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Legislative Changes – March 2018

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.March

March 2018 Legislative Highlights

Idaho HB 379 was signed by the governor March 1, 2018, and relates to nonprofit corporations. The bill amends the nonprofit corporation law to require only one incorporator to sign the articles of incorporation upon formation. The bills become effective July 1, 2018. To view the entire bill: ID HB379

Indiana SB 180 was signed by the governor March 13, 2018, and relates to the Business Organization Code and Transactions Act. The bill changes the required information submitted in filings to the Secretary of State, qualification/registration of foreign entities, use of business entity names and administrative dissolution. A business entity can apply for reinstatement within 5 years after the date of dissolution or active status revocation. The bill is retroactively effective January 1, 2018. To view the entire bill: IN SB180

New Mexico SB 225 was signed by the governor March 1, 2018, and relates to the biennial report due date for corporations. Effective July 1, 2018, the biennial report for a corporation will be due the 15th day of the fourth month after the end of the corporation’s tax year. To view the entire bill: NM SB225

Tennessee SB 1942 was signed by the governor on March 16, 2018, and relates to partnerships filed pursuant to the Uniform Limited Partnership Act. The bill requires limited partnerships to be in good standing with the Department of Revenue, with all fees, taxes and penalties current, before certain filings can be executed. In addition, the bill requires additional information be provided for certain partnership filings. The bill became effective March 16, 2018. To view the entire bill: TN SB1942

Utah HB 186 was signed by the governor on March 19, 2018, and enacts the Benefit Limited Liability Company Act. The bill provides for the formation of a benefit company, addresses the termination of a benefit company, requires a benefit company to adopt a purpose of creating general public benefit, establishes standards of conduct, creates a right of action and requires a benefit company to prepare, distribute, and make public an annual benefit report. The bill becomes effective May 8, 2018. To view the entire bill: UT HB186

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

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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!