to rock for the upcoming year.  

On the flip side of this, there are clients who need to have a company filed and approved, effective immediately in 2018, and are not as concerned about when the Franchise Tax is due.  Maybe you need the Delaware LLC, Delaware LP, or Delaware Corporation established in 2018 for tax purposes or maybe you just want to have it active, with your Federal EIN, bank account(s) opened, etc., so you can jump on a project early in 2019. We can make that happen, as well. 

If you want to file your company effective immediately or effective 1/1/2019, please reach out to me today at 800-345-2677 ext. 6133 or emailed me at andrew@delawareinc.com. We’re ready to help!

 

Disclaimer

THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE'S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.

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