How to submit an Annual Franchise Tax Report and pay Franchise Tax?

Step by step direction for corporations

Any corporation that is incorporated in Delaware, regardless of generating any revenue or not and where it conducts business, must file an Annual Franchise Tax Report and pay the Franchise Tax for the privilege of incorporating in Delaware. Franchise Taxes and annual Reports are due no later than March 1 of each year. Failure to file the report and pay the required franchise taxes will result in a penalty of $200 and 1.5% interest per month on tax and penalty.

How much does a corporation need to pay?^[1]  A corporation will need to pay a $50 filing fee plus the franchise tax. The franchise tax can be calculated based on one of the two mentioned methods below.

Authorized Shares Method:  In the case of this method the tax amount depends on the number of authorized shares. For corporations having no par value stock the authorized shares method will always result in lesser tax.^[2]

• 5,000 shares or less (minimum tax): $175.00.

• 5,001 - 10,000 shares: $250.00

• Each additional 10,000 shares or portion thereof will be an additional $85.00

• Maximum annual tax: $200,000.00

Assumed Par Value Capital Method  To use this method, you must give figures for all issued shares and total gross assets in the spaces provided in your Annual Franchise Tax Report. The tax rate under this method is $400 per million or a portion of a million. If the assumed par value capital is less than $1,000,000 then the tax is calculated by dividing the assumed par value capital by $1,000,000 and then multiplying that result by $400.

The Authorized Shares method is the default method. This is why some owners are surprised to receive a notification with a large amount. However, the corporation can recalculate using the Assumed Par Value Capital Method.

Below you will find the steps in how to submit an Annual Franchise Tax Report and pay the Franchise Tax.

1. Press on  https://icis.corp.delaware.gov/ecorp/logintax.aspx?FilingType=FranchiseTax  link. You will see the below mentioned: Enter your company’s 7-digit file number (it is located on the Certificate of Incorporation)

   
   

   

   Enter the code from the image, then press “Continue”.Press  “File Annual Report” 2.Press  “File Annual Report”
   

   

   3. a. Enter your issued shares, gross assets and asset date (usually the last day of the year).Then enter the period of inactivity starting with the date of incorporation.
   

   

   b. Enter your principle place of business, this is the address from where you conduct business. If it is a non-US address, select the appropriate line then enter the officer information. If the company does not have an officer, select the appropriate line.
   

   

   c. Enter the total number of directors and the information for each director.

   

   d. Select “I certify that I have read the Terms and Conditions” then enter the information regarding the director or officer  of the company who processed the report. Then press “Continue filing”.

   

   4. Then you will have an opportunity to review your Annual franchise tax report. After reviewing  the report press “Proceed to Payment” located on the bottom of the page. 

   

   5. Add your bank or credit card information and submit the report and the payment. [1] NOTE: If an amendment changing your stock or par value was filed with the 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 (source: https://corp.delaware.gov/frtaxcalc/).

   [2]  https://corp.delaware.gov/frtaxcalc/.