Using the Delaware Franchise Tax Calculator Harvard Business Services

“EisnerAmper” is the brand name under which EisnerAmper LLP and Eisner Advisory Group LLC and its subsidiary entities provide professional services. EisnerAmper LLP is a licensed independent CPA firm that provides attest services to its clients, and Eisner Advisory Group LLC and its subsidiary entities provide tax and business consulting services to their clients. Eisner Advisory Group LLC and its subsidiary entities are not licensed CPA firms. The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurs, startups and general business topics.

  • It is based on the corporation type and authorized shares.
  • Since 1981, Harvard Business Services, Inc. has helped form 388,083 Delaware corporations and LLCs for people all over the world.
  • With this type of business, your business income will be distributed to you as the sole proprietor.
  • Ideally, Delaware Franchise Tax liability should be quantified prior to incorporating in the state and prior to any new shares being authorized or issued.
  • After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing.
  • If your business is operating in multiple states, your business may have “nexus” with those other states.

If you pay your Delaware franchise tax late, you’ll be charged a late fee. The late fee is $125.00 and a 1.5 percent monthly interest afterward. Owners industrial appraisal company of multiple corporations will need to pay Delaware Franchise Tax for each entity separately as each entity is required to file an annual report.

What Should I Do After Paying My Delaware Franchise Tax?

Multistate taxes and determining nexus can be very complicated. To use this method, you must supply the company’s total gross assets and the total number of issued shares. If you don’t want to pay your Delaware franchise tax yourself, you can hire a registered agent to do it for you.

  • A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment.
  • Just want to highlight that Justin Damiani is one of the BEST customer support reps I have ever interfaced with.
  • 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.
  • Delaware LLC Franchise Taxes are due by June 1 of every year.
  • Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.

Along with your business’s annual Delaware franchise tax, your business is required to submit a Delaware annual report. Both the Delaware annual report and the Delaware franchise tax are due by March 1 each year. Delaware franchise tax is a tax charged by the state of Delaware for the right to own a Delaware company. The tax is required to maintain the company’s good standing in Delaware. The Assumed Par Value Capital Method in the above example results in a much lower tax ($26,800 vs. $170,165). Delaware would automatically show the higher tax due on their website using the authorized shares method.

Delaware: Tax Haven

Just want to highlight that Justin Damiani is one of the BEST customer support reps I have ever interfaced with. You could do a lot worse than sending him an email to get your business started & sorted with HBS.

A corporation with 20,000,000 shares authorized pays $170,165 ($250.00 plus $169,915[$85 x 1999]). A corporation with 1,000,000 shares authorized pays $8,665 ($250 plus $8,415[$85 x 99]). A corporation with 20,000 shares authorized pays $335 ($250 plus $85). Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company. 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%.

Estimated Tax:

To file as a foreign corporation, mail in the necessary documents. The Delaware franchise tax for foreign corporations is due by June 30 every year. In addition to paying the Franchise Tax, Delaware requires every corporation to have and maintain a registered agent in the State. This is a person or a representative that is physically located in Delaware. If a company doesn’t have a physical presence in Delaware, there are professional registered agents available for hire; prices and levels of service vary.

Special Cases for Delaware Franchise Tax

As long as your issued shares constitute a third to half of your authorized shares, this method will save you money. This means that if you receive a high bill that was calculated under the first method, you can request a recalculation using the second method. Delaware Franchise Tax calculations are prorated if a corporation’s authorized and/or issued shares change during the year. The minimum franchise tax is $175.00 for corporations using the Authorized Shares Method and $400.00 for corporations using the Assumed Par Value Capital Method. All corporations using either method will have a maximum tax of $200,000.00 unless it has been identified as a Large Corporate Filer, then the tax will be $250,000.00.

Incorporating in a state usually creates income tax nexus with the jurisdiction. However, in addition to incorporation, a corporation must actually be “doing business” in Delaware to be subject to the state income tax. No par value stock is assigned a value of $100 per share for purposes of the above calculation.

Technology & Life Sciences C Corporations: How Do I Compute the Delaware Franchise Tax?

The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due. Non-stock or non-profit companies are considered exempt from tax in Delaware. Often, the tax is then calculated to the minimum payment of $350, with a $50 annual report fee. When clients are thinking about forming Delaware Corporations, one of the most important decisions to make is how many total Authorized Shares of Stock the Corporation will have along with the Par Value of the Shares. This information is listed on the Delaware Certificate of Incorporation filed in Delaware. And one of the most popular questions we receive daily is how many shares of stock should I start my Corporation with?

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