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.
An LLC (limited liability company) or LP (limited partnership) that does not pay its Franchise Tax Fees for three years in a row will be cancelled 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 10 comments left for My Delaware Corporation Was Voided. Now What?Michael Brown said: Wednesday, December 15, 2021
We have a Delaware company, incorporated in July 2013. We never used it... Zero revenue, zero expenses accept for Franchise tax and Agency fees. It is now void. What risks do we have if we just let it go. Actually me as I am listed as the Officer and Director I am a Canadian, and also any of our Canadian shareholders less than 10 shareholders. Please let me know.HBS Staff replied: Thursday, December 16, 2021
Hi Michael, we typically refer clients to an attorney to advise on internal process. If you need help officially closing your business, our filings team can help. Visit: https://www.delawareinc.com/closing-a-delaware-business/ and fill out the online form to be contacted by a member of our team.Gaurav Jain said: Friday, August 13, 2021
Hello, My company was voided on 3/1/2017. I just want to close/dissolve/cancel it like it does not exist anymore. Do I need to pay any money to state of Delaware for doing so? My company never made any money.HBS Staff replied: Monday, August 16, 2021
Hello, thank you for reading our blog. A member of our filings team will reach out to answer your questions about your voided company.Robert Schulte said: Tuesday, July 13, 2021
Can a voided DE corporation be sued?HBS Staff replied: Tuesday, July 13, 2021
Hi Robert, we suggest consulting an attorney for specifics on this matter.Jo said: Tuesday, May 4, 2021
I am a non US resident. I formed a Delaware LLC two years ago which never did business but I still paid $300 for its annual tax the first year. Now I just couldn’t afford to pay for it anymore. Will I get sued for not paying?HBS Staff replied: Tuesday, May 4, 2021
Thank you for reading our blog. If you do not pay the annual Franchise Tax for three consecutive years the LLC will go into a void status with the State of Delaware.George deren said: Wednesday, April 7, 2021
We formed a corporation in Delaware - SentryBlue Group, inc. It did no business but we paid the franchise taxes for several years and then we haven’t paid in several years because it had no income or revenues. The franchise taxes we did pay we’re the minimum required by Delaware. We now wish to restore its good standing and to do that we’ll have to pay the minimum, etc. can you tell me what is necessary for you to represent us as our agent to get SentryBlue in good standing. Thank you.HBS Staff replied: Thursday, April 8, 2021
Thank you for reading our blog. We are happy to assist you with your request and will reach out to you to further assist.
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