My company has not done any business, do I still have to pay a Delaware tax?

Steven D. Goldberg, Esq. Wilmington, DE
sgoldberg@stevendgoldberg.com
http://www.stevendgoldberg.com
Contact me if you need assistance in forming/organizing a Delaware business entity or any matter of Delaware law. Delaware Forms and Publications are available at http://www.delawarellclaw.com
Yes, Virginia, you have to pay the Delaware corporate franchise tax for your corporation and the LLC and LP tax for your LLC or LP even though the company has not done any business.

The Delaware franchise tax and LLC/LP tax are priveledge taxes assesssed for the priveledge of having a company formed in Delaware, whether or not the company has done business and whether or not the company has earned any income.

The franchise tax was due for all corporations by March 1 and is calculated on the number of shares authorized. The minimum payment was $100 ($75 minimum tax and $25 report fee) If the corporation has “par value” stock Delaware offers the option to calculate the tax based on the company’s assets as reported on its US corporate income tax return and the number of shares outstanding. Generally this alternative method produces a lower tax obligation. If the tax is not paid timely or the report is not filed with complete information, there is a $100 late payment fee and the tax accrues interest at the rate of 1.5% per month.

The LLC and LP tax will be due on June 1 and is a flat tax of $250 payable by all LLC’s and LP’s. There is no report filed by either LLC’s or LP’s. For failure to pay the tax in a timely manner there is a $100 late payment fee and interest accrues at the rate of 1.5% per month. In the case of corporations, interest, franchise taxes and late penalties accrues for only 3 years, however for LLC’s and LP’s there is no limitation on the time during which interest, taxes and penalties accrue and therefore the cost to revive a LLC or LP which has failed to pay its annual tax is substantial ($350 per year plus interest).