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If you're ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form.
Franchise Tax is the fee imposed by the state of Delaware for the right or privilege to own a Delaware company. The tax has no bearing on income or company activity; it is simply required by the state of Delaware to maintain the good standing status of your company.
The term "Franchise Tax" does not imply that your company is a franchise business.
The due date of your Delaware Franchise Tax payment varies, depending on your company type.
Corporatio Franchise Tax is due by March 1 of every year. If the tax is not paid on or before March 1, the state imposes a $200 late penalty, plus a monthly interest fee of 1.5%.
Delaware LLC Franchise Tax is due by June 1 of every year. The limited partnership (LP) Franchise Tax is also due by June 1 of every year. If the tax is not paid on or before June 1, the state imposes a $200 late penalty, plus a monthly interest fee of 1.5%.
Corporations, LLCs and LPs are taxed in arrears, meaning the tax due by each due date is for the previous calendar year. The franchise tax is due even if the business didn’t conduct any activity or lost money.
The methods of calculating Delaware Franchise Tax are detailed below. Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer.
The Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has. The total cost of the corporation's Delaware Franchise Tax consists of an annual report fee and the actual tax due.
A non-stock/non-profit company is considered exempt by the state of Delaware. This type of company does not pay the annual tax but must still file and pay the annual report fee of $25 per year.
A corporation with 5,000 authorized shares or less is considered a minimum stock corporation. The Delaware annual report fee is $50 and the tax is $175 for a total of $225 due per year.
A corporation with 5,001 authorized shares or more is considered a maximum stock corporation. The annual report fee is $50 and the tax would be somewhere between $200 and $200,000 per year.
Authorized Shares Method
The state of Delaware uses this method to initially calculate your taxes. This method is calculated based on the number of authorized shares. The calculation is as follows:
Don't forget to add the $50 annual report fee to the Franchise Tax after it is calculated.
Assumed Par Value Capital Method
The state of Delaware allows you to pay the lower of the two calculation methods. Therefore, if you receive a tax bill for tens of thousands of dollars, it may be in your best interest to try calculating your Delaware Franchise Tax with the assumed par value capital method.
In order to utilize this filing method, you will need to provide the company's total gross assets (as reported on the Form 1120, Schedule L) and the total number of issued shares. The tax is then often calculated to the minimum payment of $400 tax plus the $50 annual report fee, for a total of $450 due per year.
The calculation used for this method is more complex. For more information you can use our Delaware Franchise Tax calculator
We make it easy to pay Delaware Franchise Tax online, and our Franchise Tax calculator can help you determine the amount you owe .
As your Registered Agent,we will send you tax reminders both by mail and email, well in advance of the due date. We offer a tax filing service for a small fee plus your Franchise Tax amount. For a discounted rate you can submit your Delaware Franchise Tax payment via our online Franchise Tax form. The online fee will vary depending on when the online payment is submitted.
You can also email or fax (302-645-1280) us your LLC/LP Franchise Tax worksheet or your corporation Franchise Tax worksheet. If you would like to make your Franchise Tax payment by phone, call us at 800-345-2677, ext. 6904.Pay Your Delaware Franchise Tax Now
Yes. Corporations must complete an annual report along with their Delaware Franchise Tax payment. This report must list the company's physical address (not a P.O. box and not your Registered Agent's address); the name and physical address of all directors; and, if there are any officers, the name, title and physical address of one of the officers.
If the Delaware Franchise Tax calculation uses the assumed par value capital method, the gross assets and issued shares are also to be listed. If you decide to pay your Delaware Franchise Tax for a corporation with us over the phone, the annual report would need to be separately submitted to us by email, fax or mail.
Delaware LLCs do not have to complete the annual report, but still pay the $300 Delaware Franchise Tax fee.
The Delaware Franchise Tax and the Registered Agent Fee are two separate, unrelated fees. The annual Franchise Tax is imposed by the state of Delaware. The annual Registered Agent Fee is paid to Harvard Business Services, Inc. to act as an agent for your entity in the state.
Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company. It is the lowest Registered Agent fee in the industry, and it is guaranteed to remain fixed at $50 per year, as long as the fee is paid on time and your company remains in good standing with the state of Delaware.
After paying Franchise Tax, many business owners require a Delaware Certificate of Good Standing.
A Certificate of Good Standing is a document sent directly from the Delaware Secretary of State certifying the date the company was formed in the state of Delaware, that the company is current with all Delaware taxes and that the company is in good standing.
This is not the same as your Delaware annual report and will not mention internal company information, such as director or officer details.
If you need assistance in obtaining a Certificate of Good Standing, we can help you receive your certificate in two business days or less.
For any additional questions or concerns about the Delaware Franchise Tax, please feel free to call 1-800-345-2677, ext. 6904 or email us.
The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics.
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