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DELAWARE ANNUAL FILING REQUIREMENTS
Delaware is known for its business-friendly laws and reputation as a popular state for incorporation. However, incorporating a company in Delaware also requires compliance with annual requirements and regulations to maintain good standing with the state.
This includes filing annual reports, paying franchise taxes, and complying with other regulations specific to the type of company structure. It’s important for companies to stay compliant with these regulations to avoid penalties and maintain their right to conduct business in the state. It’s also advisable to seek the help of professional firms like Relin Consultants who have experience and knowledge in this field, they can help in ensuring that your company is meeting all the annual requirements and compliance.
Effective March 1st, 2023, all corporations and non-profit organizations registered in Delaware must submit their annual report electronically to the Delaware Secretary of State. A company might be subject to late fees and penalties if this date is missed, and the business entity may risk losing its good standing.
Summary of Annual Requirements in Delaware
|Business Type||Filing of Annual Report||Franchise Tax||Due Date|
|Foreign Corporation||Required||Exempted||June 30|
|LLC - foreign and domestic||Exempted||$300||June 1|
|Nonprofits, Cooperatives, and Religious Corporations||Required||Exempted||March 1|
|LPs – foreign and domestic||Exempted||$300||June 1|
|General Partnerships – foreign and domestic||Exempted||$300||June 1|
How A Delaware Limited Liability Company Can Stay Compliant
A Delaware limited liability must complete certain filing requirements to ensure the company remains in good standing.
Pay Annual Tax
Delaware levies an annual tax on LLCs. The majority of LLCs are known as pass-through tax companies when it comes to income taxes. In other words, the individual LLC members are responsible for paying federal income taxes, not the LLC as a whole. By default, only the members of LLCs are required to pay federal income taxes.
All Delaware incorporated LLC is required to pay a flat annual tax of $300. This is also known as the Delaware franchise tax. The payment must be made no later than the first day of June. A penalty of $200 plus monthly interest of 1.5% imposed on both tax and penalty for late payments.
Submit Annual Tax Filing
The taxation of a Limited Liability Company (LLC) in Delaware is flexible and depends on the type of entity the LLC elects for tax purposes. By default, a multiple-member LLC is treated as a partnership for tax purposes and a single-member LLC is treated as a sole proprietorship.
An LLC can also elect to be treated as a corporation for taxation, with the filing requirements being the same as a corporation.
However, it’s important to note that choosing to be treated as a C-corporation will result in double taxation and S-corporation status is not applicable for LLCs with non-resident members. In terms of filing requirements, multiple-member LLCs must file the Delaware Form 300 if profits or losses are from a Delaware source, while single-member LLCs must file a personal tax return to the Division of Revenue.
Delaware Annual Report – Not Applicable To Delaware LLC
An annual report is a document that provides important information about a business to the state government, such as the company’s location, the name and address of an officer, and the names and addresses of all directors.
Delaware Limited Liability Company (LLC) is not required to file an annual report to the Division of Corporations, meaning there is no annual report fee and no due date. Instead, Delaware LLCs are responsible for paying an annual tax which is due on or before June 1st of each year.
OTHER ANNUAL FILING REQUIREMENTS IN DELAWARE
State Employer Taxes
If the Delaware LLC has employees, it must pay employer taxes. Some of these taxes must be paid to the IRS ( acquiring an EIN is the first step in fulfilling federal employer tax requirements.) Employers in Delaware must, however, also pay taxes to the state.
The business owner must first withhold employee income taxes and pay them to the DOR. Start by registering the company with the DOR, either on paper or online at Delaware One Stop: Home website After registering, the business owner must submit withholding tax returns on a regular basis (for example, monthly or quarterly).
Gross Receipts Tax
Only a few states, including Delaware, do not impose a sales tax. Delaware does, however, impose a gross receipts tax, which is a charge on retailers. The tax is determined by the gross sales of the seller. Gross receipts tax rates now range depending on the type of business.1006% to.7543%. You may visit the department of revenue website for further details, including instructions on registering for and paying the tax.
Filings for a corporation that was formed out of state
The business owner must pay a $125 registration fee if the corporation was established outside of Delaware but registered to conduct business there. This organization is regarded as alien. Though the corporation was founded in Delaware, it is not regarded as a foreign corporation for these purposes, even if the location is outside of the United States.
However, it’s crucial to remember that foreign firms cannot file online if you do have one. The annual charge for foreign corporations is payable online by June 30 of each year.
FILINGS FOR A CORPORATION THAT WAS FORMED IN THE DELAWARE STATE
The amount of Delaware Franchise Tax that a corporation is required to pay is determined by the type of corporation and the number of authorised shares it has. The cost of the Franchise Tax includes both an annual report fee and the actual tax amount.
Corporations with 5,000 or fewer authorized shares are considered minimum stock corporations. For these types of corporations, the annual report fee is $50, and the tax is $175, resulting in a total annual cost of $225.
On the other hand, corporations with more than 5,000 authorized shares are considered maximum stock corporations. These types of corporations are required to pay an annual report fee of $50 and the tax can be anywhere between $200 and $200,000 per year.
Annual Report Filing Fees
The Delaware Secretary of State charges an additional annual report filing fee of $50. Exempt corporations pay $25 to file an annual report.
Where To File The Delaware Franchise Tax Report?
A company can submit the franchise tax at the Delaware government’s official website.
Alternatively, you can mail your franchise tax report to the following address if you choose to do so:
Delaware Division of Corporations, Attention Franchise Tax, 410 Federal Street, STE 4, Dover, DE 19901.
If you require further information on Delaware company’s annual requirements, feel free to contact our consultants.
Does Delaware require Annual reports?
Delaware does require annual reports for corporations, but not for Limited Liability Companies (LLCs). Corporations incorporated in Delaware are required to file an annual report with the Division of Corporations which includes the names and addresses of the directors and officers, the registered agent and office, and any other information required by the state.
However, LLCs in Delaware are not required to file an annual report. Instead, LLCs in Delaware are required to pay an annual tax which is due on or before June 1st of each year, this tax is also known as the Delaware Franchise Tax.
Does a Delaware LLC Have a Filing Fee Every Year?
No, a Delaware Limited Liability Company (LLC) is not required to pay a filing fee every year. LLCs in Delaware are not required to file an annual report to the Division of Corporations. Instead, LLCs are responsible for paying an annual tax, also known as the Delaware Franchise Tax, which is due on or before June 1st of each year.
This tax is calculated based on the company’s total assets and/or revenue, and the LLCs are not required to pay a fixed fee. Failure to pay the annual tax can result in penalties and fines, and in certain cases, dissolution of the company.
Can a foreigner open a company in Delaware?
Yes, a foreigner can open a company in Delaware. The state of Delaware has a business-friendly environment, and it is a popular choice for businesses and entrepreneurs of all nationalities. There is no requirement that the owners, directors, or officers of a Delaware corporation or LLC be U.S citizens or residents.
In order to form a company in Delaware, the foreign individual must appoint a registered agent located in the state of Delaware, this agent must have a physical address in the state where the company can be served with legal documents. Additionally, the individual must file the appropriate formation documents with the Delaware Division of Corporations, such as the articles of incorporation for a corporation or the articles of organisation for an LLC.
It’s worth noting that owning a company in Delaware does not automatically grant the foreigner a work permit or a visa to live in the U.S, you may want to consult with an immigration lawyer if you are planning on working or living in the U.S.
How is Delaware a Tax Haven?
The Delaware franchise tax is not a business activity tax nor an income tax. The state of Delaware requires all corporations to pay an annual franchise tax to ensure the entity is in good standing.
A flat rate of US$300 is payable if you own a Delaware LLC or Delaware LP.
If you own a non-stock/non-profit company, you will only have to pay an annual report fee of US$25 per year as this type of entity is exempted from the franchise tax.
If you own a corporation (irrespective of whether it is an S-corp or a C-corp) the franchise tax is computed based on the number of shares.
US$175 if the corporation has 5,000 shares or less.
US$250 if the corporation has 5,001 shares to 10,000 shares.
In addition to the above, you will also incur an additional US$50 for annual report filing fee.