Delaware Franchise Tax FAQ

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What Is Delaware Franchise Tax?

Franchise Tax is the fee imposed by the State of Delaware for the right or privilege to own a Delaware company. The Delaware Franchise 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. All companies (LLC, Series LLC, Corporations and Limited Partnerships pay an annual Delaware Franchise Tax, regardless of their business income, business model or company structure. As your Registered Agent we will keep you well informed when the annual Delaware Franchise Tax is due each year.

Why Do I have to Pay Franchise Taxes?

Paying a franchise tax is a legal requirement for business incorporated in the state of Delaware. Failure to pay the annual franchise tax can result, in penalties, fines, or even the loss of right to conduct lawful business.


When Is The Delaware Franchise Tax Due Date?

The due date of your Delaware Franchise Tax payment varies, depending on your company type.

Delaware Franchise Taxes for corporations are 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 Taxes are 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. If your company is no longer operating, it’s important to close your Delaware business and end these fees.

What Happens if Delaware Franchise Tax Is Paid on Time?

Failing to pay your franchise tax by March 1st for corporations or June 1st for LLCs will result in a late penalty and interest. After missing the deadline, you'll need to pay a $200 late fee with cumulative interest each month. You can you learn more here about franchise tax in Delaware.

How Do I Calculate My Delaware Franchise Tax?

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 Delaware LLC or a Delaware LP is a flat annual rate of $300.

A non-stock/non-profit company is considered exempt by the State of Delaware. This type of company does not pay the standard annual Delaware Franchise Tax, but must still file and pay the annual report fee of $25 per year.

The Delaware 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 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, as illustrated below.

Two Methods to Calculate Franchise Tax for a Maximum Stock Company

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:

  • 5,000 shares or less: $175
  • 5,001 - 10,000 shares: $250
  • Additional 10,000 shares or portion thereof: add $85
  • The maximum annual tax is $200,000

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 Delaware Franchise Tax 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 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.

How Do I Pay My Delaware Franchise Tax?

If you're not sure how to pay your Delaware Franchise Tax, our team can help. 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 in addition to 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

What If I Have Multiple Businesses?

Business owners with multiple LLCs and LPs can pay franchise tax for multiple businesses at the same time. All that you'll need to do is fill in your information online, search for your companies and pay the $300 associated for each company.

Owners of multiple corporations will need to pay Delaware Franchise Tax for each entity separately as each entity is required to file an annual report.

Do I Need to Pay Delaware Franchise Taxes if My Company is Not Active?

Yes, regardless of your Delaware company activity or not conducting business, you are still required to pay the Delaware Franchise Tax to remain in Good Standing. If your company is no longer active and you wish to close your business, be sure to follow the proper steps to Dissolve a Corporation, or Cancel an LLC.

Do I Need to Submit Anything Else With My Delaware Franchise Tax Payment?

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 LLC Franchise Tax fee.


Is My Delaware Franchise Tax the Same As My Annual Registered Agent 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 and varies with the size of your business. The annual Registered Agent Fee is a fixed amount 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. Harvard Business Services Inc. offers 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.

What Should I Do After Paying My Delaware Franchise Tax?

After paying their Delaware 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.


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