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Keeping your company in Good Standing is important for many reasons, but we understand that life can be challenging, and sometimes life gets in the way. Harvard Business Services, Inc. is here to help you in any way to make sure your company gets back to tip-top shape.
As an LLC in Delaware, you have an annual Franchise Tax maintenance fee of $300 due to the State of Delaware each year by the deadline of June 1. The term Franchise Tax has nothing to do with your company being a franchise; it refers to Delaware’s annual fee for owning a company registered within the State of Delaware. If this tax is not paid on time, the LLC will enter a Cease Good Standing status on June 2. If the tax is not paid within three years, the state will mark the LLC VOID, and it will have to be renewed, as explained below.
Once a company’s status reads, Cease Good Standing, it is not eligible for a Certificate of Good Standing from the State of Delaware until it is brought back into Good Standing. Typically, the Certificate of Good Standing is required to open a business bank account, obtain a loan (such as the PPP loans for COVID pandemic relief), secure investor funding, or initiate transacting business in an additional state.
If you find that your company has a Cease Good Standing status, not to worry. It is an easy and painless process to pay your past due tax. Keep in mind that since the tax is late, the State of Delaware will have imposed a late fee of $200 and interest each month of 1.5%. In our experience, the State of Delaware does not waive late fees or interest for any reason. You can satisfy the payment several ways:
After the tax has been posted by the State, we will email a receipt and the company will be back in Good Standing with Delaware within three to four business days. Expedited processing is available if needed at an additional charge. We are always happy to expedite the process, if requested.
If your company surpasses the Cease Good Standing period and goes VOID in Delaware, a Certificate of Renewal will need to be filed with the Secretary of State along with paying any past-due Franchise Tax.
If you need to start the process for a Renewal, you can do this electronically by sending an email to our filings team at email@example.com. We can email you a quote, and send any invoices electronically. Alternatively, you may call our office and a specialist would be happy to take the Renewal order over the phone, and go over the process with you.
Once the order is placed, we create the necessary documentation for filing and send the documents electronically for signature within one to two business days.When the documents are reviewed, filled-out, and signed by the client, the documents are automatically returned to us for filing through our e-signature program. The typical turnaround time for State approval is four to five business days from the date of payment, although expediting options are available at an additional cost. The State will send us the approved, date-stamped Certificate of Renewal, and we will forward the documents to the email on file. Delaware’s documents are released in black and white, and they can be sent electronically.
Once you have your approved Certificate of Renewal in hand you can rest assured that your company is active and in Good Standing with the Secretary of State.
If your company is already in Good Standing you can order a Certificate of Good Standing using this link: (https://www.delawareinc.com/ourservices/delaware-certificate-of-good-standing/). The website offers several different turnaround times and price points to accommodate all needs.
We understand that finding out that your company is not in Good Standing can be unsettling, but Harvard Business Services, Inc. is here to help you in any way to get your company back into Good Standing, and make the process as efficient and effortless as possible.
*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.