Delaware Franchise Tax: What Is It and How Do I Pay It

delaware llc franchise tax

A Delaware Certified Copy is an official document that confirms the validity of your LLC’s formation documents. It’s basically a copy of the original Certificate of Formation, approved by the Delaware Secretary of State. Some banks might ask for a Certified Copy when you’re opening a business account for a Delaware LLC.

delaware llc franchise tax

As a result, it is important to make sure that the Franchise Tax is paid on time and in full to avoid any negative consequences. Note that electing S-Corp taxation imposes significant restrictions on the ownership and operations of an LLC. These requirements are very restrictive and limit the size and investor base of the LLC significantly. LLC owners pay Delaware Annual Franchise Tax in arrears for the previous calendar year. This means that even if you form your business on December 31st, you will still need to pay the full $300 for having an LLC that existed any time during the previous year. The limited partnership or LP franchise tax is also due on June 1.

Extra Costs for Starting a Delaware LLC

To find out more about a Delaware LLC annual fee for your business, submit your legal inquiry to our UpCounsel marketplace. UpCounsel has some of the most experienced and prestigious lawyers in the county that will help you all matters pertaining to LLC Delaware creation. Further, they will help you maintain your LLC in Delaware, regardless of where you live in the country. After paying their Delaware Franchise Tax, many business owners require a Delaware Certificate of Good Standing. The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods. Therefore, if you receive a tax bill for tens of thousands of dollars, it may be in your best interest to try calculating your Delaware Franchise Tax with the assumed par value capital method.

  • Title 8 Chapter 5 § 503 (i) states such total assets and total gross assets shall be those “total assets” reported to the United States on U.S.
  • For instance, if you do not pay the taxes by June 1, you could be subject to a late fee of $200 and pay an additional 1.5 percent interest for each month it goes unpaid.
  • However, the state requires Delaware LLCs to pay the Delaware Annual Franchise Tax no matter where its operations are located.
  • The franchise tax covers the previous calendar year’s business activity, and is due for so long as the LLC exists, regardless of its level of activity or whether it made any money.
  • The late fees for franchise tax are $200, plus 1.5% interest per month.

Business Entity File Number You’ll need your Business Entity File Number (also known as your “File Number”) in order to make payment online. You can find your LLC’s File Number by searching the database here. The Annual Franchise Tax does not change based on income, 6 e-commerce financing methods to fuel online growth however, a Delaware LLC must pay Annual Franchise Tax even if it does not have any income during a given year. Here we tell you what you need to know about Delaware LLC taxes. There are ways to reduce your Delaware franchise costs in certain circumstances.

Delaware LLC Annual Franchise Tax

In addition, businesses that have less than $50,000 in gross receipts are also exempt from the tax. If your business falls into one of these categories, you will not have to pay the Delaware Franchise Tax. A single-member LLC which adds on another member automatically has their LLC tax status adjusted to that of a partnership. This conversion to partnership taxation may have tax consequences to the original member. Also, a single member LLC can elect C-Corp taxation or, if it meets the eligibility requirements, S-Corp taxation and status.

This leads to a high number of businesses being incorporated in those tax shelter states. To reduce the taxes paid by a startup, use the Assumed Par Value method. If your Delaware franchise tax is submitted late, a $125 late fee and interest fee of 1.5 percent will be charged. If your business was formed or is located in another state but generates income in Delaware, you may need to pay Delaware taxes. If you own a business that operates in multiple states, you will greatly benefit from the knowledge of a tax professional.

Foreign File

In some cases, Delaware LLCs subject to S-Corp taxation can engage in tax planning techniques that an LLC taxed as a partnership cannot. Some of those areas include self-employment taxes and claiming the 20% “qualified business income” deduction available in some cases. Learn more about Delaware LLC taxes to choose the right taxation model for your business.

delaware llc franchise tax

In the “Payment Type” drop down list select whether you will pay with your checking account or with a credit card. After you form a Delaware LLC, you will have annual requirements to keep track of.

When are franchise taxes due for my Delaware corporation?

You can pay your Delaware Franchise Tax fee by visiting our specialized web portal here or you can visit the Delaware state website directly. IncNow’s Ready-to-Sign LLC Operating Agreement is written by A-rated Delaware business lawyers and comes included with a Now LLC or Complete LLC package. There are a few other costs you’ll need to think about when starting an LLC in Delaware. A Delaware Registered Agent is a person or company who is the official contact point for your LLC. A Registered Agent accepts important legal papers and state notices for your company and has to forward these notices to you.

January 9, 2024


SELUTE is stand for Selangor University Training Enterprise. It has been developed to educate entrepreneurs in managing their business and get certification from UNISEL. It based on MOOC where the user need to perform online assessment before attending the actual in house assessment at UNISEL.

SELUTE : Future MOOC platform for Selangor

Popular Courses

Most Rated

Subscribe our Newsletter

Template Design ©Selute. All rights reserved.