Delaware is a big state for business. In 2019 alone, 226,000 business entities were formed in the Blue Hen State, helping elevate their total number of legal incorporated entities to 1.5 million. Beyond this, a whopping 67.8% of Fortune 500 companies are incorporated in Delaware. If the state sounds popular, it’s because they are, and with such popularity comes a mountain of paperwork, including the Delaware annual report.
If you’re a new business owner who just set up shop in Delaware, there’s a fair chance that you’ll soon have to file your first annual report. This can be an intimidating process because the requirements differ from corporation to corporation. Limited liability companies (LLCs) have their own requirements, too. This guide will help you understand some of the nuances within the Delaware annual report filing process. Here’s what you need to know:
Table of Contents
- What is a Delaware annual report?
- Delaware annual report and franchise tax: corporations vs LLCs
- Where do I file my Delaware annual report?
- When when is the Delaware annual report due?
- How much does the Delaware annual report cost?
- What information do I need to file my Delaware annual report?
- What happens after I file my Delaware annual report?
- What if I miss the deadline to file my Delaware annual report?
- Who do I contact if I have issues filing my Delaware annual report?
What is a Delaware annual report?
Whether you opt for an LLC or corporation, registering a legal business entity is just one of a company’s many reporting requirements. Most states require businesses to file an annual report every year with the secretary of state, almost similar to how you have to file taxes with the IRS. In fact, this is often specifically done for tax purposes and to keep the state updated about any possible changes (think: a new address, new manager, or new shares).
A Delaware annual report is a fairly straightforward process, and you file it digitally through the Delaware Secretary of State’s Division of Corporation’s online portal. Not all entities have to file one, though. For example, both LLCs and corporations have to pay an entity tax, but LLCs aren’t required to file an annual report.
Entities cannot update their registered agent on their annual report. Instead, they’ll have to file a Certificate of Change of Agent Form. If you would like to amend your Certificate of Incorporation or Certificate of Formation, you can file Articles of Amendment with the Division of Corporations.
Delaware annual report and franchise tax: corporations vs LLCs
In the business world, Delaware is famous for its easy setup and maintenance work regarding LLCs. The state has some of the strongest liability protections, as well. You can operate from virtually anywhere as long as you have a Delaware registered agent. In addition, Delaware LLCs aren’t required to file an annual report. They only have to pay an annual flat-rate tax of $300.
Corporations, on the other hand, have to file an annual report and pay a Delaware franchise tax, unless they’re exempt domestic corporations. In that case, it’s just the annual report. For most every other corporation, franchise tax fees vary based on how you calculate them. According to Delaware.gov, the state allows business owners to use:
- The Assumed Par Value Capital Method, which is based on gross assets
- The Authorized Share Method, which is based on issued shares
Corporations using the Assumed Par Value Method pay a minimum franchise tax payment of $400, while those using the Authorized Share Method pay a minimum tax of $175. The maximum tax payment is $200,000, except for those designated as large corporate filers. Large corporate filers pay a flat $250,000 fee.
You can find out more about how to calculate your company’s payment on the Delaware Division of Corporations’ website. They even have a franchise tax calculator.
Where do I file my Delaware annual report?
You’ll file your annual report with the Delaware Secretary of State. In Delaware, you’re specifically dealing with the Division of Corporations through their online filing portal, the Delaware Corporations Information System (DCIS – eCorp). This service is available from 8 a.m. to 11:45 p.m. EST.
It’s important to remember that annual report filings are public records. Anyone can search for them online and find out if your business is in good standing and whether there’s any tax due.
When is the Delaware annual report due?
Deadlines for the Delaware annual report vary based on the type of corporation. It also depends on whether you’re operating your business inside or outside of the United States. LLCs have no annual reporting requirement, but must pay the annual flat tax of $300. Per Delaware statute, the due dates are as follows:
- Domestic corporations must file by March 1.
- Foreign corporations must file on or before June 30.
- LLCs must pay their annual tax by June 1.
This means that during your first year of business, you may not have operated for a full 12 months before you have to pay taxes and file your annual report.
It should be noted that while the full sum of Delaware’s franchise tax is due on March 1, any corporation making more than $5,000 is required to file quarterly estimated taxes with:
- 40% due on June 1
- 20% due by September 1
- 20% due by December 1
- the rest due on March 1
There are also penalties for not filing a completed annual report before the due date.
How much does the Delaware annual report cost?
The cost of filing an annual report varies depending on your business structure and where the company is located. It’s generally most expensive for foreign corporations, and they face slightly greater penalties for missing their due date. The filing fees are as follows:
- $50 plus franchise taxes for domestic corporations
- $125 plus franchise taxes for foreign corporations
- $300 flat annual tax for LLCs, with no annual reporting required
The Division of Corporation makes paying the required fees and entity taxes easy, and they offer a number of options. This includes paying via a credit card (Visa, Master Card, American Express, or Discover) or a checking account. If the transaction is more than $5,000, you must pay via electronic payment (ACH Debit).
What information do I need to file my Delaware annual report?
Filing online requires some information about your business in order to complete the process. All company owners that have to file an annual report or pay the required tax need a 7-digit business entity file number in order to login to the online portal. If you don’t remember it, you can search for your business name through the state department’s online index.
Per Delaware law, annual reports must be signed by a corporation’s president, secretary, treasurer, director, or someone authorized to do so. They’ll also need:
- The registered agent’s name, address, and signature
- The address of the corporation’s primary place of business (i.e., their company’s headquarters)
- The names and addresses of all directors
- The name and address of the officer who signed the report
- Information about the number of shares issued and their value
- Any additional information needed to ascertain the franchise tax due
- Payment information (such as checking account or credit card information)
What happens after I file my Delaware annual report?
After you file your annual report, you can likely consider yourself done for the year unless you have other legal reporting requirements (like the SEC’s 10-k report for corporations and your regular tax return). Once your report is processed and accepted, it’s filed away in the Secretary of State’s office, where it becomes a public record.
If you have to stop filing your annual report halfway through the process — whether you need additional information or simply have to step away from your computer — make sure you click the option to “Save Session and Exit.” This will give you a Session ID that you can use to log back in and take up where you left off.
What if I miss the deadline to file my Delaware annual report?
Sometimes a due date slips our minds and we end up filing late. Delaware has some intense late fees if your annual report and tax aren’t paid or filed for long enough. Again these vary based on the type and location of the business entity:
- LLCs pay a $200 late fee for late annual tax, and 1.5% interest per month.
- Domestic corporations pay a $200 late fee and 1.5% interest per month
- Foreign corporations (meaning: out of state) pay a $125 late fee
If you don’t wind up filing your annual report at all, you’ll risk your company’s good standing. In some cases, your business may be voided, and you’ll have to file additional paperwork and pay your unpaid tax balance and the associated penalties before your company is reinstated. This may include filing a Certificate of Revival, which comes with fees ranging from $169 to $200+ depending on whether you’re operating as an LLC or corporation.
Who do I contact if I have issues filing my Delaware annual report?
If you’re trying to file your Delaware annual report on your own, you can contact Delaware’s Division of Corporations at (302) 739-3073 or use the state’s live online support chat located at the bottom of the filing page.
Filing Your Annual Report FAQs
- How much does it cost to file an annual report in Delaware?
Domestic corporations must pay a $50 fee and their annual franchise tax. Foreign corporations must pay a $125 fee and their annual franchise tax. LLCs don’t have to file an annual report but they must pay a $300 annual business entity tax.
- What happens if I file my annual report late in Delaware?
If a domestic corporation files their annual report late, they will be subject to a $200 penalty plus a 1.5% interest on their unpaid tax balance. Foreign corporations are subject to a $125 penalty. LLCs don’t file an annual report, but must pay an annual tax of $300. If an LLC misses this payment, they pay a $200 late fee and 1.5% interest per month.
- What happens if I don’t file my annual report at all in Delaware?
At best, you’ll have to pay your unpaid balance and the typical penalties for those who file late. At worst, your business could be voided by the state, which requires additional paperwork and additional costs.
- If my business is closed, do I still need to file the annual report?
Corporations need to file an annual report until their business is officially terminated through something like a Certificate of Dissolution or Certificate of Merger.
- Can I get a copy of my filed annual report?
Your Delaware registered agent service should be able to get you a copy of your annual report.
- Who can file a Delaware annual report?
An annual report can be filed by a corporation’s president, secretary, treasurer, authorized officer, director, or an incorporator if their board of directors has not been elected.