How can Delaware franchise tax be reduced?

There are ways to reduce your Delaware franchise costs in certain circumstances. To reduce the taxes paid by a startup, use the Assumed Par Value method. This method calculates the taxes by total assets. As long as your issued shares constitute a third to half of your authorized shares, this method will save you money.

What happens if I don’t pay Delaware franchise tax?

Failure to pay the franchise tax by the deadline will result in $200 penalty and interest charges assessed by the State of Delaware at the rate of 1.5\% a month. It will also prevent the business from getting a certificate of good standing and may eventually lead to your business declared void by the State.

How is the assumed par value method calculated?

Divide your total gross assets by your total issued shares carrying to 6 decimal places. The result is your “assumed par”. Example: $1,000,000 assets, 485,000 issued shares = $2.061856 assumed par. Multiply the assumed par by the number of authorized shares having a par value of less than the assumed par.

How do I amend Delaware franchise tax?

Go to the website for the Delaware Division of Corporations and click on the button under the heading “File Your Annual Report and Pay Business Taxes.” Enter the SCC file number from your previous report. Click through the report and change the necessary information.

Why is my de franchise tax so high?

Delaware’s default is the authorized shares method, which is often much, much more expensive than the assumed par value calculation. It is the calculation they use when sending their annual franchise tax notifications. The authorized shares method uses the number of shares you have authorized[2] in your Charter.

Is Delaware a tax haven for corporations?

Delaware as a domestic tax haven. At present, the state of Delaware is home to approximately 1,000,000 businesses and more than 67.8 \% of Fortune 500 companies. Additionally, in 2019, 89.9\% of U.S.-based businesses with initial public offerings chose Delaware to be their corporate home.

Who do not conduct business in Delaware are not required to file a Delaware corporate income tax return regardless if incorporated under the laws of Delaware?

Generally, non-profit organizations who are recognized by the IRS as a 501(c)(3) non-profit organization do not have to file a Delaware corporate income tax return.

Do Delaware LLCs pay franchise tax?

All LLCs, Limited Partnerships, and General Partnerships formed or registered in Delaware are required to pay an annual franchise tax of $300 due June 1. Delaware corporations are required to file an annual report and pay franchise tax by March 1 each year.

How do I revive a void Delaware corporation?

To revive your voided corporation in Delaware, you must provide the completed Certificate of Renewal and Revival of Charter for a Voided Corporation form to the Department of State by mail, fax or in person, along with the filing fee and all back taxes and penalties.

Does Delaware require a par value?

Like most states, Delaware stock is typically issued with a nominal par value or even no par value. Delaware’s franchise taxes are calculated in two ways.

How do I dissolve a Delaware corporation?

Delaware’s General Corporation Law (“GCL”) provides for voluntary dissolution through a stockholder vote at a stockholder meeting. Before the vote, your board of directors must adopt a resolution to dissolve, submit it to the stockholders, and call the stockholder meeting to vote on the matter.

What is the annual Franchise Tax in Delaware?

Effective January 1, 2018, a domestic stock or non-stock for profit corporation incorporated in the State of Delaware is required to pay annual franchise tax. The minimum tax is $175.00, for corporations using the Authorized Shares method and a minimum tax of $400.00 for corporations using…

What are the filing requirements for Delaware State Corporation?

The Delaware Division of Corporations will require all Annual Franchise Tax Reports and alternative entity taxes to be filed electronically. All corporations incorporated in the State of Delaware are required to file an Annual Report and to pay a franchise tax.

How long does it take to amend Delaware corporation franchise tax?

Payment (Visa, MasterCard, Discover, American Express, Check, ACH Debit) Delaware typically takes 3 weeks to process a filing. You can expedite the filing to Same Day ($200) or 24-Hour ($100). Once your Amendment is approved, you will be on your way to saving money on your annual Delaware corporation franchise tax.

How do you calculate annual tax on shares in Delaware?

Authorized Share Method. Delaware’s default method of calculating annual franchise tax is based only on how many shares a Company has authorized in its charter: 5,000 shares or less (minimum tax) $175.00. 5,001 – 10,000 shares – $250.00. Each additional 10,000 shares or portion thereof add $75.00.