Overview of Delaware Franchise Tax
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What is Franchise Tax?
- A fee imposed by Delaware for the right to own a Delaware company.
- Fee charged for the privilege of maintaining a business within its jurisdiction.
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Who Has to Pay?
- C Corporation, S Corporation, LLC, LP, or GP.
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How to Pay?
- Online Payment:
- Submit corporation’s name, file number, and tax year.
- Pay with checking or savings account.
Understanding Delaware Franchise Tax
It is essential to adhere to Delaware deadlines. Failure to pay by the due date results in penalties and interest charges. The tax rate varies based on the type of business.
Exemptions and Reductions
- Exemptions:
- No exemptions mentioned in the given text.
- Cost Reduction:
- Use Assumed Par Value method for startups to lower taxes.
Consequences of Non-payment
Failure to pay the Delaware franchise tax will result in penalties and the company being marked as "void". Interest and penalties accumulate until the tax is paid.
How to Avoid Penalties
- Annual Report Fee:
- Minimum tax is $175, maximum is $200,000.
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Franchise Tax for LLCs and LPs:
- Flat annual rate of $300.
To file and pay online, visit the State of Delaware – Division of Corporations franchise tax filing page.