Gennine No Comments

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

Share this:

Gennine No Comments

Maryland State Dept. of Assessment and Taxation Release Changes

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.

The Maryland State Department of Assessments and Taxation has issued a  about changes to its Annual Report and Personal Property Tax Return.  The press release states in part as follows:

“Beginning in 2018, the Department will be separating the Annual Report and Personal Property Tax Return filings, which historically have been combined in Form 1. All business entities will still be required to file a two-page Annual Report, and directions within that document will determine whether or not they must also attach a Personal Property Tax Return. The majority of business owners—roughly 200,000—do not actually own any personal property and will not be required to complete that section.”

A copy of the press release is attached, and also can be found online here: http://dat.maryland.gov/newsroom/Documents/2017.12.14%20Annual%20Report%20and%20Personal%20Property%20Tax%20Return%20Press%20Release.pdf

If you have questions or concerns, please contact our Washington, DC office at 202.386.7575, 877.531.1131 or dcorders@incserv.com.

Incserv No Comments

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!

Incserv No Comments

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!

 

 

 

Incserv No Comments

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!

 

Incserv No Comments

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!

Incserv No Comments

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!

Gennine No Comments

Delaware House Bill 175 Passed

Delaware House Bill 175, passed on July 2nd, alters various fees assessed by the Delaware Secretary of State.  The Bill Synopsis is as follows:

“This Act alters various fees assessed by the Delaware Secretary of State. The Act provides that most changes to the fees and taxes assessed will take effect on August 1, 2017; however increases to the maximum franchise tax and the late penalty for the filing of an annual franchise tax report shall take effect for the tax year beginning January 1, 2017, and the increase of the assumed par value multiplier for calculation of the corporate franchise tax and the authorized shares multiplier for corporations with greater than 10,000 authorized shares for calculation of the corporate franchise tax shall take effect for the tax year beginning on January 1, 2018.”

Click here to read Delaware House Bill 175 in detail.

If you have any questions or need assistance with annual reports or franchise taxes, please do not hesitate to contact us.

Gennine No Comments

Succeeding at Biz: 4 Easy Rules That Will Keep Your Delaware Corporation Alive.

Incorporating Services, Ltd. (Incserv) is very fortunate to repost a wonderful article originally published online at Daily-Journal.com, The Kankakee Valley, Illinois. The author is Mr. Cliff Ennico of The Law Offices of Clifford R. Ennico located at 2490 Black Rock Turnpike, # 354 Fairfield, Connecticut 06825.

The article can be read below in its entirety.

Some friends and I started a high-tech business a couple of years ago and formed a Delaware corporation to run the business. We live and work in another state but were told that Delaware was the place to be for tech startups (it might have been one of your columns, actually).

We formed the corporation online to save money, and it seemed like everything was OK.

A couple of weeks ago, we signed a letter of intent with an angel investor who wants to put $3 million into our company. Needless to say, we were very excited.

But when the investor’s lawyer looked into our company, he made some horrifying discoveries. It seems Delaware killed off our corporation two years ago because we didn’t pay a “franchise tax,” whatever that is. Because our corporation was no longer active, somebody else grabbed our name in Delaware and is now trying to register it as a trademark. If that person succeeds in doing that, we will have to hand over our website domain name even though we’ve spent a fortune building a website around it.

The lawyer also told us that because we never registered in the state where we are actually doing business, we owe tons of money in penalties even though we’ve paid taxes here every year. Now the investor is not so excited about doing business with us. While we are embarrassed as hell, shouldn’t someone have told us we had to do this stuff?

While it could be true that I once wrote a column about the benefits of tech startups incorporating in Delaware, let’s be clear: I never, ever advised someone to form a corporation or limited liability company (LLC) online, and this is one of the reasons. While the online services can get you up and running quickly and cheaply, they don’t help you with the things you need to do on an ongoing basis to keep your corporation or LLC alive. This email is a perfect example of what can happen when you don’t stay on top of things compliance wise.

Having wagged my finger at this reader, I have to say I’m sympathetic to her plight. When you are building a fast-growing tech company, you are working 24/7 365 days per year, living on Red Bull, ramen noodles and three hours of sleep per week. Nobody is thinking about legal compliance. Yet failing to keep on top of things can kill your startup, as this reader’s email attests.

Here are four easy rules that will help keep your corporation or LLC on life support.

Rule No. 1: Hire a lawyer and an accountant, and listen to them! It is impossible to run a tech startup in the United States without a good lawyer and a good accountant. You need both, especially if you are too busy to deal with government paperwork. Whenever your lawyer or accountant tells you something needs to be done, do it immediately! They are not just trying to run up a bill. They are trying to save your butt.

Rule No. 2: Watch your mailbox and inbox. I am certain that the state of Delaware or the corporation’s registered agent sent this reader both emails and snail-mail reminders telling her when annual reports, franchise tax reports and other compliance paperwork were due. She probably threw them away thinking they were junk mail or spam.

This point is so important that I need to scream: WHEN YOU HAVE A CORPORATION OR LLC AND YOU GET MAIL FROM A STATE OR GOVERNMENT AGENCY ADDRESSED TO THE COMPANY, IT IS NEVER, EVER TO BE TREATED AS JUNK MAIL! If you are too busy to deal with it, you should forward the email, or scan and email the paper correspondence to your lawyer and accountant IMMEDIATELY. Let them tell you whether it’s important or not. If they say it’s important, follow Rule No. 1.

Rule No. 3: Pay your registered agent. If you are incorporated in Delaware or a state other than where you are actually located, your online service hired a registered agent in that state to act as your local presence. That company will send you a bill each year for its services. Pay it promptly. If it doesn’t get paid, it will withdraw as your registered agent, and the state will dissolve your corporation or LLC.

Rule No. 4: Register in your home state. Forming a Delaware corporation does not allow you to operate legally in your home state. For that, you need to register as a foreign corporation with your state’s secretary of state and pay taxes to the state tax authority. You have to do both. Failing to register with the secretary of state can lead to heavy penalties and bar you from your state courts if you ever have to sue someone.

Yes, doing these things costs money. But it’s money well-spent. Find the money, and get them done.

Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series “Money Hunt.” This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.

Special thanks to Mr. Ennico for his insight on properly forming and maintaining your corporate entity. Incserv is here to help, contact us for more information.

 

Gennine No Comments

Proposed BILL Could Increase Wyoming Statutory Annual Reporting Fees

As a Registered Agent in the State of Wyoming, Incorporating Services, Ltd. (Incserv) received communication from Mr. Ed Murray, the Wyoming Secretary of State. The communication was substantiated by the staff at the office in Cheyenne.

In this notice, Mr. Murray writes, “As Wyoming’s Secretary of State, I want to warn you about a bill (House Bill 267) now before the Wyoming Legislature which would significantly increase the minimum annual reporting fees for businesses by 200% – from $50 to $150 – effectively tripling fees for most of the businesses which you represent.”

The Secretary of State continues, “What HB 267 proposes – sudden and unpredictable fee increases – sends the wrong message to your clients and to all businesses here in Wyoming or to those contemplating doing business in Wyoming.”

House Bill 267 was proposed late last Friday afternoon, Jan. 27th, by Representative Jerry Obermueller (Casper). Additionally, HB 267 has been referred to the House Appropriations Committee for consideration either tomorrow, Wednesday, February 1st, or Thursday, February 2nd.

Please note: This fee increase is for the state of Wyoming’s annual reporting fees, not the registered agent fees from Incserv. Incserv will be monitoring this situation and will keep you informed.