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Filing Fees and Franchise Taxes

Changes to the General Corporation Law resulted in changes to most of the information contained in this page as of August 1, 2003. So, if you haven't looked at this page since then, some of this information may be new to you.

There are two types of fees that the State of Delaware charges:

The County of New Castle also charges a fee at the time of formation.

Stock and Close Corporations

The amount to be paid at the time of formation for a corporation can depend upon the number of shares and the value of the shares. At the very minimum, the follow list applies as Delaware's charge for filing a stock corporation, and a close corporation:

• Division of Corporations Fees $50.00
• Filing Fee Tax, $15.00 minimum
• SUB TOTAL: $65.00
• County Fees: $24.00
• TOTAL: $89.00

As you can see above, the minimum filing fee tax is $15.00. It can be greater than that. Here is the chart that the Division has published which determines the filing fee tax (which is based upon the initial authorized stock). Note that this is a graduated scale.

Limited Liability Company

• Filing Fee Tax $90.00
• Total: $90.00

Limited Partnership

• Filing Fee Tax $200.00
• Total: $200.00

Franchise Tax Fees are Recurring Charges

(Recent changes in the law have increased these fees for the tax year 2003)

• Your Registered Agent Fee, and the Franchise Tax Fee are recurring annual charges.

• The Franchise Tax is a fee for maintaining your business registration in Delaware.

• The fee for a corporation is not based upon income, but rather on formulas involving the number of authorized shares, or alternatively, the value of the corporation, whichever would impose a lesser tax.

• It is important to remember that while the minimum annual franchise tax can be as low as $35.00 (+$25.00 filing fee), the maximum annual franchise tax can be as high as $165,000.00.

• It is also important to pay the Franchise taxes on time -- the State of Delaware imposes penalties and interest if it isn't.

• A corporation which has an estimated Franchise Tax of greater than $5,000.00 will pay quarterly pursuant to a schedule listed in the Delaware Code.

Limited Liability Companies and Limited Partnerships

The annual franchise tax for LLC's and LP's are not calculated in the same manner as a corporation. They are a flat rate. The franchise tax is $200.00 for a LLC and a $200.00 for a limited partnership, and is due by June first of every year, after the year of formation.

Stock Corporations and Close Corporations

The annual franchise tax for a corporation is a minimum of $35.00. There is also a $25.00 filing fee assessed on all franchise taxes for corporations.

The maximum number of shares that can be authorized for issue and still be covered by the minimum franchise tax is 3000. The tax goes up on a sliding scale above that. The filing fee at time of formation of the corporation is treated similarly, but with the minimum threshold at 1500 shares. Therefore the lowest cost option is to authorize 1500 shares at the time of incorporation.

The following examples and tables for computation of the annual franchise tax are for simple, single class corporations. The calculations involved for multi-class corporations are additive totals of each class.

The minimum franchise tax applies to those corporations that have less than 3000 shares of capital stock or less than $300,000.00 in assumed no-par capital (3000 x $100.00). The minimum tax is $35.00.

Capital Stock: Authorized Shares Method and The Alternate Method

(We are currently awaiting issuance of a new table for this calculation from the State)

Annually, for a corporation, there is a filing fee of $25.00 due on March 1, plus a tax based upon the lower of the following two calculation methods. A Franchise Tax Notice is sent to a Corporation's Registered Agent every year, and is forwarded by the registered agent to the corporation. The Franchise Tax Notice uses the Authorized Shares Method by default. Often, if you have more shares than the minimum, the Assumed Par Value method may result in a considerably lower Franchise Tax, but requires that you file a statement setting forth the amount of total gross assets of the corporation, including good will.

An Example of the Authorized Shares Method:

A company authorized to issue 3000 shares will pay $60.00. ($35.00 tax and $25.00 filing fee.)
The same as if it were authorized to issue 10 shares.

An example of the Assumed Par Value Capital Method:

A corporation has 1,000,000 authorized shares at $1.00 par value.
They have issued 500,000 shares and have total gross assets of $1,000,000.00.
Total Gross Assets divided by Issued Shares = $1000000/500000 = 2.00
2 is more than stated par value, so multiply 2 times the authorized shares = 2,000,000
So 2,000,000 is assumed par value capital.
Then round up and tax = 2 * $250.00 = $500.00

Delaware requires mandatory electronic filing of Annual Franchise Tax Reports.

There are two ways to file your Annual Franchise Tax Report and pay your franchise tax bill to the State of Delaware:

• Use the Delaware Intercorp, Inc. EZ File system to submit your annual report information and/or have us pay your franchise taxes on your behalf for a nominal service fee.

  Why EZ File?

  It’s Fast.

  • We provide a comprehensive online form for quick and accurate electronic filing of your annual report and payment of your franchise tax.

  It’s Convenient.

  • EZ File will store your annual report details for simple online management. No need to resubmit the same info; change only what needs to be changed from year to year. (Corporations only)

  • Submit the annual report and pay the franchise tax now so you can get back to running your business.

  It’s Affordable.

  • Use your credit card to pay us the franchise tax fees due PLUS our fee of $35.00.

  
  

• Pay and file electronically online at the Division of Corporations Payment Gateway.

  
  

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