Have you recently received a notice from Delaware requiring you to file a franchise tax? Each year, many Delaware LLCs are shocked to receive a franchise tax notice for their business. Don’t panic! The below article will help answer some of your questions and help walk you through Delaware’s LLC franchise tax process.
What is the Delaware Franchise Tax?
The term “franchise tax” does not mean that your LLC is a franchise. Delaware uses the term “franchise tax” as the fee imposed for the right or privilege to be a Delaware LLC. The “tax” is not tied to your LLC’s income or activities, it is required to maintain a good standing status with Delaware’s Secretary of State.
Do I still owe Franchise Tax if my LLC does not have any profits that year or is a holding company?
Yes. Your LLC owes Franchise Tax every year, regardless of whether or not your LLC is a holding company or has started making money, opened a business bank account, or filed a federal tax return. If your LLC is formed in the state of Delaware, you must pay the annual Franchise Tax.
How much is my LLC’s Franchise Tax?
The Franchise Tax for an LLC is $300* per year.
When is the Franchise Tax due?
The Franchise Tax for an LLC is due by June 1st of every year. If you are late, Delaware imposes a $200* late penalty, plus a monthly interest fee of 1.5%* on the tax and penalty.
Does my LLC have to file an Annual Report?
No, a Delaware LLC does not have to file an annual report with the Delaware Secretary of State.
How Do I Pay My Franchise Tax?
You can pay your Delaware franchise tax online: https://corp.delaware.gov/paytaxes/
*Amount are subject to change by the Delaware Secretary of State.
The above article is for general information purposes only and should not be relied upon as specific legal advice. This article, or contacting Apex, does not in any way form an attorney-client relationship. If you have any questions or would like to learn more, please contact Tara M. Vitale at firstname.lastname@example.org.