Introduction
All businesses registered in Delaware, including LLCs, corporations, and limited partnerships (LPs), must file an annual report and pay the required franchise tax to maintain good standing. Failure to comply can result in late penalties, loss of good standing, and even administrative dissolution of the company.
This guide explains who needs to file, how to complete the Delaware annual report, filing deadlines, and how to avoid penalties.
What Is a Delaware Annual Report?
A Delaware annual report is a required filing that updates the state with current company details and ensures compliance with Delaware corporate laws.
- LLCs and LPs are not required to file an annual report but must pay a $300 franchise tax.
- Corporations must file an annual report and pay a franchise tax.
- Nonprofits must file an annual report with a $25 filing fee.
Who Needs to File a Delaware Annual Report?
| Business Type | Annual Report Required? | Franchise Tax Due? |
|---|---|---|
| LLCs & LPs | No | $300 |
| Corporations | Yes | $175 – $200,000 |
| Nonprofits | Yes | $25 |
If a corporation does not file its annual report, it can lose its good standing status and may be administratively dissolved.
Delaware Annual Report Deadlines
| Business Type | Annual Report Due Date | Franchise Tax Payment Due Date |
|---|---|---|
| Corporations | March 1 | March 1 |
| LLCs & LPs | Not Required | June 1 |
| Nonprofits | March 1 | March 1 |
How to File a Delaware Annual Report
Step 1: Gather Required Business Information
- Company name and file number (available on the Delaware Division of Corporations website).
- Principal business address.
- Names and addresses of officers and directors (for corporations).
- Registered agent information.
Step 2: Access the Delaware Division of Corporations Website
- Visit the Delaware Division of Corporations website.
- Click on “File Annual Report” and log in using the business file number.
Step 3: Complete the Annual Report Form
- Enter business details and officer or director information.
- Verify contact details and registered agent information.
Step 4: Calculate and Pay the Franchise Tax
- Corporations pay franchise tax based on authorized shares.
- LLCs and LPs pay a flat $300 franchise tax, but do not file annual reports.
- Payments can be made via credit card, ACH transfer, or check.
Step 5: Submit the Annual Report
- Review the information for accuracy.
- Submit the filing and payment confirmation.
- Download a receipt for record-keeping.
Delaware Franchise Tax Calculation for Corporations
Corporations can calculate franchise tax using one of two methods:
| Calculation Method | Tax Due |
|---|---|
| Authorized Shares Method | Starts at $175, up to $200,000 |
| Assumed Par Value Capital Method | Based on issued shares and assets, with a minimum of $400 |
Corporations with a high number of authorized shares but minimal issued shares may reduce tax liability using the Assumed Par Value Capital Method.
What Happens If You Do Not File Your Delaware Annual Report?
| Missed Filing or Payment | Penalty |
|---|---|
| Late Annual Report Filing | $200 penalty plus 1.5 percent monthly interest |
| Late Franchise Tax Payment | $200 penalty plus interest accrues |
| Failure to File for Two or More Years | Loss of Good Standing and Possible Dissolution |
Non-compliance can lead to difficulties opening business bank accounts, securing loans, or renewing business licenses.
How to Reinstate a Delaware Business After Suspension
If a business loses its good standing due to non-filing or non-payment, the owner must:
- File all past-due annual reports.
- Pay all outstanding franchise taxes and penalties.
- Submit a Certificate of Revival application (for corporations).
- Pay reinstatement fees to the Delaware Division of Corporations.
The reinstatement process can take weeks, making timely filing and payment critical.
How to Keep a Delaware Business in Good Standing
- File annual reports on time, due March 1 for corporations.
- Pay franchise taxes on time, due March 1 for corporations and June 1 for LLCs.
- Keep business records updated with the state.
- Maintain a registered agent in Delaware.
- Work with a CPA to ensure compliance and avoid late fees.
IRS Compliance and Federal Tax Filing for Delaware Businesses
| Business Type | Federal Tax Form | State Filing Requirement |
|---|---|---|
| LLC (Single-Member) | Schedule C (Form 1040) | $300 franchise tax |
| LLC (Multi-Member) | Form 1065 and K-1s | $300 franchise tax |
| S-Corp | Form 1120S | Annual report and franchise tax |
| C-Corp | Form 1120 | Annual report, franchise tax, and corporate tax if applicable |
Common Annual Report Filing Mistakes to Avoid
Missing the Deadline
Late filings result in penalties and interest. Filing after two years may lead to business suspension.
Incorrect or Outdated Business Information
Ensure the registered agent, business address, and officer details are current.
Failure to Pay the Franchise Tax
Businesses must file the annual report and pay franchise tax to maintain compliance.
Assuming LLCs Do Not Have Any Filing Requirements
LLCs do not file annual reports but must pay the $300 franchise tax by June 1.
Conclusion
Filing an annual report and paying franchise tax ensures that Delaware businesses remain in good standing. Timely filing and accurate reporting help businesses avoid penalties, reinstatement fees, and administrative dissolution.
For expert guidance on Delaware business tax filing, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
Frequently Asked Questions (FAQs)
1. Do all Delaware businesses need to file an annual report?
No, only corporations and nonprofits must file annual reports. LLCs and LPs only need to pay the $300 franchise tax.
2. When is the Delaware annual report due?
- Corporations and nonprofits: March 1.
- LLCs and LPs: No report required, but franchise tax is due June 1.
3. What happens if I do not file my annual report?
- A $200 penalty plus 1.5 percent monthly interest will be applied.
- The business may lose its good standing or face administrative dissolution.
4. How do I pay my Delaware franchise tax?
- Online through the Delaware Division of Corporations website.
- By check, ACH transfer, or credit card.
5. Can I reinstate my Delaware business if I miss filing?
Yes, but you must file overdue reports, pay penalties, and submit reinstatement forms.