Delaware Annual Report & Franchise Tax Return
Every domestic or foreign corporation must file an annual report and franchise tax return with the Delaware Secretary of State on or before March 1 of each year. The easiest way to file is via the Delaware Secretary of State’s website.
You will need the corporation’s Delaware file number to get started. If you do not know the number, you can search the Delaware Secretary of State’s website using the corporation’s name.
Once you have the corporation’s Delaware file number, you can file the annual report and franchise tax return and pay the annual report fee and franchise taxes.
Enter the Delaware file number and it will pull up the annual report that needs to be filed along with the state’s calculation of the taxes that are owed based on the number of authorized shares of stock set forth in the corporation’s certificate of incorporation. BUT, because Delaware has two methods for calculating the taxes owed, the corporation can often significantly reduce the amount owed by using the alternative tax calculation method, which is not based on the number of authorized shares, but on the number of authorized and issued shares and gross assets as of the end of the reporting period (the end of the previous tax year). The gross asset figure should come from the corporation’s Form 1120 for the previous tax year.
The Division of Corporations’ website provides information on the two methods for calculating the taxes. There is also a franchise tax calculator at this link, which will let you plug in figures to see what your taxes would be using the two methods.
All corporations pay an annual report fee of $50. The minimum franchise tax using the authorized share method is $175. The minimum franchise tax using the assumed par value capital method is $400.
You will also be asked to provide the corporation’s federal employer identification number, principal place of business address, the name and address of at least one officer, and the names and addresses of all directors.
If you have questions, call the Franchise Tax Section: 302.739.3073, option 3.
For more information, please contact a member of our Early Stage & Emerging Companies practice group.