How to Incorporate a Business in Delaware (DE)
Corporate Name Endings
The corporate name ending must contain: “association,” “company,” corporation,” “club,” “foundation, “fund,” “incorporated,” “institute, ” “society,” “union,” “syndicate,” or limited,” or one of the abbreviations “co.”, corp.”, “inc.”, “ltd.”, or words or abbreviations of like import in other languages. The name must be distinguishable from the names of other corporations organized, reserved or registered as a foreign corporation under the laws of Delaware. Use of word “trust” is prohibited except for corporations under supervision of the Bank Commissioner.
Director Information
Minimum Number – One or more.
Residence Requirements – No provision.
Age Requirements – None.
Directors are not required to be listed in the articles of incorporation.
Officer Information
The officers are not required to be listed in the articles of incorporation.
Stock Information
An increase in shares or par value does effect initial filing fees.
Corporate Records
A stock ledger and basic corporate records must be kept at the principal office.
Taxes and Fees
Annual Statements
The annual statements are sent out to the registered agent in December and January. The payment is due by March 1st. The fee is $50 and consists of a $30 franchise tax and a $20 annual statement fee. The franchise tax is based on the number of shares and the par value, and if the number of shares is above 3000 the annual fee may increase.
Franchise Tax Rate
Corporations that are not located in Delaware do not pay an income tax.
A schedule of rates based on the number of authorized shares is as follows:
Authorized Shares Tax
Up to and including 3,000 $30
Over 3,000 up to and including 5,000 shares $50
Over 5,000 up to and including 10,000 shares $90
Over 10,000 shares $90 plus $50 for each 10,000 shares or part thereof over 10,000
If your number of shares is above 3,000, the alternative method may provide a lower tax. The formula for the alternative method is below:
Divide total gross assets by total issued shares carrying to 6 decimal places (this is your ‘assumed par’). If the assumed par is the same or greater than the stated par value, multiply the assumed par by the total authorized shares (this is your assumed par value capital). If assumed par value capital is greater than 1,000,000, round up to the next million and multiply $200 per million (e.g. 10,002,000 = 11 x $200). If less than 1,000,000 divide by 1,000,000 and multiply by $200. Should your assumed par be less than the stated par value, multiply the authorized stock by it’s stated par value and continue with calculation. Each no-par share must be considered as having a value of $1. The minimum tax is$30 with a maximum tax of $150,000 .
Income Tax
The income tax rate for corporations actually located in Delaware is: 8.7%.
S Corporation
S Corporation status is recognized by the State of Delaware. A separate state election from the federal election is not required.
License Requirements
Delaware requires some businesses to obtain a license and pay a fee if you are operating in the state. Please check with the state to make sure your business is complying with the license requirements for your particular profession.
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