Every domestic or foreign corporation doing business in Delaware, not specifically exempt under Section 1902(b), Title 30, Delaware Code, is required to file a corporate income tax return (Form 1100 or Form 1100EZ) and pay a tax of 8.7% on its federal taxable income allocated and apportioned to Delaware.
How much is the Delaware corporate franchise tax?
The Franchise Tax for a Delaware LLC or Delaware LP is a flat annual rate of $300. The Franchise Tax for a corporation is based on your corporation type and the number of authorized shares your company has.
Why is my Delaware franchise tax so high?
Delaware’s default is the authorized shares method, which is often much, much more expensive than the assumed par value calculation. It is the calculation they use when sending their annual franchise tax notifications. As an example, if you’ve authorized 10 million shares, you’d owe around $75,000 in franchise taxes.
Do you have to pay tax as a S corporation in Delaware?
Calling this annual tax a “franchise tax” does not mean that your company is an actual franchise business. LLCs may choose to be treated as an S corporation for tax purposes. While this may have benefits in other respects, an LLC that elects corporation status must also pay Delaware’s corporate income tax.
What kind of taxes do you pay in Delaware?
Companies and business owners in Delaware can avoid paying other taxes common in other states including value-added tax, business transaction tax, and inventory tax. Delaware does not charge inheritance tax, or tax on transfers of stock. Delaware offers privacy by allowing business owners to shield their identity from public records.
What makes a Delaware LLC a tax shelter?
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. Making smart use of tax shelters means you pay less taxes and maximize your LLC’s profits.
When do foreign corporations have to file a Delaware tax return?
Foreign Corporations. Foreign Corporations must file an Annual Report with the Delaware Secretary of State on or before June 30 each year. A $125.00 filing fee is required to be paid. If the Annual Report and remittance is not received by the due date, a $125.00 penalty will be added to filing fee.
