Key Takeaways

  • Delaware corporations must file an annual report and pay franchise tax by March 1.
  • Delaware LLCs do not file annual reports but must pay a flat $300 franchise tax each year, due June 1.
  • Failure to comply leads to penalties, interest charges, and eventual loss of good standing.
  • Reinstatement of void or forfeited entities requires filing a Certificate of Renewal and Revival with all past-due taxes and penalties.
  • The renewal process differs between corporations and LLCs, so understanding the correct deadlines and fees is essential.

The Delaware corporation annual renewal is required by the Delaware General Corporation Law. It states each corporation in the state of Delaware needs to file a yearly report and pay the Delaware franchise tax each year before or on March 1. A franchise tax is a privilege fee for being given a special license by the state to perform business under the state's laws. This is assessed no matter what the business activity is. It isn't an income tax. It's a flat fee that's based on the corporation's authorized stock.

About the Delaware Franchise Tax

There are 1,500 shares in most corporations, which are known as minimum stock corporations. They will pay $175 in taxes in addition to a filing fee of $50. Non-profit corporations only pay $25. Corporations who have a large amount of authorized shares may be required to pay up to $180,000 in taxes. If a company that's small has many insignificant assets and authorized shares, they can recalculate their stock based on what the company's assets are down to around $400. This depends on a complex formula using issued stock and assets.

A company that fails to pay or submit their report on time goes into arrears. The state can then revoke the charter of the company. The first stage of arrears is the X status. After two years, it goes into void status. If a company gets declared void, they can be reinstated later if they file a Certificate of Renewal and Revival. There are fees for the renewal, and the previous yearly reports must be filed at the same time. Reinstating a company that's void will retroactively ratify the time period it was in good standing so it appears that the company was always in good standing.

You can visit the Delaware government's website to file your report and see what your franchise tax fee will be if you have over 5,000 authorized shares. Any foreign corporations can send in their franchise tax to: Delaware Division of Corporations, Attention Franchise Tax, 410 Federal Street, STE 4, Dover, DE 19901.

Delaware LLC Renewal Requirements

Unlike corporations, Delaware LLCs are not required to file annual reports. Instead, every LLC pays a flat annual franchise tax of $300, which is due on or before June 1 of each year. This payment is mandatory regardless of whether the LLC conducted business or generated income during the year.

If the LLC does not pay the tax on time, Delaware imposes a $200 late penalty plus 1.5% monthly interest on the unpaid balance. Over time, these fees can accumulate and cause the LLC to fall out of good standing with the Delaware Division of Corporations.

Timely Delaware LLC renewal ensures the company maintains its legal protections, including limited liability for members. LLCs that fail to comply risk being declared void and losing the ability to legally operate.

Delaware Annual Report Requirements

In the yearly report, all corporation directors and their addresses need to be disclosed, including the name of at least one officer. Director names must be current at the time when the report is filed and not from another point in time.

Some smaller businesses think they don't have directors because they only know the roles of their stockholders and officers, such as president, treasurer, or secretary. However, each corporation in Delaware has at least one director. They're essential when it comes to connecting officers to stockholders:

  • Stockholders elect directors each year, who then appoint the officers.
  • Stockholders can't directly elect the officers.
  • Since stockholders can't elect officers, at least one director is required.
  • You can't check the box that says no directors as this is misrepresenting the company.

The state no longer sends companies green check paper forms to filled out and returned. Instead, all annual reports must now be entered online. Many agents have their own online services that let you finish the annual report in a format that's easier than the one on Delaware's website. The state does not save information from year to year and won't take American Express.

Once the registered agent gets the name of an officer and the directors' information, the system will then send in the report to the Division of Corporation to be filed by XML. The state can then generate a report that goes on public record and shows the information that was entered online. There was some resistance to this when it first launched, but it's now been accepted by the proprietors of Delaware companies and the agent community.

The only way you can file a corporate yearly report with Delaware when you have a domestic corporation is to pay a registered agent to do it or file online. However, there's no reason to pay someone to enter in the exact information you just gave them, so it's best to do it yourself. You can do this on the Delaware Division of Corporations Website.

Renewal and Revival of Delaware Entities

When a Delaware corporation or LLC falls into forfeited or void status for failing to meet its obligations, the state allows reinstatement through a Certificate of Renewal and Revival. To revive an entity:

  • File the Certificate: Submit the Certificate of Renewal and Revival with the Delaware Division of Corporations.
  • Pay Outstanding Taxes and Fees: All past-due franchise taxes, penalties, and interest must be satisfied.
  • Submit Missed Reports (Corporations only): Any unfiled annual reports must be completed and submitted.

For LLCs, revival involves only the payment of overdue franchise tax and submission of the Certificate of Renewal and Revival. For corporations, both overdue taxes and delinquent annual reports must be filed.

Once processed, revival restores the company’s good standing retroactively, as though it had never lapsed. This ensures that contracts and legal protections remain intact during the period of default.

Key Differences Between LLC and Corporation Renewals

While both corporations and LLCs must maintain compliance with Delaware law, their annual obligations differ:

  • Corporations:
    • Must file an annual report by March 1 each year.
    • Pay franchise tax based on the number of authorized shares (ranging from $175 to $200,000).
    • Provide updated information about directors and officers in the report.
  • LLCs:
    • Do not file an annual report.
    • Must pay a flat $300 franchise tax by June 1 each year.
    • No shareholder or director disclosure requirements.

Understanding these differences is crucial when planning Delaware LLC renewal or corporation annual renewal.

Frequently Asked Questions

1. When is the Delaware LLC renewal due?

Delaware LLCs must pay a $300 franchise tax by June 1 each year. No annual report is required for LLCs.

2. What happens if I miss the LLC renewal deadline?

Missing the deadline results in a $200 penalty plus 1.5% monthly interest until paid. Continued noncompliance may cause the LLC to be declared void.

3. Do Delaware corporations and LLCs have the same renewal process?

No. Corporations must file annual reports and pay franchise tax by March 1, while LLCs only pay the $300 annual tax by June 1.

4. How do I revive a void Delaware LLC or corporation?

You must file a Certificate of Renewal and Revival and pay all past-due taxes, penalties, and fees. Corporations must also file missed annual reports.

5. Can I file my renewal online?

Yes. Both corporations and LLCs can handle their renewals through the Delaware Division of Corporations’ online portal or with the help of a registered agent.

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