Delaware Franchise Taxes and Annual Reports

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All corporations that are incorporated in Delaware must do the following on an annual basis: file an Annual Report and pay an annual franchise tax. More information on both the Annual Report and the franchise tax may be found on the State of Delaware website: https://corp.delaware.gov/frtax.shtml. Both the Annual Report and the annual franchise tax are due by March 1st of each year.

How is Delaware’s franchise tax calculated?

The franchise tax is calculated using either the Authorized Shares Method (in which case the minimum tax is $75 or the Assumed Par Value Capital method (in which case the minimum tax is $350). There is a strict penalty with interest for any failures to timely file the Annual Report and pay the franchise tax. You may visit here https://corp.delaware.gov/frtaxcalc.shtml on the State of Delaware site to view methods of calculating your company’s franchise taxes. Make sure you speak with your tax advisor if you have any questions about the calculation and payment of the franchise tax.

How do you learn about your company’s tax and Annual Reporting obligations?

The State of Delaware will send a notice to your registered agent around December of each year. Your agent will then forward the notice to your address that they have on file. Keep in mind that it is quite common for companies to recalculate their tax obligations based on either method mentioned above. Before you panic, speak with your registered agent and your tax advisor about the franchise tax method that is most appropriate for your business. It is very important that you maintain a current address with your agent at all times so that you may continue to receive important, time-sensitive notices and legal documents.

How do you file your Annual Report and pay the franchise tax?

You may electronically file your Annual Report and taxes here:  https://corp.delaware.gov/paytaxes.shtml

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