Harvard Business Services, Inc

A tax haven or shelter is a method of reducing taxable income which results in a reduction of tax payment. The method is any that recovers more than $1 in tax for ever $1 spent within a four-year period. A tax shelter can be created by an individual or a corporation. To reduce the taxes paid by a startup, use the Assumed Par Value method. If you don’t file your Delaware franchise tax on time, you will be charged a late fee.

What Happens if Delaware Franchise Tax Is Paid on Time?

If your company falls into the maximum stock option of 5001 or more shares, there are two possible methods to calculate the Delaware franchise tax. If you don’t want to pay your Delaware franchise tax yourself, you can hire see if commission pay is right for you a registered agent to do it for you. The registered agent will charge a small fee to complete the filing of your Delaware franchise tax.

Do I Need to Submit Anything Else With My Delaware Franchise Tax Payment?

Delaware provides a favorable tax shelter for U.S. corporations. There are other states, such as Nevada, that also do this. This leads to a high number of businesses being incorporated in those tax shelter states.

1. Paying a franchise tax is a legal requirement for business incorporated in the state of Delaware.
2. Corporations must complete an annual report along with their Delaware Franchise Tax payment.
3. The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has.
4. The methods of calculating Delaware Franchise Tax are detailed below.
5. If you pay your Delaware franchise tax late, you’ll be charged a late fee.

The Delaware Franchise Tax has no bearing on income or company activity; it is simply required by the State of Delaware to maintain the good standing what is bond price definition of bond price bond price meaning status of your company. As long as your issued shares constitute a third to half of your authorized shares, this method will save you money. To file as a foreign corporation, mail in the necessary documents. The Delaware franchise tax for foreign corporations is due by June 30 every year. Our annual Registered Agent Fee is $50 per year, and is due on the anniversary month of the formation of your company.

Read on to find out how much you’ll pay, or visit our Delaware Franchise Tax calculator app for a quick answer. Your business may require a Delaware Certificate of Good Standing. Delaware also has no personal property tax or value-added taxes.

How to File

When you file your Delaware franchise tax, an annual report must also be filed. If the tax is not paid on or before June 1, a late fee of $200 and a monthly interest 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. Multistate taxes and determining nexus can be very complicated. Delaware Franchise Taxes for corporations are due by March 1 of every year.

If the tax is not paid on or before March 1, the state imposes a $200 late penalty, plus a monthly interest fee of 1.5%. Title 8 Chapter 5 § 502 (c) states that a penalty of $125.00 is assessed for failure to file the Annual Franchise Tax report by March 1st. Title 8 Chapter 5 § 504 (c) states if the tax of any corporation remains unpaid after the due dates established by this section, the tax shall bear interest at the rate of 1.5 percent for each month or portion thereof until fully paid. If so, that document can be sent directly from the Delaware Secretary of State.

When filing a franchise tax in Delaware, all the must be submitted is the what is the gaap matching principle physical address of the business and the name of the registered agent. The goal of the Delaware franchise tax is to make owning a business in Delaware simple. Since the tax payment process is simple, businesses are more likely to want to be incorporated in Delaware. A non-stock/non-profit company is considered exempt by the State of Delaware.

The Secretary of State may at any time require a true and correct copy of such schedule to be filed with the Secretary of State’s office. The Delaware Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has. The total cost of the corporation’s Delaware Franchise Tax consists of an annual report fee and the actual tax due.