Consequences of not paying Delaware Franchise Tax

You must pay Franchise Tax to maintain “good standing” status for your company. If you don’t pay your Franchise Tax, it will always stay in the records of the Delaware Division of Corporations and you will pay a penalty for late payment which is $200. Also, your company will be penalized at 1.5% interest for every month it remains unpaid. Delaware Corporations are also required to file an annual report besides paying the Franchise Tax.

To maintain a Delaware Corporation, you are required to pay your Delaware Franchise Tax. Franchise Tax is not calculated based on your company’s income. Delaware law requires companies incorporated in Delaware to pay an annual franchise tax to keep the company in “good standing”. Even companies with no business activity must pay a franchise tax to maintain “good standing” status.

What is a “Good Standing” Status?

A Delaware Certificate of Good Standing is a document issued by the Secretary of State that shows the ability of a corporation to do business. If you have an overdue Delaware franchise tax, The Secretary of State will not issue a Good Standing status for your company.

Consequences of an Unpaid Franchise Tax

What happens when you do not pay your franchise tax?

  1. It will always stay in the records of the Delaware Division of Corporations. Even if you pay all the past due Franchise Tax, a missed Franchise Tax payment will be on the company’s history. If a potential investor, lender, etc. investigate your company, this may be unappealing.
  2. Eventually, your company will be marked “void” by the Delaware Division of Corporations. “Void” status will prevent you from obtaining a Certificate of Good Standing which explained before.
  3. To date penalty for non-payment or late payment is $200. Your company also be penalized at 1.5% interest for every month it remains unpaid.

You can read the rest of the article on our blog;
https://clemta.com/blog/consequences-of-not-paying-delaware-franchise-tax

--

--

--

CLEMTA is Software as a Service (SaaS) platform that sets up a business/company in the United States.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

SnowCone & Kyte.one Partnership Announcement: Presenting AirLyft For DAO Growth Tooling

Weekly Episode 161

Mobile App Success Story: How AliExpress Did It

UK businesses must embrace AI and automation or risk being left behind

How a Rundown Square Near Boston Birthed a Biotech Boom and Real Estate Empire

The value chain, increasingly important in responsible management.

Netflix to Shift $100 Million in Cash Into Black-Owned Banks

A Contactless World Driving Change in Marketplaces, Food, Travel, & Transportation

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Clemta

Clemta

CLEMTA is Software as a Service (SaaS) platform that sets up a business/company in the United States.

More from Medium

What is Confusion Matrix?

Why you’d want to use current concurrency over GrandCentralDispatch or OperationQueues.

Columbus Was No Hero

Why a workplace LMS benefits from a grounding in teaching and education

Why a workplace LMS benefits from a grounding in teaching and education