Every year, LLC company owners are required by the Delaware State law to file for their LLC Annual Franchise Tax as the State does not require LLCs to file annual reports.
In this case, filing an LLC Annual Franchise Tax is essential for compliance and maintaining a good record with the government. Likewise, another reason for this is to avoid the dissolution of your LLC company. The Annual Franchise tax helps the Delaware Government to generate revenue from state businesses.
With that said, this article will guide you through the steps of filing your Annual Franchise Tax in Delaware.
When to File Your LLC’s Annual Franchise Tax?
The Annual Franchise Tax should be filed every year from the time you filed your LLC initial report. The Annual Franchise Tax must be filed by the 1st of June of every year. To avoid forgetting your Annual Franchise Tax filing, you must always include it on your calendar of activities.
For example, you can create a reminder on your phone or calendar to help you remember around one to two months before the due date to avoid missing the filing.
On the other hand, if it’s your first year to file for LLC Annual Franchise Tax, it’s due the following year after the approval of your LLC application.
For example, suppose your company was established and certified on September 9, 2020. In that case, your first LLC Annual Franchise Tax is considered due on June 1, 2021.
Similarly, if you want to double-check the date when the state approved your LLC, it’s best to check your LLC’s Certificate of Formation.
The State of Delaware provides an email reminder to the email address of the LLC registered agent as it is written in the LLC Articles of Organization. This reminder is a courtesy reminder of the Franchise Tax and it is sent in February of every year.
What Are the Requirements You Need to Prepare?
Before you file, make sure that you have these documents or information prepared. Preparing these documents beforehand can help prevent any delays during the process.
- State-issued LLC entity number
- Date of organization
- Delaware Business EIN (entity identification number)
- Other important details about your company, such as:
- Your registered agent
- Its registered office address
- Officers/directors or partners updated contact information
- Insurance policy information including your proof of insurance, the insurance company’s name, the insurer’s name, and the policy date.
- 300 USD filing fee, this cost is a constant for all businesses regardless of if you make a profit or not, or if you perform business activities or not.
What Will Happen If I Don’t File My Company’s LLC Annual Franchise Tax?
Not filing your company’s LLC Annual Franchise Tax in Delaware will result in the administrative dissolution of your company by the State of Delaware. However, you’ll first be penalized with a one-time fee of $200 and then the interest is calculated at 1.5 percent for each month the fee remains unpaid.
Where to File the LLC Annual Franchise Tax?
Fortunately, filing your company’s LLC Annual Franchise Tax is now easier. You can only file your LLC Annual Franchise Tax online through the online filing system of the State of Delaware. The state does not allow for the submission of hardcopy through the mail or in person.
How to File Your LLC Annual Franchise Tax: A Step-by-Step Guide
To help you file your company’s LLC Annual Franchise Tax online, this article has outlined the steps of the process. Check them out below.
Step 1: Go to the State of Delaware online filing system
Step 2: Input your LLC Entity number and click on the continue button.
Step 3: Confirm the tax to be paid, note that a late payment penalty may be included depending on when you’re making the payment. After you are sure of the amount to be paid, click on the pay taxes option
Step 4: choose pay full amount and don’t make any entry in the box to the right.
Step 5: Choose a payment option that is comfortable for you from the drop-down on the page
Step 6: Once you’re done, you need to enter your billing information, phone number, email address and then click “Submit” to make the payment.
Your Annual Franchise Tax will be paid after the payment you made has been confirmed successfully, and then you will see a message congratulating you on paying your Annual Franchise Tax in the State of Delaware. You’ll be sent an email to confirm your payment, you can print the email and keep it for your business record.
What Is the Difference Between an LLC Annual Franchise Tax and LLC Partner Tax?
Most company owners mistake LLC Annual Franchise Tax and LLC Partner Tax as being the same. Due to this misconception, they either miss filing one or the other. If you have multi-member LLCs, which means you have two or more owners, you must file for LLC Partner Tax.
Other Transactions You Can Do Under the Annual Franchise Tax and Change Services
Aside from filing your company’s LLC Annual Franchise Tax, here are the other business documents that can be generated through the Annual Franchise Tax and Change Services:
- Changing of registered agent/office
- Reinstating a business entity
- Closing a business
There are two possible reasons you might want to change your LLC’s assigned registered agent. First, you are dissatisfied with your existing agent and would like to change services. Second, you are your own agent and would like to get the services of a registered agent.
Regardless of the reason, you’ll need a registered agent for your company. This is because an LLC licensed agent plays a vital role in every company. In this case, your registered agent is the official representative of your company.
For example, suppose the state needs to contact your company for some legal matters. In that case, there should be an authorized representative where they can send legal documents.
- Reinstating a business entity
One reason for filing a reinstatement is that your LLC faced dissolution due to non-filing of the Annual Franchise Tax or paying taxes.
Of course, aside from these, some of the other tasks you can perform in the Annual Franchise Tax and Change Services:
- File an amendment
- Business name search
- Change tax/Employer registration record
Finally, you now know how to file your company’s LLC Annual Franchise Tax in Delaware. Making sure you comply with this requirement is essential to avoid penalties or the dissolution of your company.
In this case, to avoid forgetting your Annual Franchise Taxing, it’s best to organize your calendar. In fact, it’s recommended to set a reminder two months before your date of filing.
After all, as a business owner, it’s your responsibility to abide by the government’s ordinance to avoid penalties for your company.