Review all taxes that are due, and pay the fee obligations accordingly. Choose “Pay Full Amount,” and leave the box on the right blank. Select from the “Payment Type” from the drop-down menu, including if you’ll pay with a credit card or checking account.

If you live in Delaware, you can be your own Registered Agent. However, if you’re not based in Delaware or don’t have a physical address in the state, you can still start a Delaware LLC. You can hire a Registered Agent service, like IncNow, to meet this requirement.

  • The definition of a tax shelter is any method used to reduce the amount of income that is taxable.
  • An S corporation is not subject to federal taxes, the way a traditional C corporation would be.
  • If you live in Delaware, you can be your own Registered Agent.
  • The Certificate of Formation is like the LLC’s birth certificate.

With this detailed guide, you now have a clear understanding of the financial needs of starting and running a Delaware LLC. Delaware law requires LLCs to have an LLC Operating Agreement. This document sets out the rules for your company and explains who the owners and managers are. A good LLC Operating Agreement can help prevent disagreements and misunderstandings within the business. The most important is paying the Delaware Annual Franchise Tax.

Corporate Tax Structure

You can check the status of your LLC’s Good Standing and tax payments by using the “Entity Search” feature on the Delaware Division of Corporations’ website. You will need your business’s Delaware Entity File Number to search for its status. Delaware’s business court, Court of Chancery, is well-known for its understanding of business disputes. This alone can save businesses a lot in legal costs over time.

If you don’t operate in Delaware, you do not have to submit income tax or accounting reports to authorities, and your LLC is not liable for state income taxes. Corporations must pay taxes at a corporate income rate, while standard LLCs, partnerships, and sole proprietorships are pass-through entities. This means the owners instead of the business tax shelters itself are taxed at the state and federal level. Businesses pay a fee that varies depending on the amount of assumed no-par capital. The Delaware Division of Corporations explains how to calculate taxes using this method. Even with the various costs involved in starting and maintaining a Delaware LLC, many business owners choose Delaware.

Incorporation Fee Breakdown

Dreaming of starting a Limited Liability Company (LLC) in Delaware? This detailed guide will help you understand all of the costs involved when starting a Delaware LLC. If you need more information or help with the Delaware LLC tax rate, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site.

Delaware LLC Annual Franchise Tax: Frequently Asked Questions

With that, Delaware LLCs do not have to file annual reports in the same way as corporations do. Further, Delaware offers a host of favorable tax and business laws that other states cannot compete with. Whether you want to incorporate or choose the LLC route, remember that fees and maintenance requirements depend on the structure you choose. The Delaware LLC tax rate is typically lower than the rate paid by corporations. Delaware requires most LLCs formed in the state to pay an annual tax of $300 but beyond that, profits are taxed differently. Officials recommend that you pay the franchise tax early to avoid any late penalties.

From there, you will receive an email confirmation affirming you made the payment. Moreover, you should remind yourself regularly of the necessary taxes due each year. Also, the state will send reminders to your LLCs registered agent. A registered is the appointed representative who receives your document on behalf of your LLC and sends the documents to your business.

Some banks might ask for a Certified Copy when you’re opening a business account for a Delaware LLC. You may also need a Certified Copy for different business transactions. No, all Delaware LLCs are required to pay the Annual Franchise Tax regardless of their income, activity level, or location of operations. If your business wants to operate under a different name than its official LLC name, you need a DBA or “Doing Business As”. Also known as a “trade name” or “fictitious name”, a DBA lets your LLC do business under a different identity. For example, if “XYZ LLC” wanted to run a restaurant called “Tasty Treats”, they’d need a DBA for “Tasty Treats”.

Setting Up a Delaware LLC: Costs and Fees

Fortunately for LLC owners, the annual tax is straightforward. Every Delaware LLC, limited partnership, and general partnership must pay $300 per year, due annually by June 1. Calling this annual tax a «franchise tax» does not mean that your company is an actual franchise business. Like most states, Delaware taxes some types of income earned by businesses. The method for determining which taxes apply and the amount depends on the type of business entity you operate and the filing status you choose.

Extra Costs for Starting a Delaware LLC

It’s crucial to pay the Delaware Annual Franchise Tax on time. If you don’t pay by the deadline of June 1st, you’ll face late fees and interest on the unpaid amount. If your LLC doesn’t pay its franchise tax for three years, the state will cancel your LLC.

To start a Delaware LLC, you’ll first need to pay a $110 state filing fee. This fee is for filing the LLC’s Certificate of Formation with the Delaware Secretary of State’s Division of Corporations. The Certificate of Formation is like the LLC’s birth certificate. In addition to offering lower taxes compared to other states, Delaware is considered a tax shelter. The definition of a tax shelter is any method used to reduce the amount of income that is taxable.