Delaware LLC Annual Report and Tax Filing Guide

Key Takeaways

• Delaware LLCs do not file an annual report, but they must pay a $300 annual franchise tax by June 1.
• Corporations must file an annual report and pay franchise tax by March 1 to maintain good standing.
• LLCs that fail to pay the franchise tax face penalties and risk of voiding by the Secretary of State.
• Corporations must list the names and addresses of directors and officers, while LLCs do not report this info.
• Foreign entities cannot file their Delaware annual report online; they must submit it by mail.

What is Delaware Annual Report?

A Delaware annual report is a document that contains specific business information. The Delaware annual report is a form that is submitted at the time of payment of the Delaware franchise tax.

The information required by a Delaware annual report is:

• The address of the corporation's physical location
• The name and address of one officer
• The names and addresses of all corporation directors

These details must be submitted each year, even if no changes were made since the previous year.

All businesses that are incorporated in Delaware must submit an annual report. The report is due on March 1. This is the same due date as the Delaware franchise tax.

LLCs are not required to fill an annual report. LLCs are required to file the Delaware franchise tax.

The annual reports are filed and stored with the Delaware Secretary of State's office.

If a change happens mid-year that affects the information listed on your annual report, an update must be filed. The amendment must be fully filled out when submitted. The amendments are accepted for up to a year after the original filing.

Steps to File Delaware Annual Report

Filing a Delaware annual report is a simple process. The Delaware annual report should be filed in conjunction with the Delaware franchise tax payment.

The Delaware annual report and franchise tax are due on March 1 for all domestic corporations. Domestic corporations must file the Delaware annual report and franchise tax online. If you need help filing, a registered agent can file for you.

Steps to File the Delaware Annual Report

1. Go to https://corp.delaware.gov/
2. Enter your Business Entity File Number
3. Enter corporate information
4. Pay the Delaware annual report fee and franchise tax

Delaware annual reports can only be filed online. The State of Delaware used to send out forms with return envelopes, but this is no longer an option.

The state of Delaware's website is not very user friendly for submitting your businesses Delaware annual report. Many registered agents have their own websites which tend to be easier to use. Delaware's state website for submitting the annual report doesn't save information from year to year and doesn't accept American Express credit cards.

Business Entity File Number

If you don't already know this number, it can be found on the website. Search for your business name. The number will be provided as a result.

Enter Corporation Information

After you enter the Business Entity File Number, you'll need to enter your corporate information. This information is used to file your annual report. You will need this information to complete the form:

• Federal Employee Identification Number or EIN
• Corporation's physical address
• Officer names and addresses
• Directors' names and address
• Name, title, and address of person filing

All of the fields should include a "help" button if you have any questions as to what information the field requires.

Many small businesses are unaware of the role of a director within their company. The director in a small business is the connection between the officers and the stockholders.

Other than close corporations, all Delaware corporations have directors. Close corporations are an older type of corporation, one that was popular before the LLC was invented. Close corporations require fewer formalities to incorporate. A close corporation is not a c-corporation. The "c" in c-corporation refers to a subsection of the IRS tax code.

Stockholders cannot directly elect the officers. To make sure the stockholders have a voice but aren't directly electing officers, the stockholders elect the directors. The directors then appoint the officers. Directors are typically selected annually.

This all goes to help you when filling out your Delaware annual report. The Delaware annual report requests the name of at least one director. All active businesses will have at least one director. If a business checks the "no directors" box, it is most likely a misrepresentation. Even if it's an honest mistake, this is still considered a misrepresentation.

Pay the Annual Report and Delaware Franchise Tax Fee

All that's left is to pay the requested fees for the Delaware annual report and franchise tax. The payment can be made with an electronic check or credit card.

Once your payment is submitted, you are done until the following year. One of the attractions of the Delaware annual report and franchise tax is the simplicity of the filing process.

Delaware Franchise Tax

In addition to the Delaware annual report, a corporation must file and pay the Delaware franchise tax fee.

Arrears

The Delaware franchise tax is filed in arrears. This means that the tax being paid is on the previous calendar year.

This chart below explains how to calculate how much franchise tax, annual report fees, and the due date for your type of corporation.

Cost of the Delaware Franchise Tax

The cost of your Delaware franchise tax and due date is dependent upon which type of business you own.

There is a minimum franchise tax of $175 and a minimum filing fee of $50. The total minimum to pay on a Delaware franchise tax and the annual report is $225 a year.

If the Delaware annual report and franchise tax are filed late, there's a $125 late fee and 1.5 percent interest rate on the amount due.

Foreign Corporations in Delaware

Any corporation that is physically located outside of Delaware is considered a foreign corporation. As a foreign corporation, the annual report and filing fee must be submitted by mail.

LLC, GP, LP

This applies to both domestic and foreign LLCs, GPs, and LPs. All of these types pay an annual franchise tax. The Delaware franchise tax fee may be paid online.

Delaware LLPs and LLLPs

For these types of businesses, the annual report and fee must be submitted by mail. The forms can be found online.

How To Calculate Delaware Domestic Franchise Tax

The domestic corporate franchise tax for Delaware can be calculated in two different methods.

• Authorized Share Method
• Assumed Par Value Method

Which method is better for your company will depend upon the size of your company. You can pay the lower amount of the two methods.

The minimum possible tax to pay with the Authorized Shares Method is $175.

The minimum possible tax to pay with the Assumed Par Value Method is $350.

If your tax statement states that you owe more than $350, it might benefit you to calculate your tax payment based on the Assumed Par Value Method.

Authorized Share Method

The tax payment in this method is calculated off of the total number of shares authorized, not the shares issued to shareholders.

• 5,000 shares or less: $175
• 5,001-10,000: $250
• Additional 10,000: $75 for each

The maximum payment with this method is $180,000.

Assumed Par Value Method

This calculation method is based upon issued shares and the total gross assets of the corporation. This method can be mathematically complicated. You can request that it be calculated for you, or do it yourself.

1. Divide the gross assets by the issued shares. The result is your Assumed Par Value or APV.
2. Multiply the APV by the total number of authorized shares. The result is known as the Assumed Par Value Capital.
3. The tax owed is calculated as $350 for every $1,000,000 of your APVC.
   1. If your APVC is above $1,000,000, round up to the next million, not down.

Foreign Corporations and Delaware Franchise Tax

Corporations that are formed out of state but are registered to do business in Delaware are considered foreign corporations.

To register to do business in Delaware, you must pay a $125 registration fee.

Foreign corporations cannot file their Delaware annual report online. The Delaware annual report must be submitted by mail.

Can Foreign LLCs File a Delaware Annual Report?

Foreign LLCs (those formed outside of Delaware but registered to do business in the state) do not file an annual report, just like domestic Delaware LLCs. However, they must pay the same $300 annual franchise tax, due by June 1. The payment can be submitted online through the Delaware Division of Corporations.

Unlike foreign corporations, foreign LLCs do not have to submit additional reports by mail. However, they are expected to maintain a registered agent in Delaware and remain compliant with state tax and business licensing rules.

LLC Taxes in Delaware

In Delaware, LLCs are not required to file an annual report. Delaware does require LLCs to pay an annual tax.

State Business Taxes

LLCs are considered tax pass-through entities. This means that the LLC itself doesn't pay federal taxes. The federal taxes must be filed by the individual members of the LLC.

Delaware does require LLCs to pay a flat $300 fee for taxes.

State Employer Taxes

LLCs in Delaware must pay employment taxes for any employees. Some of these taxes are for the state and some are federally required.

Gross Receipts Tax

Delaware doesn't have any sales tax. Delaware does have gross receipts tax. This is a tax on good's sellers. The tax is based upon the seller's gross revenue.

The range charged for the gross receipts tax ranged. The tax range is dependent upon the type of business.

LLC Registration

If you're doing business in states other than Delaware, your LLC may also need to be registered in that state.

Do Delaware LLCs File an Annual Report?

Unlike corporations, Delaware LLCs are not required to file an annual report with the Secretary of State. However, they must still meet an important filing obligation: paying the annual franchise tax of $300. This payment is due every year on June 1, and failure to comply can result in penalties or the voiding of the LLC's good standing status.

Because no annual report is required, LLCs do not need to disclose member or manager information to the state. This makes Delaware a popular jurisdiction for privacy-minded business owners. LLCs only need to maintain internal records identifying members and managers.

Delaware does not issue reminders to pay this tax, so it’s crucial for LLC owners to track deadlines themselves or work with a registered agent who will notify them.

Delaware Corporation Requirements

To register your corporation in Delaware, there are a few requirements. To maintain the registration, there are a few ongoing steps to follow.

Corporate Records

The following documents should be kept on hand at the principal place of business:

• Certificate of Incorporation
• Bylaws
• List of shareholders
• Books and records of account
• Minutes of shareholder and director meetings
• Documentation of Delaware corporate taxes and fees

There are also tax requirements and fees:

• Delaware franchise tax
• Delaware annual report
• Federal tax identification number or EIN
• State tax identification number
• Delaware business license

S-Corporation

Delaware allows for S-corporations or S-corps to operate and pay taxes.

If you're interested in incorporating your business in Delaware or need help filing a Delaware annual report, don't hesitate to reach to one of UpCounsel's knowledgeable lawyers for help.

Consequences of Not Filing the Delaware Annual Report

Failing to file a Delaware annual report and pay franchise taxes on time can result in serious consequences. For corporations, the Secretary of State imposes a $125 late fee and 1.5% interest per month on the unpaid tax balance. If the delinquency continues, the corporation may be declared void and lose its legal right to do business in Delaware.

LLCs that fail to pay the $300 annual franchise tax by June 1 face similar risks. The state can void the LLC, meaning it loses its good standing and must file additional paperwork and fees to be reinstated. This can also complicate legal matters and contracts if the LLC is not in good standing.

Frequently Asked Questions

• Do Delaware LLCs have to file an annual report?
  No, Delaware LLCs are not required to file an annual report. They only need to pay a $300 annual franchise tax by June 1.
• What happens if I don’t pay the Delaware LLC franchise tax?
  The LLC may lose its good standing and can be declared void by the Secretary of State. Penalties and reinstatement fees may apply.
• Can I file my Delaware annual report by mail?
  Only foreign corporations and certain partnerships may file by mail. Domestic corporations must file online. Delaware LLCs do not file reports at all.
• Do I need to list members of my Delaware LLC in any filings?
  No. Delaware LLCs are not required to list members or managers in public filings, preserving business privacy.
• How can I confirm if my Delaware LLC is in good standing?
  You can check the status of your business by searching the Delaware Division of Corporations database or contacting your registered agent.

Get Legal Assistance

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