As a Delaware LLC owner, you must pay the state tax on your business. The amount due depends on the type of enterprise.
LLCs are a popular choice for small businesses due to their more tax advantages than other business structures, as well as protecting both personal and gross assets.
Annual Franchise Tax
LLCs in Delaware do not need to file annual reports, but they must pay an annual franchise tax of $300. Payment must be made no later than June 1 each year or else face a $200 penalty for nonpayment.
The franchise tax is calculated using either the authorized share method or assumed par value method, depending on your company’s type and number of shares. You can estimate your taxes using the state’s franchise tax calculator.
Nonprofits do not need to pay franchise taxes.
Delaware’s franchise tax is determined by the type of corporation and number of authorized shares. For corporations using the authorized share method, it’s $175; for those using assumed par value capital methods, $350. This fee must be paid in addition to your corporation tax payment.
Annual Report Filing Fee
If you’re starting a Delaware LLC, you may not be aware of the annual report filing fee that must be paid before June 1. This fee must be paid in full before that date to avoid late fees and penalties.
The fee structure varies based on the corporation’s type of entity; non-exempt corporations pay a $50 fee while exempt ones pay $25.
In addition to filing fees for annual reports, corporate entities must also pay franchise tax. This amount is determined based on the number of authorized shares, issued shares and total assets.
The minimum franchise tax for corporations using the Authorized Shares Method is $175; on the other hand, corporations using the Assumed Par Value Capital Method have a maximum tax of $400. Large corporations also face higher maximums. Regardless of which method you select, taxes must be paid on or before March 1st; those who miss this deadline face a $200 penalty plus interest at 1.5% rate.
Registered Agent Fee
Delaware corporations, LLCs and non-profit entities must have a designated registered agent who must have a physical address in Delaware and be available during business hours to accept service of process, annual report notices and franchise tax notices on behalf of the company.
Your registered agent is also responsible for filing amendments with the Secretary of State office and obtaining good standing certificates. They also assist in paying annual fees and sending reminders to your company about when to renew its status.
Establishing a Delaware registered agent is mandatory when starting a new business in the First State. Not only does this cost-effectively save you money during startup, but it also guarantees compliance with state laws.
Some companies provide free registered agent services, while others charge a fee. The cost of a registered agent varies based on the provider and your needs; typically, you can expect to pay between $60-300 annually.
Late Fee
If you miss the annual deadlines for paying Delaware LLC tax or filing the Annual Report, a late fee of $125 and an interest rate of 1.5% will apply.
You may be able to avoid paying this fee if you file your Annual Report early or pay your franchise tax in February. To do this, go online to the Division of Corporations website and enter in your File Number.
Once you’ve reviewed your tax and fee obligations, click the “Pay Taxes” button. You have the option of selecting your payment method as well.
If you fail to pay your franchise tax by March 1 for corporations and June 1 for limited partnerships (LPs), an administrative closure by the State of Delaware could occur. A $200 late penalty and monthly interest at 1.5 percent will be added onto any unpaid amounts.
