Question 1

Why did Delaware send me a tax bill for $85,215 when my company made no money?

Accepted Answer

Delaware assesses tax by default using the Authorized Shares method, which charges $85 per 10,000 shares. Startups with 10,000,000 shares receive an automatic $85,215 default bill. Under 8 Del. C. § 503(a)(1), Delaware by default calculates tax using Authorized Shares: $250 for the first 10,000 shares, plus $85 for each additional 10,000 shares. By legally electing the Assumed Par Value Capital Method under 8 Del. C. § 503(a)(2) on your Annual Report, your tax is recalculated based on gross assets and issued shares, almost always reducing it to the statutory minimum of $400 ($450 with report fee). (Statutory authority: 8 Del. C. § 503(a)(1) & § 503(a)(2))

Question 2

What number do I use for Total Gross Assets on the Delaware Annual Report?

Accepted Answer

You must use Total Assets from Line 15(d) of IRS Form 1120 Schedule L (Balance Sheets per Books). Under Delaware administrative rules and 8 Del. C. § 503(a)(2), "total gross assets" means total assets reported on federal income tax return IRS Form 1120 Schedule L Line 15d. If your corporation has not yet filed its first federal return, use the balance sheet asset figure as of December 31st of the tax year. (Statutory authority: 8 Del. C. § 503(i) & IRS Form 1120 Sched. L)

Question 3

Can I get a refund from Delaware if I already paid the $85,215 state bill?

Accepted Answer

Yes. Under 8 Del. C. § 505, you have up to 3 years from payment to file an Amended Annual Report and demand a refund. If you paid the default Authorized Shares notice by mistake, you can submit an Amended Annual Franchise Tax Report with the $50 state fee. The Delaware Secretary of State will adjust your assessment to the Assumed Par Value method and issue a cash refund check or tax credit for the overpayment. (Statutory authority: 8 Del. C. § 505)

Question 4

What happens if I miss the March 1st Delaware Franchise Tax deadline?

Accepted Answer

Delaware assesses an automatic $200 late penalty plus 1.5% monthly interest on the unpaid balance. Under 8 Del. C. § 502, C-Corporation Annual Reports are due March 1st. Failure to file incurs an automatic $200 penalty plus 1.5% interest per month. If delinquent for two consecutive years, the Delaware Secretary of State administratively voids the corporate charter, forfeiting your corporate liability shield. (Statutory authority: 8 Del. C. § 502 & § 510)

Question 5

Does a Delaware C-Corp need to hold an in-person board meeting every year?

Accepted Answer

No. Under 8 Del. C. § 141(f), directors can take any corporate action by Unanimous Written Consent without a meeting. Delaware General Corporation Law § 141(f) expressly permits directors to execute actions via unanimous written consent in lieu of holding an in-person or virtual board meeting. This written consent must be filed with the corporate minute book. Startups routinely use written consent to ratify Annual Report filings, officer elections, and stock option grants. (Statutory authority: 8 Del. C. § 141(f))

Question 6

Can one person hold all officer and director titles in a Delaware corporation?

Accepted Answer

Yes. Under 8 Del. C. § 141(b) and § 142(a), a Delaware corporation may have a single director who also serves as President, Treasurer, and Secretary. Delaware corporate law does not require multiple individuals. A single person may serve as the sole Director, Chief Executive Officer / President, Treasurer / CFO, and Secretary, and may hold 100% of the voting stock. (Statutory authority: 8 Del. C. § 141(b) & § 142(a))

Question 7

What corporate records must a Delaware corporation maintain for stockholder inspection?

Accepted Answer

Under 8 Del. C. § 220, stockholders have a statutory right to inspect the stock ledger, books of account, and board minutes upon proper written demand. Delaware corporations must maintain accurate stock ownership records (stock ledger) and formal minutes or written consents of all board and stockholder meetings. Under DGCL § 220, any stockholder with a "proper purpose" (such as valuing their shares or investigating fiduciary breaches) can demand inspection of these records. (Statutory authority: 8 Del. C. § 220)

Question 8

Is FinCEN Beneficial Ownership Information (BOI) reporting mandatory for my Delaware company?

Accepted Answer

Yes, unless you qualify for one of 23 statutory exemptions (such as the Large Operating Company exemption). Under the Corporate Transparency Act (31 U.S.C. § 5336), every domestic corporation and LLC formed in Delaware must file an Initial BOI Report with the US Treasury Financial Crimes Enforcement Network (FinCEN), identifying all beneficial owners holding ≥25% equity or exercising substantial control. Penalties reach up to $591/day civil fines and up to $10,000 criminal penalties. (Statutory authority: 31 U.S.C. § 5336 & 31 CFR § 1010.380)

Question 9

What is the $25,000 penalty for foreign-owned Delaware entities under IRS Form 5472?

Accepted Answer

Under IRC § 6038A, any US entity with 25%+ foreign ownership that fails to file Form 5472 faces an automatic, non-waivable $25,000 IRS penalty per year. If 25% or more of your Delaware C-Corp or LLC is owned directly or indirectly by a non-US individual or foreign entity, the corporation must file IRS Form 5472 alongside a pro-forma Form 1120. Failure to file triggers an automatic $25,000 penalty, plus an additional $25,000 for each 90-day period non-compliance continues after IRS notification. (Statutory authority: IRC § 6038A(d)(1) & Treas. Reg. § 1.6038A-2)

Question 10

Can non-US citizens without a Social Security Number incorporate in Delaware?

Accepted Answer

Yes. Delaware has no citizenship or residency requirements for founders, directors, or shareholders. You do not need a US passport, SSN, or green card to own or direct a Delaware C-Corp or LLC. You only need to appoint a Delaware Registered Agent with a physical street address in Delaware, obtain an Employer Identification Number (EIN) from the IRS via Form SS-4, and comply with FinCEN BOI reporting using a foreign passport. (Statutory authority: 8 Del. C. § 101 & § 131)

Question 11

How much is the Delaware LLC Annual Tax and when is it due?

Accepted Answer

Delaware LLCs pay a flat annual tax of $400, due on or before June 1st of each year. Under 6 Del. C. § 18-1107, Delaware LLCs do not file an Annual Report with officer listings. Instead, they pay a flat $400 annual tax due June 1st. Missing the June 1st deadline incurs an immediate $200 late penalty plus 1.5% monthly interest. (Statutory authority: 6 Del. C. § 18-1107)

Question 12

What is charging order protection for a Delaware LLC?

Accepted Answer

Under 6 Del. C. § 18-703, a charging order is the exclusive remedy for judgment creditors against an LLC member’s interest. Delaware law provides strong asset protection: a personal creditor of an LLC member cannot seize company assets or vote member shares. The creditor can only obtain a "charging order" on distributions actually paid out to that member. If the company makes no distributions, the creditor receives nothing. (Statutory authority: 6 Del. C. § 18-703)

Question 13

Why does my Delaware company need a Delaware Registered Agent?

Accepted Answer

Title 8 Del. C. § 131 mandates that every corporation maintain an agent with a physical street address in Delaware to accept legal service of process. A Registered Agent is your entity's statutory point of contact with the State of Delaware. If your agent resigns and is not replaced within 30 days under 8 Del. C. § 136, your corporate charter is automatically forfeited and your Certificate of Good Standing is voided. (Statutory authority: 8 Del. C. § 131, § 132, & § 136)

Question 14

What is the difference between a Short Form and Long Form Certificate of Good Standing?

Accepted Answer

A Short Form ($50) confirms statutory existence and tax compliance. A Long Form ($175) certifies the complete history of all charter filings and amendments. Under 8 Del. C. § 391, the Delaware Secretary of State issues Certificates of Good Standing. Banks, payment processors, and foreign qualification filings standardly require a Short Form ($50). Complex M&A transactions, venture equity financings, and corporate legal opinions typically demand a Long Form ($175) detailing every historical filing. (Statutory authority: 8 Del. C. § 391(a)(11))

Question 15

If my Delaware company has an engineer in California, do I need to register in California?

Accepted Answer

Yes. Having a single W-2 employee or manager in California constitutes "doing business" and triggers foreign qualification and the $800 minimum tax. Under California Corporations Code § 2105 and Revenue & Taxation Code § 23153, a Delaware corporation with physical workers in California must file for a Certificate of Qualification ($70) and pay the annual $800 minimum franchise tax, regardless of whether the company is profitable. (Statutory authority: Cal. Corp. Code § 2105 & Cal. Rev. & Tax Code § 23153)

Question 16

Does a Delaware startup pay tax in Texas if it has remote workers there?

Accepted Answer

You must file foreign qualification ($750 fee) and submit an annual Public Information Report, but pay $0 in Texas tax if gross revenue is under $2.47M. Texas imposes a Margin/Franchise Tax with a generous statutory "No Tax Due" threshold of $2.47M. If your total gross receipts are below $2.47M, you owe $0 in tax, but must file an annual No Tax Due Information Report and Public Information Report (PIR) by May 15th. (Statutory authority: Tex. Tax Code § 171.002)

Delaware Corporate Compliance & Tax FAQ

Why did Delaware send me a tax bill for $85,215 when my company made no money?

What number do I use for Total Gross Assets on the Delaware Annual Report?

Can I get a refund from Delaware if I already paid the $85,215 state bill?

What happens if I miss the March 1st Delaware Franchise Tax deadline?

Does a Delaware C-Corp need to hold an in-person board meeting every year?

Can one person hold all officer and director titles in a Delaware corporation?

What corporate records must a Delaware corporation maintain for stockholder inspection?

Is FinCEN Beneficial Ownership Information (BOI) reporting mandatory for my Delaware company?

What is the $25,000 penalty for foreign-owned Delaware entities under IRS Form 5472?

Can non-US citizens without a Social Security Number incorporate in Delaware?

How much is the Delaware LLC Annual Tax and when is it due?

What is charging order protection for a Delaware LLC?

Why does my Delaware company need a Delaware Registered Agent?

What is the difference between a Short Form and Long Form Certificate of Good Standing?

If my Delaware company has an engineer in California, do I need to register in California?

Does a Delaware startup pay tax in Texas if it has remote workers there?

Have a complex or unaddressed corporate inquiry?

Delaware Corporate Compliance & Tax FAQ

Frequently Asked Questions Directory

Why did Delaware send me a tax bill for $85,215 when my company made no money?

What number do I use for Total Gross Assets on the Delaware Annual Report?

Can I get a refund from Delaware if I already paid the $85,215 state bill?

What happens if I miss the March 1st Delaware Franchise Tax deadline?

Does a Delaware C-Corp need to hold an in-person board meeting every year?

Can one person hold all officer and director titles in a Delaware corporation?

What corporate records must a Delaware corporation maintain for stockholder inspection?

Is FinCEN Beneficial Ownership Information (BOI) reporting mandatory for my Delaware company?

What is the $25,000 penalty for foreign-owned Delaware entities under IRS Form 5472?

Can non-US citizens without a Social Security Number incorporate in Delaware?

How much is the Delaware LLC Annual Tax and when is it due?

What is charging order protection for a Delaware LLC?

Why does my Delaware company need a Delaware Registered Agent?

What is the difference between a Short Form and Long Form Certificate of Good Standing?

If my Delaware company has an engineer in California, do I need to register in California?

Does a Delaware startup pay tax in Texas if it has remote workers there?

Have a complex or unaddressed corporate inquiry?