If you are a non-US resident and you registered an LLC (Limited Liability Company) in Delaware, you’ve probably heard about Delaware Franchise Taxes. If you have questions about the when, what, and how of filing Franchise tax returns for your LLC in the State of Delaware, this article is dedicated to answering your questions particularly as it concerns non-US residents.
What is a Delaware Franchise tax?
Generally speaking, US Franchise taxes are imposed by US State authorities on businesses registered and operating within a State in the US. Franchise taxes are paid at the State level. Franchise taxes are different from Federal Income Taxes.
That being said, Delaware Franchise Taxes are taxes imposed by the State of Delaware on businesses registered and operating within the State of Delaware.
Not all States require businesses to remit franchise taxes, however, the State of Delaware does.
Finally, please note that LLC founders who are non-US residents are required to pay Delaware Franchise taxes.
When is the due date to file Delaware Franchise Tax for my LLC?
For Delaware LLCs, franchise taxes are to be paid on or before the 1st day of June. The deadline for filing Delaware franchise taxes is 1st June and it applies whether or not the said date falls on a weekend.
This date is only applicable to Delaware LLCs formed in the previous calendar year. Where for instance, your LLC is formed in a current calendar year, such company will commence payment of Franchise taxes on the 1st day of June of the subsequent year.
How much is Franchise tax for Delaware LLC?
The flat fee to be paid by Delaware LLCs is $300 (three hundred dollars) per entity. The amount is paid yearly regardless of whether or not your LLC has carried out business activity since formation or generated income and or profit.
What happens if I fail to pay/remit taxes on or before the deadline?
Your LLC will attract a $200 penalty and a 1.5% monthly default interest. This applies to LLC founders who are either US residents or non-US residents
So long as you registered an LLC in Delaware, you are required to file your franchise tax returns and it doesn’t matter whether or not you live there, your LLC hasn’t carried out operations after registration or your LLC hasn’t earned a profit.
Choosing to ignore paying it doesn’t make your liabilities go away as your fees will continue to accumulate over time.
At Lex-Praxis, we help clients (including non-US residents) who own Delaware LLCs in the US with fulfilling their annual corporate compliance obligations such as;
i. Filing their Franchise tax returns
ii. Renewing their registered agent fee
iii. Filing of Federal tax returns
Need help with filing taxes or setting up a business in the US? Please reach out to us through the Whatsapp chat icon on the lower right part of this page or send us an email here, and we will respond to you.