How to Calculate Franchise Taxes Division of Corporations State of Delaware
If the Delaware Franchise Tax calculation uses the assumed par value capital method, the gross assets and issued shares are also to be listed. If you decide to pay your Delaware Franchise Tax for a corporation with us over the phone, the annual report would need to be separately submitted to us by email, fax or mail. All active Domestic Corporation Annual Reports and Franchise Taxes for the prior year are due annually on or before March 1st and are required to be filed online. Failure to file the report and pay the required franchise taxes will result in a penalty of $200.00 plus 1.5% interest per month on tax and penalty. The California franchise tax, for example, is equal to the larger of your California net income multiplied by the 8.84 percent tax rate or the $800 minimum tax. The minimum tax is due the first quarter of each accounting period and must be paid whether your startup is active, inactive, operates at a loss or files a return for a short period of less than 12 months.
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 $400.00 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 $400.00.
The State of Delaware allows you to pay the lower of the two Delaware Franchise Tax calculation methods. Therefore, if you receive a tax bill for tens of thousands of dollars, it may be in your best interest to try calculating your Delaware Franchise Tax with the assumed par value capital method. If you’re ready to file and pay your Delaware Franchise Tax now, please visit our online Franchise Tax payment form. A corporation with 100,000 shares authorized pays $1,015.00($250.00 plus $765.00$85.00 x 9).
If your company is no longer operating, it’s important to close your Delaware business and end these fees. Notification of Annual Report and Franchise Taxes due are sent to all Delaware Registered Agents in December of each year. Delaware has mandated electronic filing of domestic premium on stock important points related to premium on stock corporations Annual Reports.
Doing Business in Delaware
We offer a tax filing service for a small fee in addition to your Franchise Tax amount. For a discounted rate you can submit your Delaware Franchise Tax payment via our online Franchise Tax form. The online fee will vary depending on when the online payment is submitted. Our Delaware Franchise Tax Calculator was developed to help you understand and plan for how much you’ll likely need to pay your Delaware Franchise taxes for your Delaware business. Delaware’s taxation structure has different tiers for LLCs, LPs, non-profit corporations, and for-profit corporations. Instead of doing hours of research on how to calculate Delaware franchise tax, use our tool to get answers in minutes.
What happens if I don’t pay?
In order to utilize this filing method, you will need to provide the company’s total gross assets (as reported on Form 1120, Schedule L) and the total number of issued shares. The tax is then often calculated to the minimum payment of $400 tax plus the $50 annual report fee, for a total of $450 due per year. Certain exempt domestic corporations like charities, civic organizations and religious organizations do not have to pay the franchise tax.
- Our all-star team does your monthly bookkeeping for you and sends your financials to trusted tax professionals for a stress free filing experience.
- Yes, regardless of your Delaware company activity or not conducting business, you are still required to pay the Delaware Franchise Tax to remain in Good Standing.
- To use this method, you must give figures for all issued shares (including treasury shares) and total gross assets in the spaces provided in your Annual Franchise Tax Report.
- Total gross assets shall be those «total assets» reported on the US Form 1120, Schedule L (Federal Return) relative to the corporation’s fiscal year ending the calendar year of the report.
- There is a helpful Franchise Tax Calculator on the Delaware website to assist in estimating your franchise taxes (note there is a different calculator for each of the 2017 and 2018 tax years).
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%. The term «Franchise Tax» does not imply that your company is a franchise business. The factors are property, wages and sales in Delaware as a ratio of property, wages and sales everywhere (Chapter 19, Title 30, Delaware Code). Foreign Corporations must file an Annual Report with the Delaware Secretary of State on or before June 30 each year.
Authorized Shares Method
This method is a bit more complicated, because it involves calculating your business’s assumed par value—i.e. Learn how to build, read, and use financial statements for your business so you can make more informed decisions. Bench simplifies your small business accounting by combining intuitive software that automates the busywork with real, professional human support.
A non-stock/non-profit company is considered exempt by the State of Delaware. This type of company does not pay the standard annual Delaware Franchise Tax, but must still file and pay the annual report fee of $25 per year. Failing to pay your franchise tax by March 1st for corporations or June 1st for LLCs will result in a late penalty and interest.