When Are Delaware LLC Taxes Due? (DE Franchise Tax Guide)
In Delaware, LLC taxes are a critical aspect of operating a business. Understanding the deadlines and requirements for Delaware LLC taxes is essential to maintain compliance and avoid penalties.
I've dedicated significant time to thoroughly understanding Delaware's annual tax requirements and deadlines.
After extensive research and consultations with tax experts, this comprehensive guide provides vital information on when Delaware LLC taxes are due.
This guide will teach you how to stay compliant and manage your tax obligations effectively.
Quick Summary
- Delaware LLC taxes are due annually by March 1st, with penalties for late payments. The tax is a fixed amount, varying with the LLC's structure.
- Payment methods for Delaware LLC taxes include Web Pay, mail, or credit card, emphasizing the importance of record-keeping for compliance.
- The Delaware Franchise Tax includes a \$300 report filing fee and a \$50 registered agent fee, due annually by March 1st to maintain good standing.
- I frequently warn my clients that non-payment of Delaware LLC taxes results in penalties, including a \$200 non-filing fee, additional fees over time, and potential LLC dissolution.
What Is Due Date For Delaware LLC Taxes?
The annual due date of Delaware LLC taxes is March 1st each year [1]. All LLCs registered in Delaware are subject to the Delaware Franchise Tax.
Drawing from our experience, the Delaware Annual Franchise Tax Payments apply to LLCs established or registered within the state. Rather than being based on income, this tax is a fixed amount that varies depending on the LLC's authorized shares or assumed par value capital.
Failing to meet the tax requirements can lead to penalties or a loss of good standing. Delaware LLC owners must promptly pay their taxes to comply with state regulations.
For the latest and most accurate information, we recommend consulting the official website of the Division of Corporations or seeking professional advice.
What is Delaware Franchise Tax?
The Delaware LLC Franchise Tax, or the annual tax, is only part of the annual or amended annual report fee.
The other parts include a \$300 report filing fee and a \$50 registered agent fee, due annually on or before March 1 by 5 PM EST.
If you have not updated your Registered Agent/Service of Process Address within two years, you must pay a separate \$150 fee.
From our experience, if you have not filed your report within two years, an additional penalty of \$250 will apply if the Delaware LLC remains inactive after November 1.
"Understanding the tax obligations and deadlines for a Delaware LLC is crucial for maintaining compliance and optimizing financial health. It's not just about meeting dates; it's about strategic planning and understanding the implications of Delaware's unique tax structure on your business."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
In 2022, Delaware saw 73.7% of its business entity formations, amounting to 231,196, register as LLCs, underscoring the state's role as a pivotal business hub [2].
The tax, applying to both domestic and foreign corporations registered in Delaware, serves as a key revenue source for the state, enabling it to maintain the privileges and benefits offered to these businesses.
How Do I Pay Delaware Franchise Tax?
You can pay Delaware Franchise Tax to the Delaware Department of State. The annual report fee (this includes the annual franchise tax) is currently \$300.00.
All checks should be made payable to the Department of State and have the owner/member's name in which you are filing, the business name in which you are filing, and the file number.
There are a lot of convenient ways to pay your franchise tax. One that we use mostly is Web Pay. You can go to their website and set up an account [3].
Another method of paying your Delaware Franchise Tax is through the mail.
You can also pay your annual franchise taxes at a Franchise Tax Board Field Office.
Another method of paying your Delaware Franchise Tax is through Credit Card – Online through Official Payments Corporation [4].
Read our article for more information on how to file business taxes for an LLC.
Do I Need to Submit Anything Else With My Tax Payment?
You must submit your State of Delaware Annual Franchise Tax Report, supporting schedules, and any additional forms with your annual tax payments.
We advise you to always file the State's Annual Report, otherwise, the State will impose a penalty fee on you.
The Annual Report fee for this process is \$50, and it should be submitted along with your State Franchise Tax payment.
You can also submit the State Annual Report filing fee while you submit your State Franchise Tax payments to avoid waiting in line.
What Happens if I Don’t Pay My Delaware LLC Tax?
The Division of Revenue may impose penalties and interest if you don’t pay your Delaware LLC tax.
Delaware LLC Non-Filing Fee is a penalty fee of \$200 that starts to accrue every month. It is overdue and unpaid.
If the LLC annual tax remains unpaid after 12 months, an additional \$500 will be imposed on September 1, and another additional fee of \$200 will be imposed on November 1.
The Delaware Secretary has the power to dissolve an inactive LLC upon request of any interested party.
The LLC dissolution process starts when the Delaware Secretary serves a notice instead of an LLC annual report, which sets forth the steps to be taken by the member/manager to continue doing business in Delaware.
If no action is taken within four months after receipt of this notice, then Secretary shall dissolve the limited liability companies by issuing a certificate of dissolution under seal.
We advise you to take legal or tax advice regarding annual tax matters.
Related Articles:
- How to Open an LLC in Delaware
- Premium Registered Agents in Delaware
- Quality Formation Services for Your LLC in Delaware
FAQs
What is the Delaware Franchise Tax Division Contact Info?
The Delaware Franchise Tax Division Contact Info can be reached at the Delaware Department of State, Office of the Secretary, at 302-739-4251.
Alternatively, you can contact the FTB at 1-800-2PAYTAX. These contacts provide assistance and information regarding Delaware's annual tax requirements and payments.
What Is the Assumed Par Value Capital Method Franchise Tax in Delaware?
The Assumed Par Value Capital Method Franchise Tax in Delaware is a tax system the state implements for corporations. It calculates taxes based on assumed par value capital, which is determined by the number of authorized shares and their par value.
References:
- https://revenue.delaware.gov/business-tax-forms/franchise-taxes
- https://corp.delaware.gov/stats/
- http://www.services.delaware.gov
- http://www.officialpayments.com
This guide really helped me understand how to pay my Delaware LLC taxes online. Web pay seems like the easiest option.
Great breakdown of the tax system. I’ve been thinking of switching my LLC to Delaware.sounds like it’s worth the cost for the benefits the state offers.