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For companies that operate in Delaware in a brick-and-mortar business, home business or online business, there often additional requirements to maintain compliance, such as business licenses or permits.
Franchise Tax is an annual fee paid to the Division of Corporations for the privilege of owning a business incorporated in Delaware. For an LLC or LP, the cost of your Franchise Tax is currently $300 per year, which is a flat-rate unrelated to the company’s income.
The LLC/LP Franchise Tax is due each year on or before June 1. If you don’t pay by the due date, you will be charged a late fee as well as interest; in addition, your Delaware company will lose its Good Standing status until the Franchise Tax Fee, late fee and interest are paid in full.
For a minimum stock corporation, (companies with 5,000 shares of stock, or less) your Franchise Tax is currently $225 a year, which is a flat-rate unrelated to the company’s income.
For a maximum stock corporation, (companies with more than 5,000 shares) your Franchise Tax will be at least $300 and can increase based on a number of factors. If your Delaware corporation Franchise Tax Fee is not paid on or before March 1 of each year, you will be charged a late fee as well as interest, and your Delaware corporation will lose its Good Standing status until the Franchise Tax Fee, late fee and interest are paid in full.
The second compliance requirement for Delaware is the Registered Agent Fee. The Delaware Registered Agent’s job is to forward service of process and serve as a liaison between your company and the state of Delaware.
When we receive correspondence from the Delaware Secretary of State for your company, we will send it to the Communications Contact for your company. We will also monitor your Franchise Tax status and remind you when it’s time to pay it. Failure to pay your Registered Agent fees on time may result in penalties and/or loss of your Good Standing Status.
If you have any questions or concerns about how to keep your Delaware LLC or corporation in compliance, please feel free to call us at 1-800-345-CORP.
*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.