How to Save Money on Delaware Franchise Tax
More than one Delaware business owner has been shocked to receive a whopping franchise tax bill come tax time. How can I possibly owe so much? Nobody told me I was going to owe this much! Will I owe this much every year?
Don’t feel bad. Delaware bases your corporate franchise tax on the amount of authorized stock you issued when you formed your corporation. While the information about how much you will owe is on the DE Secretary of State website, it isn’t exactly easy to find, and the Division of Corporations isn’t very forthcoming about it.
Here’s the skinny: the more stock you authorize, the more franchise tax you’ll owe. That’s the long and the short of it.
But what do you do if you’ve already authorized the stock? Your corporation is already formed. You’ve already started doing business.
Don’t freak out just yet. There’s still a fix.
If you authorized millions of shares of stock when you formed your corporation (which, let’s face it, who doesn’t like the sound of millions of shares of corporate stock?), you can still go back and make a change.
You do so by filing a Certificate of Amendment. The Certificate of Amendment is used to make alterations to your Certificate of Incorporation, such as the amount of stock your corporation has authorized.
If Filings Made Easy already serves as your Delaware registered agent, we can handle this filing for you. Or, if you’d like to take care of it yourself, you can simply download the file from your account, fill it out, and send it in.
Here’s what you need to do:
- Fill out a Certificate of Amendment: Make sure you fill out the form completely and legibly. You will be indicating the Article that needs to be amended, as well as the actual amendment (the new number of authorized shares).
- Write a Short Cover Letter: The cover letter should include your Name and Address, as well as a telephone number or fax number. Simply detail what filing you are making.
- Submit to the Division of Corporations: You can mail the filing or fax it to the Division of Corporations. It will be processed within three weeks, unless you select an expedite option (same-day for $200, or 24-hour for $100).
That’s all there is to it. The Division of Corporations will amend your Certificate of Incorporation, and your new franchise tax will reflect this change.
Delaware Division of Corporations
401 Federal Street, Suite 4
Dover, DE 19901