Is your business incorporated in the state of Delaware? If so, you are required to file an annual report and pay an annual franchise tax with the Delaware Division of Corporations each year by March 1, regardless of where you conduct business. This is a separate filing requirement from the Delaware corporate income tax return.
There are generally two methods of calculating the franchise tax you owe:
- the authorized shares method, which is based on the number of authorized shares your company has ($175 minimum) or;
- the assumed par value method, which is based on the value of your company’s assets ($400 minimum).
You are only required to pay the lesser of the two, so these calculations are important to limit your tax liability. While the minimum tax is $175 to $400 depending on the method, the maximum annual tax is $250,000 for “large corporate filers” who have consolidated gross revenue or consolidated assets between $250 million and $750 million and $200,000 for the rest, regardless of method.
If you have any questions or need assistance with these often-complex calculations, please get in touch with Sonjia Barker, SALT Director, at sbarker@perkinsaccounting.com or contact your Perkins advisor.