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The objective of the annual report is threefold. The annual report keeps the Government informed about all updates, communicates any modifications or changes, & keeps the LLC members informed about the necessary taxes and costs. This article has all the information about the Delaware LLC annual report filing in Delaware.
An annual report can be called an address book, as it features all the relevant addresses of the company & the members. This annual report is a comprehensive record of the company’s activities for the entire year. It is also referred to as the Annual Franchise Tax Report, as it facilitates the filing of the franchise tax.
Content of the Annual Report
Typically, the annual report filed by a Delaware LLC (or any other business entity, for that matter) will include all the information related to its business & members. The standard contents of the annual report or the annual franchise tax report are
- Office Address of the LLC
- Names & Addresses of the Members & managers.
- Identification Documents
- Social Security numbers of the key members of the LLC
- The objective of the business of the LLC
- List of all the signatories of the LLC
- Information of the registered agent, if any
LLC Tax Update: Before you file your LLC annual report in Delaware, make sure to pay all the tax dues for the year.
Delaware LLC Annual Report
An annual report filing is a mandatory requirement for all LLCs. It ensures that all the information provided by the LLC is accurate & updated. This information is essential for state officials to ensure that all companies pay taxes.
In Delaware, the LLC Annual Report is called “the Annual Franchise Tax Report.” This Franchise Tax report is filed with the office of the Delaware Secretary of State. Note that the LLC Annual Report is not the same as the Certificate of Good Standing in Delaware.
Does the State of Delaware Require an Annual Report Filing?
The State of Delaware does not have any Initial Report Requirements. But, it is mandatory to file the Delaware annual report (known as the Annual Franchise Tax Report) with the Delaware Secretary of State. All the legal entities, such as C Corporations, Limited Partnerships, and Limited Liability Companies, are bound to file the Annual Franchise Tax report along with the Franchise Tax.
How to File a Delaware LLC Annual Report
The Delaware LLC Annual Franchise report can only be filed online. The Annual Franchise Tax Report must be filed by June 1 each year. In Delaware, annual reports can be filed with the Secretary of State online by following a few simple steps.
- Step 1: Visit the Delaware Government site.
- Step 2: You will see the Services tab on the main page of the Delaware Government’s site. Click on that to proceed further with the filing of the Annual Franchise Report.
- Step 3: When you click on the services tab, you will see a drop-down menu. Select the File Annual Report option from that list.
- Step 4: As soon as you click on the File Annual Report link, a new page will open. Click on the “click here to pay taxes/ File Annual report”
- Step 5: In the search box given below the file number entry, type your seven-digit Business Entity File Number. If you had left an incomplete session earlier, you can put that session’s saved session ID to continue from where you left.
- Step 6: Once you enter the Entity number, you will have the option to file the Annual Franchise Tax Report, along with the Franchise Tax and filing fees. Fill up the accurate information & fees, calculate the taxes & submit the report online.
Delaware LLC Annual Franchise Tax Report (Domestic & Foreign)
| State Office: | Division of Corporations, John G. Townsend Bld, 401, Federal Street, – Suite 4, Dover, DE 19901. Link to Website |
| Due Date: | June 1st every year. |
| Filing Fee: | The Annual Franchise Tax Report filing fee in Delaware is $300 |
| Penalty: | The non-filing penalty or the late filing penalties of the annual report is $200, plus there will be 1.5% interest levied in every month of non-filing. |
| Filing Method: | An LLC can file the Annual Franchise report online only. |
| Forms: | Since the only filing method available for an LLC to file the annual franchise report is online, there is no link to download the forms to file the Annual Franchise Tax. |
| Important Information: | Once a Domestic or Foreign Delaware Limited Liability Company submits the Annual Franchise Report along with the prescribed taxes to the Delaware Division of Corporations, the Annual Report filing will be complete. |
Annual Report Deadline
The Annual Franchise Tax Report must be filed by June 1 each year. Every LLC is bound by this rule & non-filing or late-filing can have serious consequences.
Penalties for Non-filing or late filing
Filing the Annual Franchise Tax report is essential for every type of entity in the State of Delaware, so much so that there can be penalties for non-filing the Annual Franchise Tax Report. The non-filing penalty or late filing penalties for the annual report are $200, plus 1.5% interest is levied for every month of non-filing.
Tax Structure in Delaware LLC
For an LLC in Delaware, the tax structure is very simple and flexible. First of all, every LLC has the advantage of a pass-through taxation. On the other hand, an LLC can choose the desired tax structure at the time of formation. There are two ways an LLC can be taxed,
Default Status:
When filing your LLC in Delaware, entrepreneurs have the opportunity to select a desirable tax structure. If they do not choose a specific structure, the LLC will be taxed under the ‘Default Status’. That means the tax will be levied based on the number of LLC members.
For a single-member LLC, it is considered a ‘disregarded entity’. This means that a single-member LLC does not have to file a federal income tax return, but the individual (or the LLC member) must file it personally. In the case of a single-member LLC, it is treated as a sole proprietorship.
In the case of a multi-member LLC, it is considered a partnership for tax purposes. Hence, the default status for a multi-member LLC is a partnership firm. LLCs are required to file a separate ‘partnership form’ with the IRS.
LLCs with Spouses: There are specific states (like California) where starting an LLC with a spouse is considered a single-member LLC instead of a partnership or multi-member LLC. In such cases, both husband and wife will be liable to pay taxes
Elective Status:
For an elective status, the LLC can choose the tax structure while filing the formation documents. LLCs in Delaware should file a separate tax form if they do not wish to be taxed by default. Many LLCs choose to be taxed as a corporation to enjoy corporate benefits, especially if the LLC is large.
LLCs can choose between S-Corp and C-Corp tax status when filing the formation document in Delaware. In that case, the concerned LLC needs to submit a separate form for each type it chooses. For the S-Corp type, Form 2553 must be submitted; for the C-Corp type, Form 8832 must be submitted.
In Delaware, there may be local taxes (inquire with the local government body for details) that LLCs must pay to be updated. Make sure to pay and update your tax dues before you file your annual report in Delaware.
Annual Report vs Certificate of Good Standing in Delaware
The Certificate of Good Standing is a legal document that certifies that an LLC in Delaware is in good standing and compliant with all applicable laws. That includes an updated annual report as well. While Annual Reports show if your company is up to date.
They are both similar documents (although not identical) and serve as proof of the company’s good standing. The Annual Report is a domestic document, whereas the Certificate of Good Standing in Delaware is a mandatory document if the LLC is going beyond the home state to a foreign state. There are several ways to obtain a Certificate of Good Standing in the state of Delaware.
A Certificate of Good Standing can be obtained by applying online in the state of Delaware. To apply for the Certificate, one must fill up the Good Standing Request Form. The form requires you to share your name, email, and phone number to begin. Then, you can search for your company records and submit the form to obtain the Certificate of Good Standing in Delaware.
A filing fee of $50 (short form) and $175 (for long form) must be paid to the SOS to obtain the Certificate of Good Standing. The amount might be more depending on the number of copies you request. If you request additional copies of documents, you may incur an additional fee.
Request Certificate of Good Standing:
- Online application: Request Certificate of Good Standing
- Offline application: No offline form is available to request the certificate of good standing
- Fees: $50 (short form) and $175 (for long form)
Why Do LLCs Have to File the Annual Report?
Some states are not required to file this yearly report, commonly referred to as the Annual Report. However, there are several reasons why states require an LLC to file an Annual Report. Here are some reasons,
To Maintain the Accuracy of the Information
An annual report filed by the LLC has all the updated information about its official addresses & the names or addresses of all its officials. This updated information enables state authorities to track down any LLC when communicating.
To provide the Correct Correspondence
Often, creditors or other entities willing to transact with the LLC require the correct correspondence address. If this information (which can only be modified with the help of an annual report) is not updated annually, such entities will be unable to communicate with them.
To Notify the Government About All the Significant Changes
If you have changed your main business address or had new business appointments of managers or members, the annual public information report notifies the State Government Entities about it. So, the next time someone questions a newer reform that you have introduced in your LLC, you will be saved because you had submitted the information to the Government.
To Provide an Activity Log of an LLC
The Annual Report is like an activity log of the LLC. It brings on record all the transactions, new associations, appointments, etc. & keeps those records intact for all future references.
To Help You With the One-time Filing of Taxes
The annual report is an excellent means to keep you on your toes in case of your dues payment. Every LLC is required to pay taxes through the annual report filing. By filing the report on time, the LLC can manage the exemptions & can avoid penalties imposed by the Government.
To Enable the State to Track the Payments
The government authorities use all the information filed through the annual report for tracking the payment of State Taxes.
Seek the Help of a Registered Agent
Every State will have a different rule for filing the Annual Report. Usually, it is submitted annually, but in some states, it is submitted every other year. Some states require the filing of the report only once in ten years.
Not only the timing, but also the mode of filing, proper addresses, exemptions, legality, and annual report compliance, among other factors, must be considered when paying taxes or filing reports with state authorities. In many such scenarios, it is advised that an LLC appoints a Registered Agent to manage all this. Check out the best LLC service that offers all the services at an affordable price. An experienced agent is required for:
- Streamlining the mandatory processes & filing.
- Sending or receiving any documents.
- Reminding you of important tax filing and payment dates.
- Simplifying the filing procedures.
- Avoid any penalties.
- Flexibility in working.
- Maintaining Privacy (as it keeps your personal records off the public record)
You can read more about a Delaware Registered Agent here.
FAQs
Yes, an annual report is essential for every business entity in most states. Some states also require biennial or decennial reports to be filed.
A Yearly Business Report, or the annual report, typically incorporates the address of the business, names & addresses of the members, a list of all signatories, SSNs of the members, & details of the registered agent.
A Registered Agent is well-aware of all the filing requirements, annual report filing fee, & overall Annual Report compliance. The knowledge & proficiency of the registered agent allow the smooth filing of reports & other fees.
The most important aspect of filing an Annual Report is maintaining accurate record-keeping. Ensure that you document every transaction thoroughly and accurately.
Yes, the fees may vary depending on the type of entity or the type of legal entity you are representing.
In Conclusion
In conclusion, we can see that the annual report, also known as the Franchise Tax Public Information Report, is significantly easier to file. However, it is mandatory to file the report on time to avoid any penalties. If you are running an LLC in the state of Delaware, you have to comply with the filing of certain important documents, including the annual report or the Franchise Tax Public Information Report, as it is named in the state of Delaware.
It is also important to note that once this Public Information Report is filed with the Comptroller of Public Accounts, there is no need for additional filing with the Secretary of State. Additionally, please note that an annual report is not the same as a Certificate of Good Standing in the state of Delaware. They might look similar, as many parts of the certificate are the same as those in the annual report; however, it is a completely different document and should be compliant with the filing requirements for the annual report in Delaware.