Effective August 1, 2010, the State of Delaware made changes that affect the annual franchise tax filing for certain types of companies.

The minimum amount due for Maximum Stock corporations (those companies that have over 5000 authorized shares) has increased.  Maximum Stock corporations that file under the Assumed Par Value Capital Method will now be assessed a minimum amount due of $350.  The standard $50 annual report fee will also be added to this amount due, for a new minimum amount due of $400.

The annual franchise tax fees for Non Stock corporations have also increased.  Non Stock corporations will now pay $75 franchise tax, in addition to the $50 annual report fee.  Therefore, the new minimum amount due for Non Stock companies will be $125.

All fee changes are effective for the 2010 franchise tax year, and will be due by March 1, 2011.  Harvard Business Services will start sending reminder notices beginning in October 2010, so there will be ample opportunity to make timely payment arrangements.

As always, we can assist with the filing of the annual franchise tax report for a nominal fee for any company you may have, whether it is registered with us or not.

Harvard Business Services is always here to assist with any franchise tax questions or concerns you may have.  Feel free to contact our office via email (franchisetax@delawareinc.com) or telephone 1-800-345-2677, ext. 6901 (1-302-645-7400 outside of US) and we would be glad to help.

As the annual franchise tax season approaches many clients become confused with the term “franchise tax”. On a daily basis we hear, “my company is not a franchise, why do I have to pay this fee?” Many people’s immediate reaction to the word “franchise” quickly congers up images of McDonalds, Subway, Burger King etc. When speaking from a corporate standpoint, think of the term franchise as the right or privilege granted to operate a company. Delaware is granting the entity the right or privilege to own/operate a company under the Delaware Corporate Law Structure, (which we know is the best in the nation!) and for that right or privilege Delaware would like compensation in return; this compensation is what we call the Delaware Franchise tax.

Title 8, Chapter 5 § 502 of the Delaware Corporate Code clearly states:

“Annually on or before March 1, every corporation now existing or hereafter incorporated under Chapter 1 of this title or which has accepted the Constitution of this State, shall make an annual franchise tax report to the Secretary of State. The report shall be made on a form designated by the Secretary of State and shall be signed by the corporation’s president, secretary, treasurer or other proper officer duly authorized so to act, or by any of its directors, or by any incorporator in the event its board of directors shall not have been elected.”

The annual franchise tax for the corporation is due on March 1^st of ever year. No worries, as your registered agent we will provide plenty of notice to remind you of this deadline. The franchise tax is due even if the business didn’t conduct any activity or lost money.

We strive to make paying the franchise tax as easy as possible for you. You can pay it now, quickly and easily by using our franchise tax filing service on our website. https://www.delawareinc.com//payft/index.cfm

If you have any questions feel free to call 800 345 2677 ext 6901 or email franchisetax@delawareinc.com

Forget the whole concept of a business franchise like McDonald’s that you should have invested in 20 years ago. That’s NOT what Franchise Tax is all about.

The word “Franchise” in this context means the permission from the State of Delaware – as a legal jurisdiction — to own and operate the company you formed under their authority. By incorporating in Delaware you gain a professional legal framework in which to operate your company. Delaware’s world-class Corporate Law determines your corporate governance. You have access to the Delaware Court of Chancery and you pay tax the State of Delaware every year you’re in business.

The good news is that Delaware is one of the simplest and least expensive states for Franchise Tax. In Delaware, a company with 5,000 shares or less pays a minimum of $125 per year in Franchise taxes and fees. A Delaware LLC pays only $250 per year in Franchise Tax.

To pay your Delaware Franchise Tax simply through Delawareinc.com follow this link: www.delawareinc.com/payft.

This blog category will help you understand Franchise Tax as time goes on. We invite you to join the conversation by leaving a question or comment.