- What is Delaware LLC Franchise Tax?
LLC franchise tax is a type of tax imposed on limited liability companies (LLCs) by Delaware. It is a tax paid for the privilege of conducting business as an LLC within the state.
- Do I Need to Pay the Franchise Tax if I haven’t started doing Business yet?
Yes. Regardless of your company activity (whether you are actively conducting business in the state or not), you are required to pay the Delaware Franchise Tax to remain in Good Standing.
- How is the LLC Franchise Tax calculated?
The Delaware LLC Franchise Tax is a flat-fee but in cases of default payments, the fee could vary based on length of default and penalties accrued.
- When is the Delaware LLC Franchise Tax due?
The due date for Delaware LLC franchise tax is June 1st every year. This is an ANNUAL tax..
- What happens if I don’t pay the LLC Franchise Tax?
When you pay your Franchise Tax, you receive a certificate of “Good Standing” from the Secretary of State.
On the other hand, if you don’t pay your Franchise Tax, you will incur a $200 flat-fee penalty and 1.5% in interest per month on the tax and penalty. Depending on how long you owe this for, you may receive a “Void” status from the Delaware Division of Corporations (DDC) which will prevent you not just from obtaining a Certificate of Good Standing but could mean the dissolution of your business, which can affect your ability to conduct business legally.
- Do I Need to Pay Delaware Franchise Tax if My Company is Not Active?
Yes. Regardless of your company activity (whether you are actively conducting business in the state or not), you are required to pay the Delaware Franchise Tax to remain in Good Standing. If your company is no longer active and you wish to close your business, please send us a message to facilitate that.
- Is Delaware Franchise Tax the Same As Annual Registered Agent Fee?
No. these are two separate services. The annual Franchise Tax is imposed by the State of Delaware and varies depending on the size of your business. The annual Registered Agent Fee is a fixed amount payable to the registered Agent on file who serves as an Intermediary between Norebase and the state of Delaware.
- What period does the Franchise Tax payment cover?
Corporations are taxed in arrears, meaning the tax due by each due date is for the previous calendar year. e.g Franchise tax payable in 2024 is for businesses registered in 2023 irrespective of the month of registration. The franchise tax is due even if the business didn’t conduct any activity or lost money.
- What if I don’t have an Employee Identification Number (aka EIN)?
Not having an Employee Identification Number (EIN) does not prevent you from filing taxes. While franchise tax is localised to the Delaware state, this EIN is assigned by the Internal Revenue Service.
If you have any questions not answered here, please send a DM to hello@norebase.com and we will respond immediately.