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One of the annual obligations a Delaware business entity must fulfill is filing and paying an annual Franchise Tax.
For years, we have offered assistance to help our clients ensure their Franchise Tax filing is accurately completed with the state of Delaware. Each year, thousands of clients utilize our services to take care of their Franchise Tax filing.
However, there are some clients who choose to file directly with the state of Delaware. What’s the difference? Which way should you file your Franchise Tax?
Consider these two scenarios:
Ike owns numerous Delaware business entities. He decides to file his Franchise Tax fees directly with the Division of Corporation’s Franchise Tax Department. He mails several different checks to cover the Franchise Tax fees for all his separate entities. Unfortunately, the transaction does not go smoothly.
The state indicates there is a prior balance on some of his entities while other entities show a credit on the accounts. Ike is positive he paid Franchise Tax on all of his entities correctly, but that is not what is on record with the state’s Franchise Tax Department.
The discrepancies can be traced back a couple of years, which means there is a lot of research to investigate. Now Ike has to spend his valuable time searching through cancelled checks, bank statements and entity records to figure out what happened. In the meantime, some of his business entities are imposed additional late penalties as well as interest fees. Now the situation is worse and Ike is even more frustrated.
Sam also owns several business entities registered in the state of Delaware. He doesn’t want to deal with the hassle of filing his Franchise Tax reports himself, so he lets us take care of everything for him. Sam receives email confirmations for all his Franchise Tax transactions, so he knows exactly when the process is complete.
A few months later, during a routine audit for a specific entity, Sam is required to provide receipts for all his past Franchise Tax filings. He contacts Harvard Business Services, Inc. and instantly obtains all the necessary copies of the requested documentation. Sam doesn’t have to worry about searching through old records to find what he needs, nor does he have to waste any of his time. We are able to quickly do all the work for him, saving him time, aggravation and money.
The moral of this Franchise Tax story is: Don’t be like Ike. Let Harvard Business Services, Inc. take care of your business entity’s annual Franchise Tax filing so you can focus on more important business matters.
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.