Regulatory Compliance Checklist For Delaware Companies

By following this regulatory compliance checklist for Delaware companies, you can ensure that your business is meeting all necessary legal requirements, reducing the risk of non-compliance, and protecting your business and reputation. Before you read on, click here to automate your Delaware company compliance from anywhere.

Regulatory compliance checklist for Delaware companies

Although these requirements listed are applicable to businesses in different sectors, there may be other obligations such as business licenses or permits for companies carrying out operations in certain industries or operating in Delaware.

Tax Obligations

There are taxes that companies registered in Delaware must pay before a deadline, failure to do this attracts a penalty such as a fine and or loss of certificate of good standing.

1. Franchise Taxes 

This is an annual fee payable to the Division of Corporations in return for the privilege of incorporating your business in Delaware. For Limited Liability Companies (LLC), Limited Partnerships (LP), and General Partnerships a flat rate of $300 is paid unrelated to your company’s annual income by the 1st June of every year. For C-Corps,  The deadline for payment is the 1st of March each year. Franchise taxes are computed Based on the company’s gross assets value, the number of issued shares, and the share price. The fine for failing to pay your annual taxes on time or paying them late is $200.00, with interest at the rate of 1.5% per month. Take advantage of  Norebase’s professional tax filing service to help with the payment of annual taxes and avoid late payments and penalties. 

2. Annual Report

C-Corps incorporated in the State of Delaware are required to file an annual report. The filing charge for the annual report is a one-time flat fee of $50 Annual Reports must be submitted to and received by the secretary of state division by March 1st of every year. Payments that are not made on time or paid late (i.e., after March 1) are subject to a $200 fine plus interest at a rate of 1.5% per month.

3. Federal Corporate Income Tax 

This is a requirement that applies to not just companies incorporated in Delaware but every other company in the US. The amount payable varies depending on its type, commercial activity, and income. Companies are obligated to pay corporate income taxes, and even if no taxes are owed, they must nevertheless file an annual tax return. These returns must be filed by the 15th day of the third month after the tax year’s closure. For accounting purposes, this is specified by the company to either be a calendar year that is from January 1 to December 31,  or a fiscal year that consists of 12 consecutive months ending on the last day of any month. If you select the calendar year, your annual filing deadline is March 15th. 

For returns for which no tax is owed, the penalty is $220 for each month or portion of a month (up to 12 months) the return is late; and (ii) for returns for which tax is owed, the penalty is the aforementioned sum plus 5% of the unpaid tax for each month or portion of a month the return is late, up to a maximum of 25% of the unpaid tax.  Additionally, interest is accrued on it, it is important to note that failure to pay taxes and the failure to file returns are determined independently.

4. Employment Taxes 

Companies with employees in Delaware must also follow the federal payroll tax laws, which include paying employer Social Security and Medicare taxes and withholding federal income tax from employee paychecks. Quarterly returns must be submitted by the last day of every quarter, while annual returns must be submitted by 31 January of each year.

Salaries and other compensation (including non-cash payments) received by an employee in a company’s trade or business must be reported on Form W-2, and a copy of this form must be provided to the employees. Click here to automate this process for all your entities.

5. Proforma 1120 and 5472 Returns Filing 

Proforma 1120 and Form 5472, respectively, are used by foreign-owned Delaware C companies and single-member LLCs to report certain transactions to the IRS. These transactions include the giving or receiving of money or property from or to parties with international relations, as well as the giving or receiving of services. Foreign-owned single-member LLCs are required to submit a Proforma 1120 that details all of their income, credits, and deductions. A penalty of $25,000 may be levied for failing to file; if the failure continues after 90 days after IRS notification, the penalty doubles.

Maintenance Of A Registered Agent

For a company to be incorporated in Delaware, the company must have a registered agent with a physical office address in the state. A registered agent’s duties include the forwarding of process serving and acting as a point of contact between your business and the state. In order to continue acting on behalf of the Company, most registered agents pay an annual fee. Failure to keep a registered agent could result in a number of issues, including but not limited to:

(i) Missing out on legal notices and correspondence addressed to the company;

(ii)  Missing out on tax notices or court documents which could result in significant financial liability for the company;

(iii)  The company could lose its good standing (i.e., a company without a registered agent may not be issued a Certificate of Good Standing on application).

Compliance with regulatory requirements is a crucial aspect of any business, but it can often be overwhelming and time-consuming. We at Norebase are aware of these difficulties and will assist you to achieve all obligations listed in the regulatory compliance checklist for Delaware companies. Register with us today and get started.