Introduction to Delaware Foreign Qualification

The state of Delaware is home to more than 1.5 million business entities with 84,675 small business formations in 2019 including foreign corporation registration in Delaware. It is one of the most preferred states by both businesses and investors due to benefits like the flexibility of structuring the ownership, administration, and operation of an entity to fit the needs of owners and investors. Delaware also presents tax advantages, small business incentives, funding and grants, privacy, and a reliable judicial system. The advantages and pro-business environment have been and will continue to attract entrepreneurs for doing business in Delaware for domestic and foreign entities.

What is foreign qualification?

Foreign qualification refers to registration of a business with the office of the secretary of state of a state different from that of its formation or home state. There are several scenarios in which a company may want to opt for Delaware foreign qualification although the most common reason is business expansion. The process of foreign corporation or foreign LLC registration in Delaware will enable a company to pursue growth opportunities in another state or across state borders legally without the need for incorporating or forming a new entity. Let’s look at an example to understand this:

If you have formed a domestic LLC in Nevada then Nevada is considered to be your home state. Now, if you plan to expand your operations to the state of Delaware then you will be required to acquire Delaware foreign qualification in order to register your LLC in the new state.

The foreign LLC or foreign corporation registration in Delaware will ensure you are able to make your business operational. You will be required to apply for and obtain business licenses or permits, hire a registered agent in Delaware, and also maintain annual compliances as required by the state of Delaware as well as Nevada.

When does a company have to foreign qualify?

If you already have a business corporation or LLC in any state in the nation except Delaware and want to expand your existing business or are interested in doing business in Delaware then you will need to register your business in the said state through a process known as foreign qualification. At the same time, it is important to understand the scenarios that will require you to apply for foreign qualification. Let us look at separate examples to understand when you need to and when you will not be required to pursue foreign LLC registration in Delaware.

• Example#1: You have a retail store in Texas and because of its tremendous success; you want to expand to other states like Delaware. In order to open a new store in Delaware, you will have to go through the process of Delaware foreign qualification as this will help you to register in this state. When you are foreign qualified, you will be able to operate your store in both locations.
• Example#2: You are a consultant based out of California and you work with multiple clients online across several states including Delaware. Since most of your work is online, you will not be required to file for foreign LLC or foreign corporation registration in Delaware. Business law specifies that earning revenue from multiple states doesn’t translate into the fact that you are actually transacting your business in those states.

Foreign qualification is not mandatory or necessary for all types of businesses or activities in Delaware. To determine if your company requires Delaware foreign qualification; you need to ask a few questions first. They are:

• Do you have a physical presence like a retail store, restaurant, or any other commercial office space in Delaware?
• Are you required to apply for a business license or permit in this state?
• Do you conduct face-to-face or in-person meetings with clients quite frequently in the said state?
• Does your business generate a substantial percentage of your company’s revenue from Delaware?
• Does your business have employees working in this state?
• Are you paying any state payroll taxes in Delaware?

If your answer is “yes” to any or all of the above questions then you will need to file for Delaware foreign qualification.

Expand your business through Delaware foreign Qualification!

Doing business in Delaware

The type of business you are planning to form will be governed by Title 6 and Title 8 of the Delaware Code e.g., foreign corporation registration in Delaware is governed by Title 8, Subchapter XVI of the Delaware Code. You are probably wondering what doing business in Delaware really means. In brief, it refers to the practice of carrying on with the business activities of a company in the state of Delaware when the said company was actually registered in another state. In such a scenario, foreign corporation registration in Delaware is necessary.

When you are doing business in Delaware then it also means that there is a physical presence in the state. The presence could be in the form of:

• A warehouse in Delaware
• Commercial space or office in the state
• A retail store in the state
• Sales representatives in Delaware

Similarly, there are certain activities that are not considered as doing business in Delaware like having a bank account in Delaware, an isolated transaction in the state, conducting business as a part of interstate commerce, and collecting debts among others.

Foreign Qualify Process

The process of Delaware foreign qualification will depend purely on the form of business you plan to conduct in the state like the foreign LLC registration in Delaware may be different from that of a foreign corporation. However, it is also important to remember that failing to foreign qualify can lead to penalties for noncompliance pursuant to 2 DE Code § 378 (2014 through 146th Gen Ass) for business corporations and 2 DE Code § 18-908 (2014 through 146th Gen Ass) for a limited liability company. The Court of Chancery can even prohibit such a company from doing any business in the Delaware state.

Delaware foreign corporation registration

If your corporation is based out of Delaware and you plan on doing business in Delaware then you will have to foreign qualify. The following steps will help you to identify the requirements for foreign corporation registration in Delaware.

• Name: The first step towards foreign corporation registration in Delaware is to determine if your chosen name is available. You will need to conduct a name availability search in the Delaware state database. If your chosen name is available then you will need to reserve the name with the Department of State, Division of Corporations. The fee for this is $75.
• Registered Agent: An important aspect of doing business in Delaware is hiring a registered agent as it is mandatory for service of process pursuant to 2 DE Code § 376 (2014 through 146th Gen Ass). You can hire IncParadise as we possess knowledge of and expertise in Delaware foreign qualification and can help you qualify for the same.
• Certificate of Existence: It is also known as the certificate of good standing and is required for foreign corporation registration in Delaware. The Certificate of Existence should be dated within 6 months prior to the date of applying for the Qualification of Foreign Corporation. The certificate has to be issued by the original jurisdiction of incorporation of the foreign business entity.
• Qualification of Foreign Corporation: If you want to apply for Delaware foreign qualification by yourself then you need to download the form from the Delaware Division of Corporations portal. The form is known as the Qualification of Foreign Corporation and has to be submitted along with a Certificate of Existence and a filing fee of $245. The processing of the qualification certificate will take around a week although you have the option of expedited processing.

Do you want to form a Delaware Foreign Corporation?

Delaware foreign LLC registration

If you are planning to start a limited liability company in Delaware and are already doing business in another state then you will need to apply for foreign LLC registration in Delaware. The following steps will help you to identify the requirements for the Delaware foreign qualification for an LLC.

• Name: The first step towards foreign LLC registration in Delaware is to choose a name and determine if the name is available. You will need to conduct a name availability search through the Delaware state database. If your LLC name is available then you will need to reserve it by submitting the “Application for Reservation of Limited Liability Company Name” along with a fee of $75 to the Department of State, Division of Corporations.
• Registered Agent: An important aspect of doing business in Delaware is hiring a registered agent as it is mandatory for service of process on registered foreign limited liability companies pursuant to 2 DE Code § 18-910 (2014 through 146th Gen Ass). You can hire IncParadise, one of the most reputable agents in Delaware to assist you with the process of foreign LLC registration in Delaware.
• Certificate of Existence: A Certificate of Existence also known as the certificate of good standing is required for foreign LLC registration in Delaware. The Certificate of Existence states that the limited liability company exists. This certificate should be dated within 6 months prior to the date of applying for the Certificate of Registration of Foreign Limited Liability Company. The Certificate of Existence will be issued by the original jurisdiction of LLC formation or your home state.
• Qualification of Foreign LLC: If you want to apply for Delaware foreign qualification by yourself then you need to download the form from the Delaware Division of Corporations portal. The form is known as the Certificate of Registration of Foreign Limited Liability Company and has to be submitted along with a Certificate of Existence and a filing fee of $200. The processing of the qualification certificate will take around a week although you have the option of expedited processing.

Do you want to form a Delaware Foreign LLC?

Need Any Assistance in Applying for Delaware Foreign Qualification?

If you are thinking of doing business in Delaware even if you are operating your LLC or corporation in another state then foreign qualification will help you with registration in this state. As one of the leading registered agents in Delaware and the nation, IncParadise can assist you with the process of foreign LLC or foreign corporation registration in Delaware. We can also help you in acquiring a Certificate of Existence/Certificate of Good Standing from your home state and provide you additional services that will ensure you are in compliance with all requirements pertaining to foreign qualification in Delaware. We provide foreign qualification services in all 50 states, which means that if you plan to expand into any other state apart from Delaware then we can also assist with foreign qualification in those states as well.

Starting a Company in Delaware

The state of Delaware with a GDP of $72.461 Billion has a strong economy and robust transportation infrastructure that businesses can leverage. The efficient business climate that the state boasts of is driven by the strategic location, which has been the center of business in the Northeastern United States. It is home to 84,675 small businesses and had an annual growth rate of 2.3% in 2019. The economic and business climate is conducive for Delaware company registration for non-residents and you can choose to form any type of business entity like corporations, limited partnerships, limited liability companies, and other corporate entities. You can even open a Delaware company online but right now, you are probably wondering what makes Delaware so popular for a new business.

Why choose Delaware to start a business?

An attractive economic and business environment is what makes Delaware so popular amongst new businesses and entrepreneurs. When setting up a Delaware company as non US residents, you will be able to benefit from the low cost of doing business and pro-business legal and tax system. There are several other advantages that make this state not only one of the best places for incorporation but also ensure strategic positioning of your company. Some of the top advantages are:

• The process of starting a new business is not complicated although it may require you to file several documents. You can even open a Delaware company online.
• The Delaware Court of Chancery with expert judges instead of a jury to play a key role in protecting businesses by quickly and efficiently resolving corporate issues.
• If you are planning on setting up a Delaware company as a non-US resident, then tax advantages are one of the salient benefits. The state does not have corporate income tax, personal property tax, value-added taxes (VATs), unitary or inventory tax, and stock transfer taxes among others
• Another important tax benefit is that once you open a Delaware company online and your company has shareholders not residing in Delaware then they don’t have to pay taxes on shares in this state
• The Delaware Corporate Statutes imparts a lot of structural flexibility when it comes to organizing a corporation
• The Delaware company registration for non-residents is quite similar to that of domestic business entities
• There is greater privacy that businesses can enjoy. For example, Delaware corporations are not required to disclose the name of directors or officers in their formation documents.

These are some of the reasons why more than half a million businesses have formed in the state and are successfully operating in Delaware. You can enjoy these benefits post Delaware company registration for non-residents.

Setting up a Company as a Non-US Resident in Delaware

If you are residing outside of the U.S and want to start a business in Delaware, is it possible? Are there any restrictions? Generally speaking, the corporate law structure of Delaware does not impose any kind of restrictions on management or ownership of a Delaware company by a U.S non-resident. This simply means that Delaware company registration for non-residents is possible and the process to form or incorporate a business is quite similar to that of a domestic company.

How to form a Delaware LLC or Delaware Corporation as a Non – US resident?

If you are a non – US resident and want to start a company in the US or in Delaware then there is a process governed by the Delaware business laws that you would have to follow. You can actually start a new business in Delaware irrespective of which country you reside in. Although Delaware company registration for non-residents is possible, physical presence of the owner is not mandatory, however you will be required to enlist or hire the services of a reputed Delaware Registered Agent by law.

In order to form a Delaware LLC or Delaware corporation as a non – US resident you will need to be compliant with the business laws and fulfill certain criteria like obtaining an Employer Identification Number (EIN), file franchise taxes, Delaware company formation with a bank account, and pay US taxes as a nonresident. You will be required to file all your incorporation or formation documents with the Department of State: Division of Corporations.

Do I need a US Business Address to form a company in Delaware?

One of the important requirements for setting up Delaware Company as a non US resident is that of a physical address. You may start a business in the US while residing anywhere in the world but your business in the U.S needs to have an address, which has to be shared with the office of the Secretary of State and Delaware Division of Corporations. The address is used primarily by the state departments or agencies to send certificates, important business mail, reminders or notifications etc. The physical address will also be required to facilitate Delaware company formation with a bank account or open a new bank account. The address is a mandatory requirement of the state for business formation and hence needs to be fulfilled.

Since, you are residing outside the U.S, how do you fulfill this requirement? This is where a registered agent like IncParadise can provide you with a physical address through the virtual mailbox service to fulfill state requirements as well as business needs like receiving important mail and helping you to maintain regular business hours in Delaware.

Start a new business in Delaware’s pro-business climate!

Steps to start a Delaware company

The process for Delaware company registration for non-residents is quite similar to that of a domestic company formation although there may be some extra requirements.

1. Choose a name for a Delaware company

One of the important steps towards setting up a Delaware Company as a non US resident is to identify a name and reserve it. Firstly, you will need to identify a name that is unique and available. You have to check for availability by performing a name search on the website of the Department of State: Division of Corporations. If your chosen name is unique and available then you have to reserve it online or by submitting a paper form. The fee is $75 and the form is submitted with the Delaware Secretary of State. A name can be reserved for a period of 120 days and is important if you plan to open a Delaware company online.

2. Hire a Registered Agent

A Delaware company registration for non-residents is possible only if you are in compliance with all requirements of the state and this includes hiring a registered agent. A new business as well as existing business in the state has to hire and maintain a registered agent pursuant to 8 DE Code § 132 (2012 through 146th Gen Ass) for corporations and 6 DE Code § 18-104 (2016) for LLC. The primary objective of a Delaware registered agent like IncParadise is to receive all official mails from the office of the Secretary of State and also handle service of process on your behalf. We can be your registered agent in Delaware for handling of service of process and fulfill other business related requirements.

3. File Certificate of Incorporation or Certificate of Organization

The most important step towards setting up a Delaware company as non US residents is filing for the formation documents. The documents will differ according to the type of business entity you form. If you are planning to form a stock corporation then you will have to apply for the Certificate of Incorporation pursuant to 2 DE Code § 102 (2014 through 146th Gen Ass). You have to submit a cover memo and a minimum fee of $89 along with the incorporation certificate form to the Delaware Division of Corporations.

If the Delaware company registration for non-residents is a limited liability company then you will be required to file the Certificate of Formation pursuant to 2 DE Code § 18-201 (2014 through 146th Gen Ass). You have to submit a cover memo and a fee of $90 along with the form to the Delaware Division of Corporations. You can submit the form by mail or open a Delaware company online.

4. Obtain Employee Identification Number or EIN

An Employer Identification Number (EIN) is a 9-digit unique identification number that is assigned to a business entity by the Internal Revenue Service (IRS). This is also known as the Federal Tax Identification Number (FEIN) and it is mandatory for a company to obtain an EIN prior to setting up a Delaware Company as a non US resident. This number is used for filing tax returns and is also required during Delaware company formation with a bank account, applying for loans, and other business related activities. It is important to note that as a US non-resident, you will not be required to show or possess a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to obtain an EIN.

5. Open a business bank account

Delaware company formation with a bank account is possible and you are not required to be a U.S. resident alien or American citizen to open a business bank account in Delaware. Although, each bank in the U.S has its own set of requirements, if you have your Certificate of Incorporation or Certificate of Organization and Employee Identification Number (EIN) then you will be able to apply for a Delaware business bank account. You may also be required to furnish other information such as location or address of your company and address of your registered agent. You can apply for a business bank account prior to or after setting up a Delaware company as a non US resident. Some of the common documents required by Non-US residents for a business bank account include:

• Certificate of Incorporation or Formation
• Federal Tax ID Number (EIN)
• Proof of address
• Photo ID (such as a valid passport)
• LLC Operating Agreement if you have formed an LLC
• Corporate bylaws

6. Maintain annual corporate compliance and requirements

Once you open a Delaware company online, it is important to ensure that you maintain annual corporate compliance and requirements of the state as this will help your business to enjoy active status. The annual requirements vary from one state to another and are also different for different forms of businesses. If you are setting up a Delaware Company as a non-US resident, then the requirements will be the same as a domestic or foreign company operating in the state. There are primarily three requirements and they are:

• Annual Reports
• Franchise Tax
• Maintaining a Registered Agent

If a company fails to maintain annual corporate compliance and requirements then the state may charge penalties and even administratively dissolve the said business entity.

7. Use virtual office/mail forwarding service

One of the primary requirements for a Delaware company registration for non-residents is a physical address. You can form any business in Delaware but you will need to provide the business address in the formation documents and also for obtaining business related documents like a business license or even a tax ID like EIN. It is not always possible to own a brick and mortar office or rent out a commercial space, especially if you reside outside the U.S. In such a scenario, you can still obtain a business address to open a Delaware company online and this is possible through opting for a virtual office or a mail forwarding service.

IncParadise can provide you with a virtual office and mail forwarding services in Nevada and Wyoming. In fact, you can start a new business in Delaware and opt for Nevada mail forwarding or virtual office services. One of the salient benefits of opting for a mail forwarding service is that you will never have to compromise on communication with your customers and vendors even if you were to change office address or move to another location

Need Any Help in Forming a Delaware Company?

Whether you plan on setting up a Delaware company as a non US resident, requires a registered agent, or want to obtain an Employer Identification Number (EIN). We at IncParadise can provide the necessary assistance. We are an expert incorporation and registered agent service provider in Delaware and we can help you to start your business in Delaware and also maintain annual compliances with the Secretary of State or Division of Corporations.

We believe that every business in Delaware has its own set of requirements and hence we offer a wide variety of business related additional services. These services include S Corporation status election, U.S. street address, Certificate of Good Standing, amendment to the Articles, and foreign qualification among others. You can

Delaware Business Tax

An entrepreneur wanting to form a new business in the state of Delaware needs to check their federal, state, and local or county business tax requirements. Although, the state is considered to be a tax shelter; you may be required to file Delaware business taxes. How do you determine what type of taxes your businesses are required to file? The type of Delaware business tax return to be filed is dependent on the type of entity you form as corporations have different tax filing requirements as compared to a limited-liability company.

The Internal Revenue Service (IRS) categorizes federal business taxes under the following:

• Self-Employment Tax
• Income Tax
• Employment Tax
• Excise Tax
• Estimated Tax

It is important to note that the type of state and local taxes will vary according to the state where you form or register your business.

What are Delaware business taxes?

Delaware, like most of the other states, taxes some form of business income that is derived within the state. The income derived from specific businesses is taxed mostly depending on the legal structure of the said business. Although, in some states, there are no corporate income taxes, Delaware has a corporate income tax. In this state, there is Delaware franchise tax and business entities like LLC, general partnerships, and limited partnerships also have to file Delaware business taxes. Depending on the legal form of your business, you may have to file one or more of the taxes like the LLC which you are not required to file with franchise tax as it is applicable to only traditional corporations.

Delaware business taxes comprises primarily of the following:

• Franchise tax
• Delaware corporate tax
• Annual tax
• Gross Receipts Taxes
• Withholding Tax

What are the tax advantages in Delaware?

Delaware is considered a business friendly state with a strong tax shelter. This makes the state extremely attractive to entrepreneurs and investors. Whether you are incorporating or forming a limited liability company, there are certain Delaware business tax benefits that you will enjoy including tax credit programs. Some of the tax advantages are:

• Business Friendly Tax Environment: One of the top Delaware business tax benefits is that the state does not levy the following taxes on new or existing entities:
  • There is no Delaware corporate tax on interest or any other investment income, which a holding company based in the state may earn. If a holding company owns equity investments or fixed-income investments then it will not be taxed on the gains on a state level.
  • There is no Delaware corporate tax on goods or services that is being provided by a Delaware corporation operating outside the state.
  • The State of Delaware does not have any personal property tax and hence you will not be required to file any Delaware business tax return on the same, although local county real estate property taxes may be applicable but they are quite low.
  • There are no Delaware business taxes on intangible income like that of trademark royalties
  • Whether your company is situated in Delaware or it is out-of-state, any in-state purchases will not be subjected to sales tax.
  • Delaware does not have any ad-valorem or value-added taxes (VATs)
  • The state does not have any use tax, unitary, or inventory tax
  • There are no stock transfer or capital shares taxes in Delaware
• Tax Credits: The average cost of doing business in the state of Delaware is almost 25 percent below the national average and the tax incentives play a key role in keeping the average low. The state offers a wide variety of tax credit programs as a part of the Delaware business tax benefits package and this refundable credit helps save money, which is important for startups and small businesses. Some of the most popular tax credit programs include:
  • New Economy Jobs Tax Credit
  • Additional credits for job creation in targeted growth zones
  • New Business Facility Tax Credits
  • Public Utility Tax Credit
  • Brownfields Credit
  • Gross Receipts Tax Credit
  • Angel Investor Job Creation and Innovation Tax Credit
  • Brownfields Credit
  • Business Finder’s Fee Tax Credit
  • Clean Energy Technology Device Manufacturers’ Credit
  • Research and Development Tax Credits
  • Individuals with Disabilities Tax Credit
  • Neighborhood Assistance Tax Credit
  • Land and Historic Resource Conservation Tax Credit

IncParadise can help you start a Delaware new business today!

How Delaware Businesses are taxed?

If you are planning to form a new business in Delaware then you may be required to file a Delaware business tax return and this will be applicable to the type of business entity and the activity like sale of goods or services. The tax rate will be determined by the type of Delaware business taxes applicable to your business and hence it is important to identify the taxes according to the business type. This will also ensure you are better prepared for the filing of tax returns and thus cut down on any unexpected fee or fines. The different Delaware businesses and the way they will be taxed are as follows:

Delaware Corporate Taxation

If you form a domestic or a foreign corporation in Delaware then you will have to file a Delaware business tax return unless exempt under Section § 1902 (b): Imposition of tax on corporations; exemptions; Title 30, Delaware Code. The applicable Delaware corporate tax is:

• Corporate income tax: The corporate income tax return has to be filed using Form 1100 or Form 1100EZ using their Employer Identification Number (EIN). The applicable Delaware corporate tax is 8.7% of the federal taxable income allocated as well as apportioned to the state of Delaware. The percentage tax applicable is based purely on an equally weighted 3-factor method of apportionment. The factors taken into consideration are wages, property, and sales in the state as a ratio of wages, property, and sales everywhere else.

A corporation formed in the state may be required to file a Delaware business tax return for gross receipts tax and withholding tax.

Delaware Franchise Tax

If you form a domestic or foreign company in Delaware then you will have to pay franchise tax. The Delaware franchise tax is a fee that has been imposed by the state for the privilege or the right to own a company or business in the state. This is one of the few Delaware business taxes that are not based on the income of the company or its activity. There are two methods for determining the amount of tax to be paid. If the Authorized Shares method is used then the minimum tax is $175.00 and if the Assumed Par Value Capital Method is used then the minimum tax is $400.00 for corporations. The maximum franchise tax using either method should not exceed $200,000. On the other hand, the franchise tax for a Delaware LLC is a maximum of $300.

The due date for the Delaware franchise tax is different for different types of businesses. The tax for corporations is due on March 1st of each year while the due date for an LLC is June 1 each year. If this Delaware corporate tax is not paid within the due date then the state may impose a penalty and a monthly interest fee of 1.5 percent.

Delaware personal income tax

If you form a company in Delaware, which is a pass-through tax entity, then you will be required to file Delaware business taxes in the form of personal income tax. A pass-through tax entity is a type of business where the earnings and losses of the company are passed onto the owners. The most common form of this type of business entity that files a Delaware business tax return is:

• Sole proprietorships
• Limited liability companies
• Partnerships
• S corporations

The personal income tax rate in Delaware has changed and the tax rate varies from 2.2% to 5.55% for income below $60,000, and if the income is $60,000 or more then the tax rate is 6.60%. The form for filing a Delaware business tax return will be different based on the type of entity for example, a single-member LLC classified as partnership has to file “form 300” while a single-member LLC classified as a sole proprietorship has to file “form 200”. You will also have to report all your profits and losses on Schedule C for efficient filing of Delaware business taxes.

Delaware withholding tax

If a company is conducting business in Delaware or maintaining an office in the state and is also paying wages or providing other forms of remuneration to resident or non-resident Delaware individuals then they will be required to pay Withholding Tax. This type of Delaware business taxes requires a business to withhold an estimated amount from the employees as tax.

The due date for filing Delaware business tax return for withholding taxes varies according to the payroll end date for example; if your payroll end date is 01-01-21 then the due date for return will be 01-06-21 for eight monthly filers. Similarly, for quarterly filers, if the quarter end is 03-31-21 then the filing due date would be 04-30-2021. The withholding tax forms are normally sent after a withholding application is filed with the Delaware Division of Revenue but you will have to open a withholding account using the One Stop Business Licensing and Registration system. Failure to file Delaware business taxes like the withholding tax may lead to a penalty of 5% per month along with an interest of 0.5% per month.

Gross receipts tax

If you form a business in Delaware then you may be required to file gross receipts tax. You will have to file a Delaware business tax return if you are a seller of goods (tangible or otherwise) or if your business provides any type of service in the state. It is one of the important Delaware business taxes where-in the term “gross receipts” refer to the total receipts received by a business from sale of goods or services rendered within the state. It is important to note that deductions for this type of Delaware business taxes are not applicable on labor costs, cost of goods, interest expense, property sold, discount paid, state or federal taxes, delivery costs, or any other expense allowed. The tax rate can vary from 0.0945% to 1.9914% depending on the type of business activity for example, the current tax rate for an advertising agency and General Services is 0.003983% while that of Automobile Manufacturers is 0.000945% and Retailer – General is 0.007468%. You can get more information on gross receipts tax from the Department of Revenue website.

Ready to Incorporate your Delaware company?

Each type of business has its own set of requirements, which is dependent on the business activity and the first step towards making it operational is by registering with the state. IncParadise, an expert incorporation service provider in Delaware can help you to register your LLC or corporation in the state.

At IncParadise we value our customers and recognize the need for businesses to remain compliant with annual requirements as specified by the state. Hence, we offer Delaware additional services for all types of businesses, so that they can choose what they need and thus fulfill their legal or state based requirements. Our additional services include Delaware domestication, foreign qualification, EIN or Tax ID, and Certificate of Good Standing among others.

Delaware Annual Report

A Delaware annual report is considered to be a comprehensive overview of the achievements and financial statement of a business entity from the previous year. An annual report is also known by different names in different states like Annual Franchise Tax Report in Arkansas, Periodic Report in Colorado, statement of information in California, Two-Year Report in the District of Columbia, Annual Registration in Georgia, and Business Entity Report in Indiana among others. Some states require this report to be filed annually and in some states it is biennial. The important question is whether your company needs to file a Delaware annual report information sheet or do you have to file some other type of report?

What is Delaware annual report?

A Delaware annual report is a type of document that needs to be submitted to the state annually. The reports contain specific business information like:

• The address of a company’s physical location
• The name and address of at least one officer
• The names as well as addresses of all directors

The Delaware annual report information also requires an authorization by an officer or director of the company for filing purposes. Since the annual reports in Delaware state are electronically stored, hence the details of this informational report cannot be viewed publicly thus providing a layer of privacy for businesses.

If you change your business address or officers, what happens? In such a scenario, especially if the change takes place mid-year, an update to Delaware annual report needs to be filed. It is important to note that all forms of annual report amendments will be accepted for a period of one year from the date of the original filing.

Who has to file Delaware annual reports and when is the due date?

Whatever form of business you register with the state of Delaware, the annual requirements may be the same or different. The requirement of Delaware annual report filing is dependent on the form of business. For example, domestic and foreign LLCs are not required to file an annual report and instead have to file an “Alternative Entity Tax”or annual tax with a flat fee. Business entity types like domestic and foreign limited partnerships and general partnerships do not require filing an annual report but are required to file an annual tax of $300. On the contrary, a foreign or domestic corporation will be required to file an annual report pursuant to 2 DE Code § 515 (2014 through 146th Gen Ass). The fee for the Delaware annual report information is different for exempt and non-exempt domestic corporations and foreign corporations.

There is a Delaware annual report due date for different forms of businesses and failure to file within the due date may lead to penalties. Business corporations are required to file their annual report along with franchise tax on March 1st, each year. The due date for foreign corporations is June 30th each year while the due date of a limited liability company’s Delaware annual report filing is June 1st of each year.

Filing a Delaware Annual Report

The Delaware annual report filing by a limited liability company, corporations, and other businesses is required by law although some forms of businesses need to file an annual tax instead of the annual information report. Every domestic and foreign corporation that has been organized under the laws of this state and has obtained the right to transact or carry on business in this state will have to file the annual report along with a franchise tax pursuant to 2 DE Code § 502 (2014 through 146th Gen Ass) and 2 DE Code § 515 (2014 through 146th Gen Ass). The filing should be done prior to the Delaware annual report due date. Some of the important aspects to consider while filing this report include the filing due date, where to file and the applicable fee.

Steps to file the Delaware annual report

The Delaware annual report filing process may look complicated, hence the necessary guidance required towards filing it. It is always beneficial to use a professional company with years of experience in filing Delaware annual reports as it can help you to avoid any potential problems. We are offering this service and we will gladly help you with it. If you are interested in the filing of the Delaware annual report process then the following information will provide the necessary guidance.

Step#1: Go to Delaware Division of Corporation website

The website of the Delaware Division of Corporation provides comprehensive information pertaining to the annual report filing along with the fee and Delaware annual report due date. The annual report can only be filed online using the Delaware Corporations Information System: DCIS-eCorp.

Step#2: Enter business entity file number

In order to file the Delaware annual report online, you will need to provide the 7 digit Business Entity File Number. This file number is issued by the state of Delaware to each new business at the time of incorporation or formation. It is a 7-digit number that is used for identifying your company and also filing the Delaware annual report information with the Division of Corporations. You will be able to locate this number on your Certificate of Incorporation or Certificate of Formation.

Step#3: Enter corporate information

In order to facilitate the Delaware annual report filing, you will be required to enter specific corporate information like:

• Exact legal name of the business entity
• Total number of authorized shares
• Class and par value of the shares
• Principal business address and phone number
• Name and address of an officer
• Names and addresses of all Directors

Step#4: Pay franchise tax and annual report fee

The final step towards filing Delaware annual report information is to submit the report fee and also pay franchise tax. The annual report fee for non-exempt corporations is $50 and that of exempt corporations is $25. The fee for foreign corporations is $125. The franchise tax will differ based on the type of corporation. For example, the franchise tax for a non-exempt non-stock corporation is $175. If your company is a non-exempt stock corporation then the franchise tax will be calculated using the Authorized Shares Method or the Assumed Par Value Capital Method. The minimum tax is $175 for Authorized Shares Method and $400 using the Assumed Par Value Capital Method. The maximum tax using either method is $200,000.

Alternatively, you can take advantage of our entity management software as it helps in tracking the annual requirements of your company and thus ensure Delaware annual report filing on time. We will not only help you to file your annual report but also ensure you are able to submit correct Delaware annual report information.

Need help filing the Delaware Annual Report?

Consequences of failing to file annual reports

There is a Delaware annual report due date within which you are required to file the report. The due date is different for different forms of business entities but what happens if you fail to file on the due date? Failure to file the Delaware annual report and franchise taxes by business corporations on or before March 1st can lead to penalty. The penalty is $200 along with an interest of 1.5% per month, which is applied to the unpaid tax balance.

According to 8 DE Code § 510 (2018) if a business corporation neglects to file the Delaware annual report information or franchise taxes for a period of one year then the charter of the said corporation will be void, and the company will be declared inoperative.

The penalty for non-payment or late payment of annual tax by a limited liability company is the same as that of a corporation.

Need Any Assistance in Filing Delaware Company Annual Report?

The Delaware annual report filing with the Delaware Division of Corporations is mandatory for corporations by law. There is a difference in the annual requirement for corporations and a limited liability company as the latter is not required to file an annual report. There may be times when a company is unable to file within the Delaware annual report due date. This is where IncParadise ensures you never miss your due date for filing annual report or franchise taxes and this is made possible by providing the necessary assistance and services related to annual report filing on time.

You can also benefit from our entity management software, which keeps you updated regarding the company’s operations and sends reminders regarding annual requirements.

Delaware Business License

Once you form a business, you have to make it operational and for that you will need to obtain a business license in Delaware. Delaware law states that every business, both Delaware and non-Delaware is required to obtain an annual state business license. You may also require additional state licenses or permits depending on the type of business activity you may have. You may also need to apply for and obtain Delaware business license if your business qualifies under any of the mentioned state regulated industries. The business licensing aspect of regulated industries is managed and licenses or permits are issued by state agencies like the Division of Public Health issues food establishment licenses and permits.

Some of the regulated industries include:

• Agriculture
• Contractors, Building, Construction
• Food Establishments
• Alcohol
• Automobile
• Banking
• Child Care
• Boating
• Environmental Protection
• Manufacturing
• Health
• Lottery or Gaming

Apart from the state business license, you may also need to apply for and obtain Delaware business license and permits in the county or city that your business is located in. For example: If you start a business in New Castle County, Delaware and it is situated within the city limits then you will be required to obtain a City of New Castle Business License. The Delaware business license fees for operating in the City of New Castle will take into account the number of employees including the owner.

Delaware small business information

If you are planning to start a small business in Delaware then you will need to register it as well as obtain a business license in Delaware. As a startup or an entrepreneur, you will also require information and resources that will help you strengthen your business and help it to grow. Where can you get such information? One of the best places to search for informational resources is the “Business Resource Connection” of the Delaware Division of Small Business. This agency is a part of the Delaware Department of State that is focused and committed towards supporting new businesses in their path towards achieving growth and sustainability through approximately 300 business-focused programs. You can search using location, specific need, industry, business stage, and target community.

If you are looking for a comprehensive business guide that provides information and resources pertaining to Local Business Assistance, Funding Programs, Government Contracting, SBA Certification Programs etc., then the U.S. Small Business Administration (SBA) – Delaware Edition is a great place to start. You can download their resource guide as the information enclosed can be extremely helpful. The agency has dedicated “Resource Partners”who specialize in offering counseling, mentoring, and training programs to help startups and small businesses to thrive through different stages of their business life cycle. You can become a part of these programs prior to or post application for a business license in Delaware.

The Delaware Small Business Development Center is another agency that provides a wealth of information and resources that will help you to establish and grow your new business. They offer a variety of training programs including online training, on-location classes, seminars etc. The primary objective of the Delaware Small Business Development Center (DSBDC) is to develop as well as support entrepreneurship with the help of University of Delaware’s Office of Economic Innovation and Partnerships (OEIP).

Delaware annual state business license

Every business has to fulfill business licensing requirements in their state of formation as this helps to make the business legally operational. A business license in Delaware will help you to conduct your business in the state. A business license is basically a type of approval or permit that is issued by the state, regulatory bodies, state agencies, and county clerk etc., to authorize the said business to operate within the state’s boundaries. There is a Combined Registration Application (CRA) that you can submit with the Division of Revenue along with your EIN information to obtain a state license. It is also important to note that you may need to apply for and obtain licenses that are issued locally by the city council or county clerk offices. This requirement may vary from one county to another. Renewing a Delaware business license is also very important as failure to do so may lead to your business being unable to operate in the state.

The process of filling and filing a license along with Delaware business license fees can be disconcerting and complex as depending on the business activity, you may need to apply for state licenses from different regulatory agencies. This is where our comprehensive “Business License Research Report” can be extremely helpful as it contains a list of filing instructions, supporting document requirements and fees for all business licenses and permits in the state of Delaware.

Obtaining a Delaware Business License

An entrepreneur or a business entity in any state has to fulfill their business licensing needs prior to starting their business operations. A business license in Delaware is a crucial aspect of any business formation and operations and helps in protecting an entity legally while boosting credibility, which provides access to state or city wide funding. Business licensing is a state-level requirement although you may need to obtain a Delaware business license on the local or county level also. The main reasons for a business license requirement are:

• Recognition of your company
• Ensuring responsibility towards yours or the actions of the entity
• Protecting public safety and health
• Monitoring finances for tax purpose

A business in any form requires a business license in Delaware pursuant to Title 29, Chapter 103 – Business Registration and Licensing System – § 10301 to § 10308. Let’s take a look at the process for obtaining or renewing a Delaware business license.

How do I obtain a business license in Delaware?

If you are an entrepreneur or a new business owner then you need to apply for a business license in Delaware with the Division of Revenue. The following steps will help you to obtain a Delaware business license:

• You can apply online with the Division of Revenue by using the “One Stop Business Licensing and Registration Service“
• Alternatively, you can download the “Combined Registration Application (CRA) Form”
• Once you complete the CRA form, you can mail it along with the required Delaware business license fees to:
  • Division of Revenue
    P.O. Box 8750
    Wilmington, DE 19899-8750

It is important to ensure the form has been filled correctly and provides accurate information as incorrect or lack of information may result in the application getting rejected.

You may need to also file multiple business licenses as well as regulated industry licenses depending on the business activity. There are several state regulated industries wherein you will be required to apply for a Delaware business license with the respective state agencies. e.g., a food establishment like a restaurant will have to fulfill regulatory requirements as specified by Delaware Health and Social Services, Delaware Division of Public Health. You will also be required to apply for renewing Delaware business licenses with the licensing state agencies.

Do you need to find out what Delaware business licenses you need?

How long does it take to receive a business license in Delaware?

A Delaware business license or permit will be issued once you have filed your licensing or permit application with the Division of Revenue along with the required Delaware business license fees. Generally, most businesses will receive or obtain a Delaware business license within a month from the date of registration with the Division of Revenue.

If you have applied online using the One Stop Business Licensing and Registration Service along with Delaware business license fees then you will have the advantage of printing a temporary license once the registration or renewal process is complete. A permanent license is normally sent within 10 working days from the date of filing the application.

Renewing Delaware business license

A business license in Delaware is issued with the annual requirement of renewal. It is normally issued for a calendar year or 1-year and expires on December 31 each year. Once it expires, you will need to apply for renewing a Delaware business license as failure to renew may hamper your business operations in the state. You will have the option to renew your license for a term of 1 year or 3 years.

There are two ways for renewing a Delaware business license and they are:

• You can renew your business license online using the Online Renewal option at the Division of Revenue portal.
• You can complete a business license renewal form and mail it to the office of the Division of Revenue along with the appropriate Delaware business license fees

Delaware Business License Fees

The annual Delaware business license fees will vary depending on the category of activity the business pursues. For example, the fee for Automobile Manufacturers is $75 while that of an Outdoor Music Festival Promoter is $750. However, the license fee is generally $75.00 for a first location for 1 year. In the second year, you will have the option of renewing Delaware business license for a 3-year period and the fee will be 3 times the original fee i.e., if the annual fee is $75 then a 3-year fee will be $225. Similarly, you will need to apply for a separate license for each separate business activity and multiple locations.

How does IncParadise help you?

Every business being formed in Delaware has different objectives as well as business activity and hence the requirement of a business license in Delaware will be different. You may require one license or permit or multiple licenses based primarily on the location of your company and business activity. This is where IncParadise can play a key role and provide guidance that will help you to obtain a Delaware business license or permits and ensure you are able to maintain compliance with the Delaware licensing regulations.

IncParadise is one of the most reputable registered agents in the state and we focus on providing a service that will help you to fulfill a variety of business related requirements. You can take advantage of our additional services that vary from obtaining an EIN to Delaware Annual Report assistance, S Corporation election, Foreign Qualification, Certificate of Good Standing, and Business License Report among others.

Doing Business As or DBA in Delaware

Delaware is one of the most favorable states for starting a new business and especially popular among first time entrepreneurs. If you are planning to start a new business in this business-friendly state then you may be required to file a dba in Delaware. It is not a mandatory requirement but is filed by several companies depending on their business identity and under what name they want to conduct their business. There are several aspects you need to consider prior to Delaware dba registration so let us begin by understanding what “Doing Business As” is and whether you require it or not.ring a Delaware registered agent, and obtaining a tax ID among others.

What is DBA in Delaware?

If you are planning to start a new business in Delaware then one of the key areas to focus on is the name of the business. The business name has to be registered or reserved with the state but there is an alternative route, which is to file dba in Delaware. The simplest way to define a DBA or “Doing Business As” is that it is the name you choose if you are planning to conduct your business under a name other than your own name. It is a name that is most often registered by companies that are sole proprietorship or partnership businesses. A DBA or doing business as in Delaware is also known as an assumed name, fictitious name, or even a trade name.

For example: An individual Jason Patrick wants to start a music retail business in Delaware. He can name the music store as Jason Patrick & Co or as “Being Musical” wherein, “Being Musical” would be considered as the DBA name. So, Jason Patrick would have to file a dba in Delaware under this name.

When do you need DBA in Delaware?

If you are planning to conduct a business in the state of Delaware then you have to identify whether you need to reserve a business name or file a dba in Delaware. It is however important to identify the circumstances in which you may be required to register for a DBA. Some of the circumstances are:

• If you are planning to start a sole proprietorship or general partnership firm and want to conduct your business under an assumed name or any name other than your own name then you will need to file for Delaware dba registration.
• If your said business wants to offer a product or a service that is different from the registered company name then you will be required to file a dba in Delaware. For instance, if your business has been into selling casual clothes and now you want to sell trekking equipment then you may be required to register a separate name or DBA for the trekking equipment business.
• If you are planning to form a Limited Liability Company or a business corporation and you want to operate the company under a name that is different from the name of your company then you will be required to file for DBA after conducting a Delaware dba search.

Filing DBA in Delaware

There are different types of businesses you can form and operate like an LLC or a business corporation in Delaware. You can also file DBA names for your business after conducting a Delaware dba search. Your DBA also known as a Delaware trade name should be unique and also meet the state’s trade name or doing business as in Delaware requirements. So what is the process of filing a DBA? Let’s look at the important steps in this filing process.

Delaware DBA name search

One of the first steps towards registration of a trade name or doing business as name is a Delaware dba search. This process will not only help in determining the right DBA name but also identify the availability of your DBA name. You can conduct your DBA name search and also need to ensure your chosen name fulfills Delaware dba requirements and is compliant with the applicable laws as mentioned in Title 6, Commerce and Trade, Subtitle II, Other Laws Relating to Commerce and Trade; Chapter 31: Registration of Trade Names, Partnerships and Associations.

The primary objective of the Delaware dba search is to ensure that your trade name is unique and is not similar to that of another business in the state.

Register Delaware DBA

Once you have conducted a Delaware dba search, the next step is to register the name. The process for Delaware dba registration requires you to file an application with the Prothonotary’s office at the Superior Court pursuant to Title 6 Del. C. Chapter 31 § 3101 and § 3103. The court is present in each county of Delaware to enable registration of a Business, Trade, and Fictitious Name. You need to ensure the Registration Certificate for DBA is completely filled and the information provided is accurate. The DBA Registration Certificates should highlight the date of business formation or when it was organized and need to be notarized.

You will be able to register as many DBA names as you require although you will be required to file separate applications for the same. Alternatively, we at IncParadise can help you with Delaware dba registration.

Are you wondering how to file your Delaware DBA?

Managing Delaware Doing Business As (DBA)

Once you file a dba in Delaware, the process doesn’t stop there as you may be required to renew it or change the existing name. There are three aspects of Delaware DBA and they include renewal, changing of the name, and canceling the dba. These aspects have to follow the rules and laws as mentioned for Delaware dba requirements.

• Renew Delaware DBA – In the state of Delaware, there are no Delaware dba requirements for renewal of the name.
• Change Delaware DBA – There are times when you may file a dba in Delaware and then want to change it. There could be business, branding, or personal reasons for changing it. In such a scenario, you will have to fill out a Supplemental Change Form for doing business as in Delaware and submit it with the Superior Court along with a fee of $25.
• Cancel Delaware DBA – If you are planning to cancel your Delaware dba registration then you have to fill out a Termination Affidavit Form submit it with the Prothonotary’s Office at the Superior Court of the county you had originally filed your DBA with.

Need Any Assistance in Filing DBA?

The process to file a DBA in Delaware may require you to fulfill certain Delaware dba requirements as specified by the Superior Court. The process can be long and complicated but if you want to save time and ensure filing of Delaware DBA then IncParadise, as one of the top registered agents in the state, can help you with the registration process.

IncParadise can not only help you to file a DBA in Delaware but also provide a wide variety of additional services that will help you to make your business or company operational in the state. Our services include getting tax id, corporation status, dissolutions, reinstatement, and foreign qualification among others.