If you’re starting up a business in Delaware, the state has specific filing requirements that you should be aware of in order to save time and money while protecting your company in the long run. These rules can help save both costs and protect future profits for you and your employees.
Delaware corporations that are incorporated annually must file and pay an Annual Franchise Tax Report by March 1 for domestic corporations and June 1 for foreign ones.
Purpose of Incorporation
Corporations are legal entities separate from their owners. By incorporating, owners can protect themselves from creditors and lawsuits by keeping personal assets out of the equation.
Delaware provides numerous advantages for businesses, from specialized court systems and familiarity among attorneys to being one of the most popular states for incorporation, especially for venture-capital-backed startups.
Delaware stands out among states in its relatively lax tax laws; companies incorporated in Delaware do not owe sales or state corporate income tax regardless of where their operations take place.
Non-stock corporations don’t have shareholders and are run by members who elect a board of directors, making these businesses often qualify as tax-exempt nonprofit corporations with the IRS.
Forming a Public Benefit Corporation in Delaware is another option to incorporate. PBCs exist solely to benefit society and environment – not maximize shareholder profit.
Articles of Incorporation
Delaware is an ideal location for small business incorporation, offering various incentives including reduced income tax rates.
State courts in Florida are also known for quickly and efficiently settling disputes, with decisions typically being made by judges with expertise in corporate law rather than juries, which can shorten litigation periods significantly.
To form a corporation, it’s necessary to file articles of incorporation with the appropriate state agency. These documents contain vital information regarding your company and its purpose as well as information on initial directors, office street address and registered agent details.
Your statement may also include details regarding how many shares of stock your corporation is authorized to issue; in general, this can range anywhere from one share up to multiple thousands.
Registered Agent
Delaware requires all corporations and LLCs to list a registered agent with an actual physical address (no post office boxes allowed), who is available during regular business hours to accept legal and tax documents from clients and provide services as necessary.
Your company’s registered agent is accountable for making sure it receives any official state correspondence, such as lawsuits or notices regarding tax filing changes. Failure to do so could result in judgment by default and significant financial liabilities for your organization.
Be sure to update the address of your registered agent with the Division of Corporations so you’re always compliant with state laws, helping ensure your company operates within its legal constraints.
Though acting as your own registered agent may save money, using a national service such as ZenBusiness can offer more streamlined solutions tailored specifically for your company’s needs. Furthermore, many third-party services also provide extra features that help your company remain legally compliant.
Annual Report
Whether your entity is a corporation or LLC, Delaware requires that an annual report be filed. This can be completed online and should be submitted along with your franchise tax payment by March 1.
Maintaining good standing in the state is of utmost importance and failing to file on time can result in late fees and penalties.
Your annual report must include information such as your company name, its location and details about its directors and officers as well as information on registered agent address(es).
As soon as changes to your business occur mid-year, such as changes in ownership, responsibility or registered agent changes, an annual report must be filed either with or amended accordingly.
Companies dedicate considerable resources and time managing their annual reports, including tracking deadlines, collecting information and filling out forms or online filing portals on time.
