Delaware Annual Report vs. Franchise Tax
Delaware C Corporations face two key filing obligations every year: the Delaware Annual Report and the Delaware Franchise Tax. These terms are often used interchangeably—but they’re not the same. Confusing the two can result in incomplete filings, late penalties, or even loss of good standing.
This blog breaks down the dual deadlines, the difference between the two filings, and what every founder must do by June 1, 2025, to stay compliant.
Relevant IRC Codes & Definitions
While both filings are state-level obligations, they influence federal reporting:
- IRC §162 – Allows deductions for business taxes and fees paid, including Franchise Tax.
- IRC §6037 / §6012 – Outlines federal corporate reporting responsibilities (Form 1120), separate from Delaware obligations.
- IRC §446 – Addresses consistent methods in reporting income and deductions.
Even though they’re filed together, each filing serves a different purpose—with separate consequences if missed.
IRS & State Form References
IRS Form:
- Form 1120 – U.S. Corporation Income Tax Return (separate from state filings)
Delaware Filings (due June 1, 2025):
- Delaware Annual Report
- Basic company info (officers, address, stock)
- Required for all domestic corporations
- Failure to file = $200 late fee + interest
- Delaware Franchise Tax
- Calculated via Authorized Shares or Assumed Par Value
- Based on equity structure, not profit
- Failure to pay = penalties + loss of good standing
Real-World Example
Case Study:
NovaScale Inc. submitted their Franchise Tax payment on time but didn’t file the Annual Report because they believed both were the same.
Result:
- Marked “Not in Good Standing”
- Incurred a $200 late fee
- Investor due diligence failed, delaying Series A funding by 6 weeks
Key lesson: Even if you pay Franchise Tax, missing the Annual Report puts your entity at risk.
Step-by-Step Guide to Complying with Both Requirements
- Login to the Delaware Franchise Tax portal
- File the Delaware Annual Report with officer info, registered agent, and address
- Calculate your Franchise Tax using the appropriate method
- Submit both filings together before June 1, 2025
- Download your confirmation for recordkeeping and CPA use
- Request a Certificate of Good Standing, if needed for investors or bank accounts
Conclusion
Delaware C Corps must handle two filings—not one—by June 1 each year. Founders who confuse the Annual Report with the Franchise Tax face steep late fees and administrative risk. The best strategy? Treat these as a dual filing requirement, even though they’re submitted through the same portal.
Call to Action
Not sure if your Annual Report or Franchise Tax was filed correctly?
👉 Schedule a review session with Anshul Goyal, CPA. We’ll verify your 2025 filings, avoid penalties, and issue clean compliance documents for your Delaware C Corp.
Disclaimer
This article is for educational purposes only and does not constitute legal or tax advice. Delaware’s Annual Report and Franchise Tax filings are mandatory for all domestic corporations, regardless of revenue or profit. Failing to complete either requirement can result in penalties and suspension of business rights.
Anshul Goyal, CPA EA FCA, is a U.S.-licensed Certified Public Accountant, IRS Enrolled Agent, and Chartered Accountant (India). He specializes in entity compliance, startup tax planning, and restoring corporate good standing for U.S. and global founders.
FAQs (Top 5 High-Searched)
Q1. Are the Delaware Annual Report and Franchise Tax the same thing?
A1. No. The Annual Report is an informational filing. The Franchise Tax is a financial payment.
Q2. Can I pay the tax and skip the Annual Report?
A2. No. Both must be completed to avoid late penalties and maintain good standing.
Q3. What happens if I file only one of the two?
A3. Your corporation may be marked as delinquent, even if payment was made.
Q4. Are both filings due on the same day?
A4. Yes. Both are due by June 1, 2025.
Q5. How do I confirm I filed correctly?
A5. Log in and download the filing receipt. Your CPA can also verify filing records.
About Our CPA
Anshul Goyal, CPA EA FCA, is a U.S. Certified Public Accountant, Enrolled Agent, and Chartered Accountant (India). He’s helped 2,000+ founders structure, scale, and safeguard their Delaware corporations, including annual compliance, IRS filings, and Franchise Tax optimization.