Delaware has specific annual requirements that vary by entity type, often involving a Franchise Tax and, for some, an Annual Report filed with the Delaware Division of Corporations. Maintaining good standing is crucial due to Delaware’s robust corporate law and the frequent use of Delaware entities for businesses operating nationwide or internationally.
Why is it important to file? Maintaining good standing with the State of Delaware is paramount for your entity’s legal operation and reputation. Failure to comply with these filing and tax requirements can lead to severe penalties and negative consequences, including:
Significant Penalties:
Corporations: A $200.00 penalty for not filing the Annual Report and paying Franchise Tax on time, plus 1.5% interest per month on any unpaid tax balance.
LLCs, LPs, GPs: A $200.00 penalty for non-payment or late payment of the annual tax, plus 1.5% interest per month on tax and penalty.
Foreign Corporations: A $125.00 penalty for not filing the Annual Report on time.
Voided Charter/Cancelled Authority: The Delaware Division of Corporations will void the charter (for domestic entities) or cancel the authority to do business (for foreign entities) if the annual requirements are not met for more than one year.
Loss of Name Protection: Your entity’s name may become available for others to use.
Inability to Conduct Business: A voided or cancelled status means your entity cannot legally enter into contracts, initiate or defend lawsuits in Delaware courts, or maintain good standing in other states where it may be registered.
Complex Reinstatement: Reinstatement is a costly and time-consuming process that requires paying all past due taxes, penalties, and fees, along with a reinstatement fee.
Specific Requirements by Entity Type in Delaware:
For Corporations (For-Profit) in Delaware:
Annual Report and Franchise Tax (Delaware Division of Corporations):
Frequency: Annually.
Due Date: Annually by March 1st. This includes both filing the Annual Report and paying the Franchise Tax.
Filing Fee:$50.00 for the Annual Report.
Franchise Tax: The Franchise Tax amount varies and is calculated based on your corporation’s authorized shares or assumed par value capital.
Authorized Shares Method (Default):
5,000 shares or less: $175.00
5,001 to 10,000 shares: $250.00
Each additional 10,000 shares (or portion thereof): add $85.00
Maximum tax: $200,000.00
Assumed Par Value Capital Method: More complex calculation, often resulting in a lower tax, with a minimum of $400.00 and a maximum of $200,000.00. (You are permitted to pay the lower of the two methods.)
Estimated Payments: Corporations owing $5,000.00 or more in Franchise Tax are generally required to pay estimated taxes in quarterly installments (40% by June 1, 20% by September 1, 20% by December 1, and the remainder by March 1 of the following year).
Penalties: $200.00 for late filing/payment, plus 1.5% interest per month.
Information Required: Corporation name, file number, principal place of business address, names and addresses of all directors, and the name and address of the officer who signs the report. Information on authorized shares is also required for tax calculation.
Filing Method: Must be filed online through the Delaware Division of Corporations website.
Foreign Corporations:
Annual Report Only: Foreign corporations registered in Delaware must file an Annual Report (but do not pay Delaware Franchise Tax).
Due Date: Annually by June 30th.
Filing Fee:$125.00.
Penalty: $125.00 for late filing.
Delaware Corporate Income Tax (Delaware Division of Revenue – Form 1100):
Frequency: Annually.
Due Date: By the 15th day of the 4th month following the close of your taxable year (e.g., April 15th for calendar year filers). Extensions are available.
Note: This tax only applies to income generated from business activities within Delaware. Many Delaware-incorporated companies do not have a Delaware income tax liability if they do not conduct business operations in the state.
For Limited Liability Companies (LLCs) in Delaware:
Annual Tax (Delaware Division of Corporations):
Frequency: Annually.
Due Date: Annually by June 1st.
Tax/Fee: A flat annual tax of $300.00.
No Annual Report: Delaware LLCs (domestic and foreign) are NOT required to file an Annual Report with the Division of Corporations. They only pay the annual tax.
Penalties: $200.00 for late payment, plus 1.5% interest per month on tax and penalty.
Filing Method: Must be paid online through the Delaware Division of Corporations website.
Delaware Income Tax: LLCs are generally treated as pass-through entities for Delaware income tax purposes (unless they elect to be taxed as corporations). Income and losses are reported on the owners’ individual income tax returns. Delaware does not have a separate state-level income tax return for the LLC itself if treated as a partnership or disregarded entity.
For Partnerships (General Partnerships, Limited Partnerships, Limited Liability Partnerships, Limited Liability Limited Partnerships) in Delaware:
Annual Tax (Delaware Division of Corporations):
General Partnerships (GPs): GPs formed in Delaware are required to pay the annual tax.
Limited Partnerships (LPs), Limited Liability Partnerships (LLPs), Limited Liability Limited Partnerships (LLLPs): These entity types are also required to pay the annual tax.
Frequency: Annually.
Due Date: Annually by June 1st.
Tax/Fee: A flat annual tax of $300.00 for LPs, LLLPs, and GPs. LLPs generally pay $200.00 per partner, with a minimum of $200.00, and a maximum of $120,000.
No Annual Report: Most Delaware partnerships are NOT required to file an Annual Report with the Division of Corporations, only pay the annual tax.
Penalties: $200.00 for late payment, plus 1.5% interest per month on tax and penalty.
Filing Method: Must be paid online through the Delaware Division of Corporations website.
Delaware Partnership Income Tax (Delaware Division of Revenue):
Partnerships are generally pass-through entities, and the partners pay tax on their share of the income. Delaware does not impose a separate income tax on the partnership itself.
For Non-Profit Corporations in Delaware, please also note the following:
Annual Report (Delaware Division of Corporations):
Frequency: Annually.
Due Date: Annually by March 1st.
Filing Fee:$25.00.
No Franchise Tax: Exempt domestic non-profit corporations are generally exempt from paying the Franchise Tax, but they must still file the Annual Report.
Penalties: $200.00 for late filing, plus 1.5% interest per month on any fees due.
Information Required: Non-profit name, file number, principal office address, and the names and addresses of its directors.
Filing Method: Must be filed online through the Delaware Division of Corporations website.
Delaware generally does not have a broad charitable registration requirement with the Attorney General’s Office for most 501(c)(3) public charities.
However, private foundations (those classified as 501(c)(3) and not public charities) are typically required to file a copy of their federal IRS Form 990-PF with the Delaware Attorney General’s Office.
Delaware Exempt Organization Business Income Tax (Delaware Division of Revenue):
Frequency: Annually, if applicable.
Applies if: Your non-profit has unrelated business taxable income (UBTI) that exceeds the federal filing threshold. If so, a Delaware income tax return would be filed.
No other state-level income tax: Generally, if your non-profit has obtained 501(c) tax-exempt status from the IRS, it is also exempt from Delaware corporate income tax (unless it has UBTI).
Federal IRS Form 990 Series: As a federally tax-exempt organization, your non-profit must file an annual information return with the IRS (Form 990, 990-EZ, 990-PF, or 990-N, depending on your gross receipts and assets). This is typically due by the 15th day of the 5th month after your fiscal year ends (e.g., May 15th for a December 31st fiscal year-end).
What information is generally required for these filings? The various Delaware filings typically require verification or updating of the following:
Your entity’s legal name and Delaware File Number.
The current principal business address.
The name and physical street address of your Delaware Registered Agent.
For Corporations and Nonprofits: Names and addresses of your directors and principal officers.
For Corporations: Authorized shares information for Franchise Tax calculation.
For Non-Profits: Confirmation of tax-exempt status.
How can we assist you? We understand that navigating Delaware’s unique filing and tax system can be complex. We are here to assist you with understanding and fulfilling your Delaware compliance obligations. Our services for these filings include:
Determining your specific filing requirements, due dates, and applicable fees/taxes.
Gathering the necessary information.
Calculating your Corporate Franchise Tax using the methods that result in the lowest amount due.
Preparing and accurately filing your Annual Reports and/or paying your Annual Taxes with the Delaware Division of Corporations.
Assisting with any applicable non-profit filings with the Attorney General or tax filings with the Division of Revenue.
Arranging payment of the applicable fees/taxes.
Confirming receipt and good standing with the Delaware Division of Corporations.
What we need from you: To facilitate these filings, fill up the information sheet:
Please do not hesitate to contact us at your earliest convenience to discuss your Delaware compliance obligations. We can help ensure your entity remains in good standing and avoids any potential penalties.
