Delaware Franchise Tax Basics

Looking for information on the Delaware franchise tax? You've come to the right place! Read up on due dates and how it's calculated below. (See our franchise tax 101 page for more general information, including what you should do after paying your tax.) If you're ready to pay your tax, please visit our easy-to-use franchise tax order form.

Delaware Franchise Tax for Limited Liability Companies (LLCs)

Every limited liability company formed in the state of Delaware is required to pay an annual tax of $250 due by June 1 of each year (please note: The amount will be $300 as of July 1, 2014). The penalty for paying the annual tax late is $200 plus 1.5% monthly interest.

Delaware Franchise Tax for Limited Partnerships

Every limited partnership formed in the state of Delaware is required to pay an annual tax of $250 due by June 1 of each year (please note: The amount will be $300 as of July 1, 2014). The penalty for not paying the annual tax is $200 plus 1.5% monthly interest. 

Delaware Franchise Tax for Minimum Stock Corporations

All Delaware corporations that have a total of 5,000 authorized shares or less must pay a minimum annual franchise tax of $75 ($175 as of July 1, 2014), in addition to filing an annual report of $50. Therefore, the total minimum due for this type of company is $125 ($225 as of July 1, 2014) and must be paid and filed electronically by March 1 of every year. (Click here for an easy way to pay your franchise tax.) Failure to pay on time will result in a $125 late penalty plus 1.5% monthly interest. 

Delaware Franchise Tax for Corporations with More Than 5,000 Shares

All Delaware corporations that have a total of 5001 authorized shares or more must pay an annual franchise tax and file an annual report. The minimum amount due for the franchise tax is $350 and the maximum amount due is $180,000. The annual report fee is $50. The franchise tax amount assessment is based on the total number of authorized shares a company has, using one of two formulas. The method that results in the lesser amount of franchise tax due is the one that the company will use to pay and file. Below is detailed information from the Delaware secretary of state regarding the different methods:

The Authorized Shares Method:
  • 5,000 shares or less (minimum tax) $175 (as of July 1, 2014)
  • 5,001 - 10,000 shares - $250 (as of July 1, 2014)
  • Each additional 10,000 shares or portion thereof add $75
  • Maximum annual tax is $180,000.00
The Assumed Par Value Capital Method:

To use this method, you must give figures for all issued shares (including treasury shares) and total gross assets. Total gross assets shall be those "total assets" reported on the U.S. Form 1120, Schedule L (Federal Return) relative to the company's fiscal year ending the calendar year of the report. The tax rate under this method is $350.00 per million or portion of a million. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $350.00. 

The example cited below is for a corporation having 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares of stock with a par value of $5.00, gross assets of $1,000,000.00 and issued shares totaling 485,000.

  1. Divide your total gross assets by your total issued shares carrying to 6 decimal places. The result is your "assumed par." Example: $1,000,000 assets, 485,000 issued shares = $2.061856 assumed par.
  2. Multiply the assumed par by the number of authorized shares having a par value of less than the assumed par. Example: $2.061856 assumed par at 1,000,000 shares = $2,061,856
  3. Multiply the number of authorized shares with a par value greater than the assumed par by their respective par value. Example: 250,000 shares at $5.00 par value = $1,250,000
  4. Add the results of #2 and #3 above. The result is your assumed par value capital. Example: $2,061,856 plus $1,250,000 = $3,311 856 assumed par value capital.
  5. Figure your tax by dividing the assumed par value capital, rounded up to the next million if it is over $1,000,000, by 1,000,000 and then multiply by $350.00. Example: 4 x $350.00 = $1,400.00 (The minimum tax for the assumed par value capital method of calculation is $350.00.)
  6. The franchise tax and annual report must be paid and filed electronically by March 1 of every year. Failure to pay the franchise tax and/or file an annual report on time will result in a $125 late penalty plus 1.5% monthly interest accrual.
Delaware Franchise Tax for Corporations with No Stock Authorized

Corporations incorporated without authorized shares also pay an annual franchise tax and are required to file an annual report. The annual franchise tax is $75 ($175 as of July 1, 2014) and the report fee is $50. They must be filed by March 1 of every year. If the report is not filed and/or paid on time, then the state of Delaware will impose a $125 late penalty plus 1.5% monthly interest.

Delaware Franchise Tax for Not For Profit (Exempt) Corporations

Exempt corporations do not pay an annual franchise tax, but are required to file an annual franchise tax report. The report fee is $25 and must be paid and filed by March 1 of every year. If the report is not filed and/or paid on time, then the state of Delaware will impose a $125 late penalty plus 1.5% monthly interest.

Delaware Franchise Tax for Limited Liability Partnerships

All limited liability partnerships must pay and file an annual report by June 1 of every year. The amount due is calculated at $200 per partner. (Note: Every partnership that has filed a statement of partnership existence shall pay an annual tax in the amount of $250. That amount will be $300 as of July 1, 2014) Please call 800-345-2677 for assistance since we cannot accept online franchise tax payments for LLPs.

**Depending on your company’s specific situation, filing requirements and/or fees may vary.

 

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