To calculate franchise tax for LLCs, refer to the state’s flat fee structure. Regardless of income or activity, all LLCs are required to pay a flat annual franchise tax of $300. The tax calculation method and the amount of the Delaware franchise tax differ based on the type of business entity.

These include a business-friendly court system, flexible incorporation rules, and the fact that businesses operating only outside of Delaware don’t have to pay state corporate income tax. Let’s imagine a Delaware-incorporated company reported total gross assets of $1,000,000 on their federal taxes this year. The Delaware franchise tax is collected every year by the Delaware Department of State. They mail your official business address an annual reminder to pay your franchise taxes. In summary, Delaware’s Franchise Tax affects various business entities, including corporations, LLCs, LPs, and General Partnerships. Maintaining good standing in the state requires these entities to pay this tax, irrespective of whether they conduct business within Delaware or not.

If you’re trying to figure out if you owe Delaware franchise tax, Bench can help. We provide small businesses with a tax filing and bookkeeping solution. Our amortization all-star team does your monthly bookkeeping for you and sends your financials to trusted tax professionals for a stress free filing experience. When it comes to paying the Delaware Franchise Tax, businesses have several options available to them.

Acceptable Payment Methods

For DE LLCs, the franchise tax is fixed at $300 per year, due before June 1 every year. Franchise Tax is a fee imposed by the State of Delaware for the right or privilege to own a Delaware company. Franchise taxes contribute to Delaware’s state revenue and are essential for the maintenance of state services. We help global founders keep compliant by taking care of the complicated stuff. Par Value per share is the value of each share or each unit as decided by the company’s founders.

How do I pay my franchise taxes and file the annual report?

1. Regardless of income or activity, all LLCs are required to pay a flat annual franchise tax of $300.
2. Be sure to stay informed, and consult these resources as you navigate the franchise tax process.
3. For every additional 10,000 shares authorized after that, you pay another $85 in franchise tax, up to a maximum of $200,000.
4. The Delaware Franchise Tax Calculator is a convenient tool available for calculating the annual tax owed by corporations operating in the state of Delaware.
5. Franchise Tax is a fee imposed by the State of Delaware for the right or privilege to own a Delaware company.

Let’s also assume the number of shares issued and authorized is the same for simplicity’s sake. A difference of 1 day in incorporation can save you taxes and compliance for one year. If you incorporated your DE company in 2023, your state compliance will be due in 2024. So, coming back, the state of Delaware uses the fancy word “tax,” but this is a fee. We have used “tax” or “franchise tax” in this blog post to keep the language consistent with the state’s use so you are not confused.

For every additional 10,000 shares authorized after that, you pay another $85 in franchise tax, up to a maximum of $200,000. If you’ve authorized 5,001 to 10,000 shares, your franchise tax is $250. Keep in mind, this number could be different from the number of shares your company has actually issued.

S Corporations and Large Corporate Filers

Moreover, the Delaware Franchise Tax Calculator is designed to be user-friendly, allowing businesses to effortlessly determine their annual tax liabilities. However, it is essential to remember that the calculator is merely petty cash book types example format entry downloads a tool, and the actual tax owed may vary slightly. The franchise tax in this method is based on a minimum of $400 and a maximum of $200,000. Companies with no-par value stock need to contact a franchise tax specialist for assistance in calculating their taxes using this method.

Assumed Par Value Capital Method

This tax is a requirement for maintaining good standing and compliance within the Delaware Division of Corporations. Business entities such as corporations and limited liability companies (LLCs) are affected by this tax, call for papers advances in accounting elsevier with each having specific payment and filing obligations. Certain exempt domestic corporations like charities, civic organizations and religious organizations do not have to pay the franchise tax.