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Delaware Annual Report & Franchise Tax–The Buzz! Part 1

Delaware Annual Report & franchise taxDelaware is one of the jurisdictions which require annual report filings and franchise tax payments.  The deadline of March 1 is quickly approaching, so today, we decided to answer a few basic questions…

Where are the annual report & franchise tax notices sent? In Delaware, annual report and franchise tax notices are sent to the agent of record, also known as your registered agent. The registered agent is then responsible for passing the notice along to you. This is one of the major reasons it’s imperative to keep your registered agent up to date with the most current contact information for your entity.

How and when are the Delaware annual report & franchise tax notices sent?  Annual tax notices for domestic Delaware corporations have been sent either by e-mail or First Class Mail.  Incserv completed their mailings on 12/29/2017.  If you have not yet received your notice, please contact your registered agent.

How can I file my Delaware annual report? The State of Delaware Division of Corporations requires all Delaware annual reports for profit corporations be filed online. This can be done by visiting the Division of Corporation’s website at www.corp.delaware.gov or by utilizing a registered agent. When utilizing a registered agent, you can have the agent file for you or use their filing portal that is tied directly to the State’s system (ours is Snapshot™ – if you want to know more about it, click here).

Be sure to check back weekly or subscribe to the blog so you don’t miss out on the rest of the details. Next week we will continue the series and talk more about how to file using our Snapshot™ portal. Of course, if you have a question in the meantime, feel free to reach out to us. We are here to help!

Rose Redman, Quality Assurance and Employee Development Manager

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Delaware Annual Report & Franchise Tax – Help! Part Six

Today we close out our six-part Delaware Annual Report & Franchise Tax Series. If this happens to be the first blog you’re seeing in the series, click here to start from the beginning. We’ve covered the basics pertaining to filing a Delaware corporation annual report and paying Delaware franchise taxes. Now for a few of the “special case” scenarios…Delaware annual report

I understand the assumed par value method of Delaware franchise tax calculation, but what happens if a stock amendment was filed during the year? If an amendment changing your stock or par value was filed with the Delaware Division of Corporations during the year, issued shares and total gross assets within 30 days of the amendment must be given for each portion of the year during which each distinct authorized amount of capital stock or par value was in effect.  The tax is then prorated for each portion of the year dividing the number of days the stock/par value was in effect by 365 days (366 leap year), then multiplying this result by the tax calculated for that portion of the year.  The total tax for the year is the sum of all the prorated taxes for each portion of the year.

Is a Delaware corporation that is ending its existence or reinstating required to file an annual report or pay franchise taxes? Yes, when a Delaware corporation is ending their existence or reinstating to return the entity to good standing, the corporation is required by law to file an annual report and pay any and all franchise tax due. If you’re handling the process on your own, you will need to reach out to the Franchise Tax Section of the Delaware Division of Corporations prior to submitting your Renewal, Merger, Dissolution, Conversion or any other document filing that will end the existence or renew the status of your Delaware corporation in order to determine the final franchise tax fees and annual report filing requirements. If you’re working with a service provider, such as us, we can handle this part for you.

What happens if I miss the deadline for filing my corporation’s Delaware annual report and paying my Delaware franchise tax? A penalty fee will be added if the annual report is not filed by the due date. In addition, 1.5% interest is assessed and added to the total amount due. The 1.5% interest is calculated based only on the total franchise tax due and does not include the annual report fee and penalty. Interest is continually accrued on the 6th of each month until the franchise tax is paid or the entity goes into an inactive status.

What do I do if I made a mistake on my Delaware annual report filing? An amendment may be filed, but it must be filed before a subsequent report is filed. For example if you made a mistake on the 2016 report, the 2016 report must be amended before the 2017 report is filed. Otherwise the 2016 record will stand as is.

This wraps up our Delaware Annual Report & Franchise Tax Series. However, if you have any questions about or need assistance with filing a Delaware annual report or paying Delaware franchise tax, feel free to reach out to us. We’re here to help!

 

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Delaware Annual Report & Franchise Tax – Help! Part Five

Part Five of our Delaware Annual Report & Franchise Tax Series brings us to the assumed par value method for calculating Delaware franchise taxDelaware franchise tax. As we previously mentioned, franchise taxes are an annual fee paid to the State of Delaware Division of Corporations for your entity. There are two options for calculating the franchise tax amount due. There is the authorized shares method and the assumed par value method. Entities with a large number of shares carrying a low par value often times opt for the latter method of Delaware franchise tax calculation.

Per the Delaware Secretary of State Division of Corporations:
To use the assumed par value method to calculate Delaware franchise tax, “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.”

The example cited below is for a corporation having 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares of stock with a par value of $5.00, gross assets of $1,000,000.00 and issued shares totaling 485,000.

  1. Divide your total gross assets by your total issued shares carrying to 6 decimal places.  The result is your “assumed par”.
    Example: $1,000,000 assets, 485,000 issued shares = $2.061856 assumed par.
  2. Multiply the assumed par by the number of authorized shares having a par value of less than the assumed par. Example: $2.061856 assumed par s 1,000,000 shares = $2,061,856.
  3. Multiply the number of authorized shares with a par value greater than the assumed par by their respective par value.
    Example: 250,000 shares s $5.00 par value = $1,250,000
  4. Add the results of #2 and #3 above.  The result is your assumed par value capital.
    Example:  $2,061,856 plus $1,250,000 = $3,311 956 assumed par value capital.
  5. Figure your tax by dividing the assumed par value capital, rounded up to the next million if it is over $1,000,000, by 1,000,000 and then multiply by $350.00.
    Example: 4 x $350.00 = $1,400.00
  6. The minimum tax for the Assumed Par Value Capital Method of calculation is $350.00.

Be sure to check back next week for the final blog in the Delaware Annual Report & Franchise Tax Series. In the meantime, feel free to reach out to us if you have any questions or need assistance with filing a Delaware annual report or paying Delaware franchise tax. We’re here to help!

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Delaware Annual Report & Franchise Tax – Help! Part Four

Today, in Part Four of our Delaware Annual Report & Franchise Tax Series, we start to break down Delaware franchise taxes. As weDelaware franchise tax previously mentioned, 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, but for alternative entities, such as a limited liability company, the fee is a flat rate. Most Delaware entities are required to pay a franchise tax.  The Delaware franchise tax fee is in addition to the $50 state fee to file a Corporation Delaware annual report.

For entities using the authorized shares method of Delaware franchise tax calculation, the fees break down as follows:

  • $175 minimum tax for corporations with 5,000 shares or less.
  • $350 minimum tax for corporations with 5,001 -10,000 shares
  • Each additional 10,000 shares or portion thereof adds $75.00..
  • $200,000 maximum tax. (This is an increase from the previous maximum tax rate of $180,000.)

Examples:  A corporation with 10,005 shares authorized will pay $325.00. $250.00 + $75.00. A corporation with 100,000 shares authorized pays $925.00. $250.00 +  675.00 ($75.00 x 9)

Corporations that owe $5,000 or more in Delaware franchise taxes make estimated payments. The schedule for estimated franchise tax payments breaks down quarterly:

  • June 1st – 40% of total tax due
  • September 1st – 20% of total tax due
  • December 1st – 20% of total tax paid is due
  • March 1st – remainder of tax is due

Be sure to check back weekly or subscribe to the blog to follow along with the series. If you’re new to the Delaware Annual Report & Franchise Tax Series, click the hyperlink to start from the beginning. Next week we will cover the assumed par value method for calculating Delaware franchise taxes. As always, if you have a question in the meantime, feel free to reach out to us. We’d be happy to help you out!

 

 

 

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Delaware Annual Report & Franchise Tax – Help! Part Three

Today, in Part Three of our Delaware Annual Report & Franchise Tax Series, we continue to delve into the specifics of completing a Delaware annual report. If you’re new to the Delaware Annual Report & Franchise Tax Series, click here to start at the beginning.

When completing the Delaware annual report for a domestic profit corporation, certain information is mandatory for all filers. Once filed, this information is considered public record, with the exception of the gross assets and issued shares.Delaware annual report

  • End of fiscal year date – For corporations not using the last day of the calendar year, the date will need to be updated to specify your corporation’s fiscal year end date.
  • Principal place of business address and phone number – This is the physical location of the principal place of business for the location. Delaware Law requires the city, town, street and number. A post office box address is not accepted. You may use an international address.
  • One officer – Only one officer is required, though additional officers may be added. The first and last name, title, and address of the officer are required. The officer authorizing the report must be listed.
  • All directors – The names and addresses of all the directors as of the filing date of the annual report must be listed. The only exception to this rule is for an initial Delaware annual report or a Delaware annual report being filed in conjunction with a dissolution pursuant to Section 274 or 275(c) of Title 8.
  • Signature line – The name, title, and address (no PO Boxes allowed) of the authorizing person must be listed.
  • Gross assets & issued shares – When filing a Delaware annual report for a corporation not considered minimum stock, calculation information is also required. This includes total gross assets and issued shares.

Be sure to check back weekly or subscribe to the blog to follow along with the series. Next week we will begin to break down Delaware franchise taxes. As always, if you have a question in the meantime, feel free to reach out to us. We’d be happy to help you out!

 

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Delaware Annual Report & Franchise Tax – Help! Part Two

Last week we started off the Delaware Annual Report & Franchise Tax Series with the basics. If you missed the first blog, click here to get caught up. This week we’ll dig a little deeper into the Delaware annual report, as it pertains to profit corporations.

Where are the annual report & franchise tax notices sent? In Delaware, annual report and franchise tax notices are sent to the Delaware annual report agent of record, also known as your registered agent. The registered agent is then responsible for passing the notice along to you. This is one of the major reasons it’s imperative to keep your registered agent up to date with the most current contact information for your entity.

How and when are the Delaware annual report & franchise tax notices sent? In Delaware, the registered agent may send corporate annual report and franchise tax notices to you via email or regular mail. Notices usually begin going out to Delaware corporations at the end of December or beginning of January.

How can I file my Delaware annual report? The State of Delaware Division of Corporations requires all Delaware annual reports for profit corporations be filed online. This can be done by visiting the Division of Corporation’s website at www.corp.delaware.gov or by utilizing a registered agent. When utilizing a registered agent, you can have the agent file for you or use their filing portal that is tied directly to the State’s system (ours is Snapshot™ – if you want to know more about it, click here).

Be sure to check back weekly or subscribe to the blog so you don’t miss out on the rest of the details. Next week we will continue the series and talk more about the details of completing a Delaware annual report. 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!

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DE Secretary of State Employee Recognition Luncheon

Reminder…

On Friday, December 1, 2017 an Employee Recognition Luncheon is planned for all the employees of the Delaware Secretary of State – Division of Corporations.  State services have been altered.

All 30 Minute and One-Hour service filings must be received prior to 5:00 PM (ET) and Two-Hour service filings will need to be received prior to 4:00 PM (ET).  All other cut-off times will remain unchanged.

The DE Secretary of State will not be available between 11:00 AM and 2:00 PM (ET). All 30 Minute, One-Hour and Two-Hour filings will not be processed during this time.  Filings which need attention should be received by the DE Secretary of State prior to 10:00 AM.

We will be able to secure filing dates and times until 10:30 PM (ET).

To meet these deadlines, Incserv must receive all filings AT LEAST 15 MINUTES before the DE Secretary of State
corresponding cut-off times.

If you have questions or concerns, please contact our office at  302.531.0855, 800.346.4646 or orders@incserv.com.

 

 

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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!

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Delaware House Bill 175

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.

Delaware House Bill 175, Laws of 2017, has increased the following corporate franchise tax rates and amounts and statutory (business) trust fees, effective as noted below.

Franchise Tax

  • Delinquency fees from $100 to $125 (January 1, 2018)
  • Tax multiplier from $75 to $85 related to the authorized shares calculation (January 1, 2018)
  • Tax multiplier from $350 to $400 related to the assumed par calculation (January 1, 2018)
  • Minimum tax related to the assumed par calculation from $350 to $400 (January 1, 2018)
  • Excepted as below, maximum tax from $180,000 to $200,000 (effective for the tax year beginning January 1, 2017)
  • Creation of a new $250,000 maximum for certain publicly traded corporations effective for the tax year beginning January 1, 2017)

Statutory Trusts

  • Maximum fee for filing documents from $300 to $500 (August 1, 2017)

The Bill may be accessed at: http://legis.delaware.gov/json/BillDetail/GenerateHtmlDocument?legislationId=25780&legislationTypeId=1&docTypeId=2&legislationName=HB175

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

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Delaware Boat Registration Series – Part 2

Delaware boat registrationIn part one of our three part Delaware Boat Registration series we answered some frequently asked questions about how to register your boat in Delaware. Here in part two, we’re covering boat registration renewals, transfers, and deflagging/deleting.

When can I renew my Delaware boat registration? As mentioned in part one, Delaware boat registrations run on a calendar year. Beginning mid-October, registration renewal opens up. Therefore if your registration expires December 31st, you may renew beginning in mid-October.

What information do I need to renew my Delaware boat registration? You will need the information from your original registration, such as the hull number, boat registration/DL number and the exact individual or company name your boat is registered under. Please note if your boat is registered under a company name, the company needs to be in good standing with the State of Delaware and with its registered agent.

I need to renew, but my address needs to be changed. How do I change the address on my registration? Your address can be updated during the renewal or transfer process.

Can I use your address on my registration? Yes. If you’re an Incserv registered agent client, you can use our address on the registration.

How do I transfer my Delaware boat registration? Transferring registration is simple. You’ll need a notarized bill of sale and then you will complete a new application. For all the details on new applications, click here to check out part one of our series.

Can I deflag or delete my Delaware boat registration? Deleting your Delaware Boat registration is also commonly referred to as deflagging your boat. Like transferring registration, the process is easy. All you need is the registration number. This is the number that starts with DL on your registration card. The Delaware Department of Natural Resources (DNREC) can then produce a deletion letter. If the deletion letter needs to be apostilled for use abroad, we can help with that too!

As always, if you have additional questions or need assistance with boat registration, renewal, transfer, and/or deletion, give us a call or email us. We would be happy to help, as we courier boat registrations back and forth to DNREC several times a week for our clients.