For Delaware companies that do not physically operate inside of Delaware, there are generally two annual Delaware fees required to be paid to keep the company active and compliant in Delaware. First, the entity must maintain a Delaware Registered Agent. The Harvard Business Services, Inc. (HBS) annual Delaware Registered Agent fee is $50 per year per company guaranteed never to increase. The second fee, is the Delaware Franchise Tax which is required by the State to be paid by all Delaware companies each year. The term "Franchise Tax" does not imply that your company is a franchise business.
For Delaware companies that do not do business in Delaware, no state income tax or income tax report is required in Delaware.
Frequently, we’re asked specific tax questions such as income tax inquiries, how to obtain an ITIN, or "will I have to pay taxes in other countries?", for example. As a Delaware Registered Agent, HBS can certainly assist with the annual Delaware fees so that your company remains compliant in Delaware and we can help obtain an EIN/Federal Tax ID Number for your Delaware or U.S. entity.
Delaware companies with US source income typically pay U.S. Federal tax on any income earned inside of the US even if your entity is based outside of the U.S. For assistance with specific tax questions or IRS filings, clients should consult with a tax professional or accountant convenient to them. We’re unable to offer tax services or advice as a Registered Agent.
Clients will typically work with an accountant convenient to where they’re located, even if based outside of the U.S. If an ITIN is needed, clients sometimes work with an ITIN Acceptance Agent as well. Or, sometimes, clients will simply search the web to locate tax experts convenient to their location.
It’s important to note that a tax professional your company decides to work with does not have to be located inside Delaware. Sometimes, clients consult with friends or other family members who are involved in business to find a reputable accountant. This is typically how many of our clients have found a proven tax professional. Whether your company decides to consult with an accountant or tax expert is entirely an internal decision.
The annual fees for maintaining an LLC in Delaware, include our $50 Registered Agent fee if HBS is the Delaware Registered Agent, and the $300 Delaware Franchise Tax. The $50 annual Registered Agent fee is due each year by the anniversary date of the formation of the company and is guaranteed to remain fixed at $50 per year for the life of the company. (A Harvard exclusive!) The $300 Delaware Franchise Tax is due June 1st of each year. As part of our Registered Agent fee we will remind you with plenty of time and help you make these payments.
For a Delaware Corporation, there are also the same two annual fees. The first fee is our registered agent fee if HBS is the Delaware Registered Agent, which is $50 and due each year by the anniversary date of the formation of the company. The second fee is the franchise tax, which is imposed by the state of Delaware and due by March 1 of every year. The franchise tax fees are based on the number of shares the corporation has authorized. A company with 1-5,000 authorized shares is assessed $225 franchise tax; a company with 5,001-10,000 authorized shares is assessed $300 franchise tax; and a company with more than 10,001 will be assessed a minimum of $450 franchise tax depending on the issued shares and total gross assets. You will receive notices of both annual fees well in advance of the respective due dates via email.
For these two fees, you do not need to find a tax professional. Harvard will help you with all you need, but for you annual State and Federal income tax returns, we recommend either an accountant or, for a small business, a good accounting program tax package,
*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 sourceâ€™s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.