March 20, 2014 Mate

Annual Delaware Beast of Burden

Delaware incorporated companies must file and pay franchise taxes each year.  The deadline to do so is March 1st.

There are two ways taxes owed can be calculated – the Authorized Shares Method or  the Assumed Par Value Capital Method.  Details on each are below.  The State allows the method that results in the lesser tax to be paid to satisfy all liability.

Here are the details:

Authorized Shares Method

For corporations having no par value stock the authorized shares method will always result in the lesser tax.

  • 5,000 shares or less (minimum tax) $75.00
  • 5,001 – 10,000 shares – $150.00
  • each additional 10,000 shares or portion thereof add $75.00
  • maximum annual tax is $180,000.00

Assumed Par Value Capital Method

To use this method, you must give figures for all issued shares (including treasury shares) and total gross assets in the spaces provided in your Annual Franchise Tax Report.  Total Gross Assets shall be those “total assets” reported on the U.S. Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report.  The tax rate under this method is $350.00 per million or portion of a million.  If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $350.00.  $350.00 is the minimum tax.

A spreadsheet to help calculate tax is linked here.  It has separate formulas for each of the methods.

Along with paying the tax liability a “tax report” is also required to be submitted.  Corporate information such as principle address, names of officers and directors, etc is required and must be current as of the filing date.  An additional $50 state filing fee is charged.

Filing and payment is made online!  All major credit cards are accepted.  Click here to start the filing of the annual report and pay the franchise tax owed.

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