How Do I Avoid Paying Delaware Franchise Tax?

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Ways to Reduce Delaware Franchise Costs

  • Use the Assumed Par Value method to reduce startup taxes
  • Failure to pay by deadline leads to penalties and interest charges

Tax Requirements for LLCs and Partnerships

  • Annual $300 franchise tax for all LLCs and Partnerships in Delaware
  • Single-member LLCs treated as sole proprietorships for tax purposes

Domestic Corporation Franchise Tax Details

  • File franchise tax online with Business Entity File Number and Corporation Information
  • Minimum tax: $175; Maximum tax: $200,000

Exemptions from Delaware Franchise Tax

  • It’s essential to pay franchise taxes annually with other state taxes
  • Tax rates vary based on business type

How to Reduce Delaware Franchise Tax

  • Calculate fees, enter information online, and pay the tax
  • Failure to pay results in penalties and interest charges

Franchise Tax Payment Rules

  • Domestic corporations must file online
  • Minimum tax: $175 for general business corporations

Delaware Franchise Tax Calculation Methods

  • Authorized Shares Method and Assumed Par Value Capital Method used
  • Pay the lesser amount based on these two methods

Understanding Delaware Franchise Tax

  • Delaware franchise tax collected annually
  • C Corporations, S Corporations, and LLCs must pay

Consequences of Not Paying Delaware Franchise Tax

  • $200 penalty and 1.5% monthly interest charges
  • Prevents business from obtaining a certificate of good standing

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