Delaware Franchise Tax Increase

The Delaware franchise tax LLCs, LLPs, LPs, and corporations, will have an across-the-board increase, announced the Secretary of State’s office. This increase took effect July 1, 2014.

The Delaware franchise tax is necessary for keeping your business in good standing. Failure to pay this tax can result in late fees, loss of good standing, and even dissolution.

The minimum annual fee for corporations will increase from $75 to $175. This fee is based on either the number of authorized shares, or the value of the corporation, and can be as high as $180,000.00.

You can calculate your annual Delaware franchise tax through the Secretary of State’s website.

Also, Delaware corporations must file an annual report in conjunction with paying the franchise tax.

The annual LP/LLP/LLC tax will increase from $250 to $300, a flat rate, due by June 1 of the following year. If you have a Delaware LLC, you do not need to file an annual report.

For what it’s worth: Delaware is a popular state for incorporation because of its business-friendly taxes and regulations. This fee increase will add to the cost of running your business. If you’re deciding whether to incorporate in Delaware versus your home state, or selecting a number of shares for your corporation, keep this increased fee in mind.