There are three ways to incorporate your business in Delaware:

  1. Hire a lawyer to do the job for you (the most expensive option)
  2. Walk in to the Secretary of State office and do it by yourself
  3. Use a professional incorporation company, like Active Filings.

DE Articles of Incorporation Requirements

The Articles of Incorporation is the formation document you file with the Delaware Secretary of State to register your corporation with the state (LLCs file Articles of Organization). In Delaware, you can file Articles of Incorporation by mail or fax (it will take the SOS 3 weeks to process your filing unless you expedite). If you hire Active Filings to incorporate your business, we are authorized to file online with the state, and we’ll form your LLC or corporation in 1 business day.

To complete your Delaware Articles of Incorporation, you’ll need to include the following information:

Company Name 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.
Company Purpose List the reason for forming the corporation or the business/activity which the corporation will engage in.
Authorized Shares List the number of shares of corporate stock you are currently authorizing. Technically, this is when you “create” your stock (more can always be authorized later), and that stock will be issued to your shareholders at your first shareholder meeting.
Registered Agent Information In Delaware, a registered agent (also known as a resident agent) is an individual or business that serves as your company’s official point of contact for lawsuits and legal notices. As part of Active Filings’ incorporation service, we include a year of registered agent service when you hire us to incorporate your business in Delaware.
Names and Addresses of the Incorporators The incorporator is the person or company authorized to form the corporation. For example, if you hired us, we would list ourselves as the incorporator. The incorporator does not have any stake in or claim to the corporation being formed.

Director Information

Minimum Number One or more
Residence Requirements No provision
Age Requirements None
Articles of Incorporation Directors are not required to be listed

Officer Information

Articles of Incorporation Officers are not required to be listed

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

Delaware State Tax Duties

If a company is doing business in Delaware, that company will have two or more requirements:

1. If you form a corporation under Delaware law you will pay an annual Franchise tax for the privilege of incorporating in Delaware payable to the Department of State. The fee is based on the number of authorized shares. If you are incorporated in another state but doing business in Delaware, you must also register with the Department of State.

2. An annual corporate income tax return at the rate of 8.7% of federal taxable income allocated and apportioned to Delaware based on an equally weighted three factor method of apportionment. The factors are property, wages and sales in Delaware as a ratio of property, wages and sales everywhere. (Chapter 19, Title 30, Delaware Code)

3. Delaware does not have a state or local sales tax. Delaware does, however, have an annual business license requirement and a gross receipts tax is imposed on the seller of goods or provider of services. Sales of tangible property are subject to a retail or wholesaler license and gross receipts tax. The tax is imposed on the seller and remitted monthly or quarterly, depending on the business activity. (Chapters 21, 23, 25, 27, and 29, Title 30, Delaware Code)

4. Every employer maintaining an office or transacting business in Delaware who makes payment of wages or other remuneration to a resident or non-resident of this state must deduct and withhold an amount substantially equivalent to the tax estimated to be due from the employee. Delaware withholding is required provided such payments are subject to withholding under the Internal Revenue Code. (Chapter 11, Title 30, Delaware Code)

The tax requirements of numbers 2, 3 and 4 are administered by the Division of Revenue.

If you need more information about Delaware taxes, please visit the Department of Finance site at http://www.state.de.us/revenue/

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.

All corporations incorporated in the State of Delaware are required to file an Annual Franchise Tax Report and to pay a franchise tax. Taxes and annual reports are to be received no later than March 1 each year. The minimum tax is $30 with a maximum of $150,000.

Corporate Annual Report

Annual reports for corporations are sent to the registered agents in December of each year. A $20.00 filing fee is required for the annual report. Annual reports or reprints may be requested through your registered agent.

LP/LLC/GP

All Limited Partnerships, Limited Liability Companies and General Partnerships formed in the State of Delaware are required to pay an Annual Tax of $100.00. Taxes for these entities are to be received no later than June 1 of each year.

How to Calculate the Franchise Tax in Delaware?

1) Authorized Shares Method:

3,000 shares or less (minimum tax) $30.00
3,001 – 5,000 shares $50.00
5,001 – 10,000 shares $90.00
each additional 10,000 shares or portion thereof $50.00

For example:

A corporation with 10,005 shares pays $140.00 ($90.00 + $50.00)
A corporation with 100,000 shares pays $540.00 ($90.00 + ($50.00 x 9))

2) Assumed Par Value Capital Method:

To use this method, you must give figures for ALL ISSUED SHARES (including treasury shares) and TOTAL GROSS ASSETS in the spaces provided on your Annual Franchise Tax Report. Total Gross Assets shall be those “total assets” reported on U.S. Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending in the calendar year of the report. The tax rate under this method is $200.00 per million or portion of a million of the assumed par value capital, which is calculated as described below, if the assumed par value capital is greater than $1,000,000. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $200.00. The example cited below is for a corporation having 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares with a par value of $5, gross assets of $1,000,000 and issued shares totaling 485,000.

Divide your total gross assets by your total issued shares carrying to 6 decimal places. The result is your “assumed par”.

Example: $1,000,000 assets ¸ 485,000 issued shares = $2.061856 assumed par

Multiply the assumed par by the number of authorized shares having a par value less than the assumed par.

Example: $2.061856 assumed par x 1,000,000 shares = $2,061,856

Multiply the number of authorized shares with a par value greater than the assumed par by their respective par value.

Example: 250,000 shares x $5.00 par value = $1,250,000

Add the results of #2 and #3 above. The result is your assumed par value capital.

Example: $2,061,856 + 1,250,000 = $3,311,856 assumed par value capital

Figure your tax by dividing the assumed par value capital, rounded up to the next million if it is over 1,000,000, by 1,000,000 and then multiply by $200.

Example: 4 x $200 = $800.00

NOTE: If an amendment changing your stock or par value was filed with the Division during the year, issued shares and total gross assets within 30 days of the amendment date must be given for EACH PORTION of the year during which each distinct authorized amount of capital stock or par value was in effect. The tax is then prorated for each portion of the year by dividing the number of days the stock/par value was in effect by 365 days (366 for a leap year), then multiplying this result by the tax calculated for that portion of the year. The total tax for the year is the sum of all of the prorated taxes for each portion of the year.

Taxes due will be based on the “Authorized Shares Method” and is printed on the Annual Franchise Tax Report each corporation receives annually. If, when filing the Annual Franchise Tax Report, you select the “Assumed Par Value Method”, please follow the calculation instructions above to confirm the tax due. To verify the tax balance due, please contact 302/739-3073 and ask for the Franchise Tax Section.

If you need more information about Delaware taxes, please visit the Department of Finance site at http://www.state.de.us/revenue/

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.

When you hire Active Filings to incorporate your business in Delaware, you’ll receive everything you need to track and maintain your company, this includes:

  • Free expedited service
  • One year of registered agent service
  • An online account where you can add additional services, track orders, maintenance requirements and digital notifications.

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