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Delaware Annual Report & Franchise Tax – Help! Part One

Last week when we discussed Annual Report Services (click here to read that blog), we mentioned most jurisdictions have annual filing Delaware Annual Report & Franchise Taxand/or tax requirements. Delaware is one of those jurisdictions that requires annual report filings and franchise tax payments. Depending on the entity type, both may be required or just one…but, we’ll get into those details later.  Since Delaware also happens to be the jurisdiction we seem to get the most questions about, we decided to tackle the subject in a series of blogs. Today we’ll start by answering just a few basic questions…

What is a Delaware Annual Report? This is a document filed annually with the State of Delaware Division of Corporations detailing pertinent company details. Information such as the Principal Place of Business, Officer and Director details, and stock information are included on the annual report. The stock information provided helps to determine the annual franchise tax due. Not all entities are required to file an annual report.

What is franchise tax? Franchise taxes are an annual fee paid to the State of Delaware Division of Corporations for your entity. For corporations, the franchise tax fee is based on authorized shares. For alternative entities, such as LLCs, the fee is a flat rate. Most entities are required to pay a franchise tax.

What entity types file an annual report and/or pay franchise taxes? When are they due?

Entity Type Annual Report Franchise Tax Due Date
Domestic Corporations Yes Yes March 1st
Exempt Domestic Corporations Yes No March 1st
Domestic Limited Liability Companies No Yes June 1st
Domestic Limited Partnerships No Yes June 1st
Foreign Corporations Yes Yes June 30th
Foreign Limited Liability Companies No Yes June 1st
Foreign Limited Partnerships No Yes June 1st
Delaware Statutory Trusts No No N/A
As mentioned above, these are just the basics. Over the next few weeks, we will continue to discuss Delaware annual reports and franchise taxes in more detail. Be sure to check back weekly or subscribe to the blog so you don’t miss out! Of course, if you have a question in the meantime, feel free to reach out to us. We’d be happy to help you out!

Amanda No Comments

Tell Me More About Annual Report Services

Annual Report Services are one of the truly invaluable ancillary services we offer our registered agent clients.

Most jurisdictions have annual filing and/or tax requirements. In order to stay in good annual report servicesstanding and maintain any legal protections your entity may provide, it’s important these obligations are fulfilled.

Why are Annual Report Services so invaluable?

For reasons we mentioned above, it’s important for your entity to remain active and in good standing. Failure to do so may result in penalty fees, a loss of good standing, and could ultimately find your entity involuntarily dissolved or its authority revoked. While it is usually possible to recover from these situations, it can be a major headache and the costs can really add up. So, why chance it? Annual Report Services are often compared to insurance, as they help insure you don’t miss these crucial deadlines.

To assist with remaining compliant, we offer two options for Annual Report Services:

Option One – Annual Report Monitoring Service (ARMS)

Annual Report Monitoring Service is a reminder service for those do-it-yourselfers who just want a friendly reminder when obligations are due for their entities. With ARMS, we will remind you 60 days ahead of the due date and again 30 days prior. When you get the reminder, you can either fulfill the obligation on your own or tell us you’d like us to handle it for you.

Option Two – Annual Report Filing Service (ARFS)

Annual Report Filing Service is an automated service for those of you who don’t want to worry about it. Think of it as the “auto-pay” feature for your credit card or electric bill. With ARFS, we proactively gather the information we will need to complete any annual filing requirements. When the due date(s) roll around, we prepare and file any reports and/or make annual payments, as well as send you proof of compliance and upload it to your Snapshot account (as available).

If you have any additional questions about or need assistance signing up for one of our Annual Report Services, feel free to reach out to us. We’re here to help make your life easier!

Amanda No Comments

How to Appoint an Independent Manager or Director in 3 Easy Steps

Appointing an Independent Manager or Director is an easy three step process. Chances are if you’re reading this, you already know what an Independent Manager or Director is and why you need one. So, the only question that remains is ‘How do I appoint an Independent Manager?’ (If you need a crash course in the what and why, you may want to check out one of our previous blogs about the topic by clicking here and/or here.) 

Step One – Operating Agreement Review
Once you’ve reached out to us to inquire about appointing independent representation, you will need to provide us Independent Managerwith a copy of the operating agreement, for review.

Step Two – The Contract
Next, we will provide you with a contract for the independent representation engagement, tailored to your specific needs. If it’s not already included within the operating agreement, you will also need to provide us the lender contact information at this time.

Step Three – Payment and Filing
Finally, when the independent representation contract is agreed upon, payment will be due, and we will sign the operating agreement.

We understand Independent Manager and Director engagements are time sensitive, so we do everything we can to make the process as quick, smooth, and seamless as possible. If you have any questions or need additional information regarding Independent Representation, please feel free to reach out to us.

Amanda No Comments

Independent Manager – Why?

In our blog “What is an Independent Manager?” we briefly touched on why an LLC would appoint an Independent Manager.independent manager - why? Before we dig a little deeper into the why of Independent Representation – did you know there are other names this special role goes by, dependent upon the type of entity? Independent Director, Springing Member, and Special Member are some of the other terms you will hear when referring to this special type of representation within a company’s board. An Independent Director and a Springing Member are both types of Special Members. A Springing Member is a member that sits dormant until an event triggers the need to bring the Member into action. This could then cause them to be an Independent Manager. For the sake of this blog, we’ll stick to discussing an Independent Manager on an LLC’s board of managers.

So, why appoint someone to this special role? There are various reasons for appointing this position, but a common motive for appointment is to protect the lender.    As an independent party with no financial relationship with the LLC, an Independent Manager simply fulfills their obligation as indicated in the operating agreement. This section of the operating agreement is drafted with consent by the lending party, so this independent party acts as a representative for the financial institution.

As long as there is a debt held by the lender or financial institution, the Independent Manager would remain active and required to vote in the interest of the lender or financial institution, including voting against bankruptcy, thus safeguarding the lender.

While the situations and names may vary, the role is rather consistent. If you have any questions about or need to appoint Independent Representation, just give us a call or email us.

 

Amanda No Comments

Legislative Changes in Nevada

Below is information we recently received through the National legislative changes in nevadaPublic Records Research Association (NPRRA) concerning legislative changes in Nevada. As an active member of the NPRRA, one of the many benefits is the continuous flow of information such as this between members regarding changes in policy, law, and processing of public records searching and filing across the US.

Notice of 2017 Legislative Impacts The 2017 Legislative session imposed several changes to certain requirements within Title 7 of the Nevada Revised Statutes. Below is a highlight of the changes. For further information and a complete list of bills, please refer to the Nevada Legislature website at: https://www.leg.state.nv.us

Assembly Bill 6 – Effective July 1, 2017 Removes an exemption from the requirement to obtain a state business license for businesses whose primary purpose is to create or produce motion pictures.

Assembly Bill 123 – Effective October 1, 2017 Revises provisions governing initial and annual lists and revises provisions relating to a series created by a limited-liability company. Each new business entity subject to Title 7 of the Nevada Revised Statutes shall file an initial list at the time of filing its organizational documents. If an amended list is filed within 60 days after the initial list is filed, the business entity shall not be required to pay a fee. If the articles of organization or operating agreement of a limited-liability company creates one or more series, the registered agent of the company shall be deemed to be the registered agent for each series of the limited-liability company. Each series may be served with any legal process, notice or demand required or authorized by law by serving the registered agent of the limited-liability company which authorized the creation of the series.

Senate Bill 41 – Effective October 1, 2017 Revises provisions governing the examination of the records required to be maintained by registered agents and revises the provisions governing the examination of records required to be maintained by certain business entities. The Secretary of State may conduct periodic, special or any other examinations of any records required to be maintained pursuant to this chapter or any other provision of NRS pertaining to the duties of a registered agent as the Secretary of State deems necessary or appropriate to determine whether a violation of this chapter or any other provision of NRS pertaining to the duties of a registered agent has been committed. Upon the request of the Secretary of State, a limited liability company shall provide the Secretary of State with the name and contact information of the custodian of records, if different from the registered agent for such company. Each limited partnership shall continuously maintain a principal office in this State, which may but need not be a place of its business in this State, or a custodian of records whose name and street address is available at the limited partnership’s registered office. A limited partnership shall maintain at its principal place of business in this State or with the custodian of records a current list of the full name and last known business address of each partner, separately identifying the general partners in alphabetical order and the limited partners in alphabetical order.

Assembly Bill 423 – Effective January 1, 2018 The Secretary of State shall work in consultation with the Nevada Commission for Women to design and conduct an annual survey of businesses in this State for the purpose of collecting data and information related to issues of gender equality in the workplace. The survey shall be offered through the state business portal at the time the business submits an online application or renewal for a state business license. The Secretary of State shall make the voluntary responses electronically available and searchable on the Internet website of the Office of the Secretary of State and shall annually compile the responses into a report and submit the report to the Governor and to the Director of the Legislative Counsel Bureau.

Assembly Bill 436 – Effective January 1, 2018 The Secretary of State shall ensure that the state business portal enables a person who applies for the issuance or renewal of a state business license to indicate whether the applicant is a minority-owned business, a woman-owned business or a veteran-owned business and shall provide information electronically concerning programs to provide financing for small businesses and information concerning the process by which the business may become certified as a disadvantaged business enterprise. The Secretary of State shall include and maintain the same information on its Internet website. The Office of Nevada Secretary of State

If you have any questions about how the legislative changes in Nevada may affect you or if you need assistance with forming or maintaining your entity in Nevada, please don’t hesitate to contact us.

Amanda No Comments

What is an Independent Manager?

This week’s informational blog covers the basics of what Independent Representation is byIndependent Manager answering the question – What is an Independent Manager?

A Limited Liability Company (LLC) is managed by a board of managers.  The board of managers oversees the activities of  an LLC.  An Independent Manager is a special type of manager appointed to the LLC’s board that has no equity relationship with the entity and thus is considered to be independent of the LLC’s ownership.  The role of this unique position is usually outlined in the LLC’s operating agreement.

So…Why would an LLC appoint an Independent Manager? Appointment of Independent Representation may be a lender or third party requirement in a transaction. This special position provides a level of security for the third party. (Think of it as insurance.) As we previously mentioned, the third party will detail the Independent Manager’s duties when drafting the operating agreement. These duties generally require the Independent Manager be a party to and vote in certain major board decisions. Again, the specific types of decisions the Independent Manager must give consent for are also outlined in the operating agreement of the LLC.  By requiring this unique position, the third party retains some control over the LLC without actively managing the entity.

These are just the basics. If you want to learn more, have questions about, or need to appoint Independent Representation, feel free to reach out to us. We would be happy to assist you. And don’t forget to keep an eye on our blog for more info to come…

 

Amanda No Comments

What is a Registered Agent and Why Are They Important?

A registered agent is the company or person you designate to receive legal and tax notices for your company. Most jurisdictions legally require entitiesWhat is a registered agent and why are they important? such as corporations and limited liability companies (LLCs) to list a company or individual physically located within the jurisdiction and available normal business hours to serve as this point of contact. Resident agent, statutory agent, and statutory representation are some of the additional titles a registered agent may go by.

So, why is a registered agent important? Well, aside from the legal requirement telling you that you have to have one (which in my book makes them kind of important), a registered agent helps you sustain your business by providing important documents and notices to keep you compliant in the jurisdictions you formed or qualified to do business in. Since these documents and notices usually require an action within a limited amount of time, it’s imperative your agent always has up-to-date contact information for you.

As mentioned earlier, the registered agent will receive and forward important legal and governmental documents and notices. In the case of legal documents such as Service of Process (SOP), you may have only a few days to respond to a summons. If your agent doesn’t have your current contact information, important response dates could be missed, resulting in significant legal repercussions. The same holds true for annual report and franchise tax notices. Invalid contact information may equate to a missed filing date and major headache, with late fees, penalties, and interest continually accruing.

Not only is keeping your registered agent up-to-date with current contact information for your entity important, but so is ensuring your annual registered agent fees are paid. Failure to maintain a registered agent may result in your agent resigning. When an agent resigns, the company is no longer considered to be in good standing with the jurisdiction and you risk losing the legal protections your entity may provide you. Returning to good standing with the jurisdiction then usually requires additional fees and may even involve filing new documents. So, why risk it?

If you have any questions or need assistance with Registered Agent Services, feel free to reach out to us. We’re always happy to help!

Amanda No Comments

Certificate of Incumbency – A Case Study

Over the past few weeks, we’ve covered the ins and outs of boat registrations, as well as the “Who?” “What?””Why?”and “How” forCertificate of Incumbency Case Study a Certificate of Incumbency. Today we wrap it all up with a real-life case study of how a Certificate of Incumbency was able to help an international boat owner.

An international client needed to prove to Israeli authorities he was the rightful owner of his boat. The boat was registered under the name of a Limited Liability Company (LLC). This client in turn owned the LLC. Sounds simple enough, right? Wrong… A basic LLC formation document in Delaware does not list the owners of the entity. So, how does the client prove ownership then? One suggestion his legal counsel gave was to file an Amendment in Delaware adding an article to show he was the owner. However, this would mean the client’s personal information, such as home address would become public information, which was not an ideal solution for this client. In talking with the client about the situation, we mentioned we often provide a Certificate of Incumbency for international clients needing to prove ownership to banking officials.  The client asked for a sample document and conferred with his attorney. The attorney agreed the Certificate of Incumbency would sufficiently meet the needs to prove his ownership. The client provided us with all the necessary documentation. We then drafted the certificate, had it notarized, and sent it to the State of Delaware for an Apostille. The end result? A very happy client!

If you have additional questions or need assistance with obtaining a certificate, give us a call or email us. We’re always happy to help you out in any way we can. Just remember, we can’t give legal or tax advice. You’ll have to contact an attorney or CPA for that.

Amanda No Comments

Boat Registration Series Part 3-US Coast Guard Vessel Documentation

Our Delaware Boat Registration Series has covered how to register your boat in Delaware, as well as vessel documentation - cargo shiphow to renew, transfer and deflag or delete your boat registration. In this final blog of the Delaware Boat Registration Series, we won’t cover Delaware at all, but rather the US Coast Guard. Through the National Vessel Documentation Center, the US Coast Guard facilitates documentation.

What is vessel documentation? This is essentially federal level boat registration. However, not just anyone can register their boat or vessel with the US Coast Guard. There are specific requirements a vessel must meet.

What are the requirements for vessel documentation? A vessel must measure at least five net tons and be wholly owned by a US citizen.

What is net tonnage? Per the US Coast Guard, “Net tonnage is a volumetric measure of a vessel’s useful capacity, for which a number of different measurement systems are in use worldwide. U.S. law requires tonnage measurement for any vessel for which the application of a U.S. law depends on the vessel’s tonnage. Owners of U.S. vessels less than 79 feet in length may choose measurement under one of two older U.S. Formal Measurement Systems (the Standard or Dual Regulatory Measurement Systems), or the U.S. Simplified Regulatory Measurement System. The U.S. tonnage measurement program is administered by the Coast Guard Marine Safety Center (MSC).”

What are the requirements for vessel documentation? The basic requirements for US Coast Guard documentation are to demonstrate ownership of the vessel, US citizenship, and eligibility for the endorsement sought.

For more information about US Coast Guard vessel documentation, check out the National Vessel Documentation Center’s website. If you have additional questions or need assistance, give us a call or email us.

 

 

 

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New Hampshire Corporate Law Updates

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA.

New Hampshire has enacted the following legislation, effective as noted:

Senate Bill 42, Laws of 2017, effective August 27, 2017, has amended the business and nonprofit corporation laws by repealing the requirement that a public hearing be held in connection with domestic reinstatements. This applies to late reinstatements for business corporations.

The Bill may be accessed at http://www.gencourt.state.nh.us/bill_status/billText.aspx?sy=2017&v=HP&id=916.

Senate Bill 18, Laws of 2017, effective August 28, 2017, has amended the business corporation and LLC laws by authorizing revoked foreign corporations and foreign LLCs to apply for reinstatement.

The Bill may be accessed at http://www.gencourt.state.nh.us/bill_status/billText.aspx?sy=2017&id=918&txtFormat=pdf&v=current.

If you have questions or need assistance, feel free to contact us or call 800-346-4646.