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In order to keep a business entity in good standing status in the state of Delaware, an annual Franchise Tax Fee must be paid. The tax amounts and due dates vary, depending on the business entity type.
However, the consequence for not paying the Franchise Tax Fee remains the same; the state of Delaware will take action against the business entity.
For example, a corporation that does not file and pay its annual Franchise Tax report for two years in a row will automatically be voided by the state.
There are several ill effects of a voided or cancelled business entity. The Delaware Secretary of State will not issue any type of certificates, such as a Certificate of Good Standing, for the company.
Generally, the activities of the business will remain in effect, such as any contracts or agreements established during the voided period. However, the company name becomes available in the Delaware database, and anyone else can form a new company with that name.
Unfortunately, many people end up facing this situation when it comes to taking care of the annual obligations for their business entities. They know there are mandatory payments, but daily life interferes before they realize they have missed the due dates, and as a result their entity has been voided.
First, don’t panic. The state will not pursue you, personally, for the outstanding Franchise Tax fees. The Franchise Tax Fees are imposed on the business entity itself, thus it is the business entity that owes them to the state.
Second, the process to restore the company is relatively simple. Formal renewal documents should be filed with the Secretary of State, and the past due Franchise Taxes, late penalties and interest fees need to be paid.
Once the renewal documents and appropriate fees have been successfully submitted and then approved by the Secretary of State, the business entity is restored—it is as if the company was never voided or cancelled.
If you need to renew your Delaware business entity, contact us and we will gladly research your specific situation and provide you with guidance in order to reinstate your company as swiftly as possible. You can call us at 800-345-2677 or email us at firstname.lastname@example.org.
*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.
There are 2 comments left for My Delaware Corporation Was Voided. Now What?Eric White said: Sunday, March 22, 2020
Haven't paid these fees in at least 5 yrars. Should we just start a new one?HBS Staff replied: Monday, March 23, 2020
Our clients typically make that decision based on the needs and future plans of their businesses. It may be best to speak with your accountant or attorney about which is a better decision for you, but we are happy to assist with renewing your existing or helping you form a new company.Özer Özbey said: Friday, July 13, 2018
Hi, I've read your article about voided company founded in Delaware. My brother had a company founded in Delaware but it has never been used and no activity since than after 2-3 years of payment we stopped paying for the unused company and doesn't remember if we managed to close it as we should do. Now I'll search for the mailings we've done with the agency we've worked. But I want to ask you if it is better or possible to start a new company with the same responsible manager as it was my brother in past or is it better trying to find out the situation of the company at the moment closed, voided, canceled etc and pay for the penalties and continue the operation of the company? Is it possible to work with another agency to go on for both conditions? Thank you in advance. Note: I'll find and share the official name and the other relative information with you as soon as possible.HBS Staff replied: Monday, July 16, 2018
We can answer your questions and find out the status of your Dealware company; the easiest way to do this is if you call us at 1-800-345-2677 or live chat with us from our home page. A live person will respond and assist you.