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Contents
Tired of doing your own books?
Federal Tax for Foreign Owned Businesses
Foreign-owned LLCs are taxed at a rate of 30% on their US-sourced income, while foreign-owned C-Corps are subject to a 21% tax rate on their global taxable income. For information on the federal tax forms foreign-owned US businesses must file, read our guide.
Delaware State Income Tax
Non-Delaware residents don’t need to pay personal income tax, and stock owned by non-residents won’t be taxed, either. Thus, businesses operating outside of Delaware don’t have to pay state corporate income tax.
If your business operates in Delaware (or has Delaware-sourced income):
- C-Corps: required to file a corporate income tax return (Form 1100 or 1100EZ) and pay a tax of 8.7% on its federal taxable income allocated and apportioned to Delaware. You can refer to this resource to learn more.
- S-Corps: required to file a corporate income tax return 1100S, and will be subject to your personal income tax bracket.
- Partnerships: required to file partnerships return Form 300, and will be subjected to your personal income tax bracket.
- Sole-proprietorship: residents are required to pay income taxes and must file Form 200-01 annually. The personal income tax brackets range from 2.2 percent to 6.6 percent at their highest.
Delaware Annual Report
- What is it: Annual reports are entity information updates due to the secretary of state each year. All Delaware-incorporated businesses are required to file.
- Due date: If your business is a corporation, you must file by March 1st and pay $50 filling fee. All Delaware LLC, LP, and GP are not required to file an annual report. However, the entities are required to pay an annual flat rate of $300 by June 1.
- How to file: You must file your annual report electronically on the state’s online filing system. You will need your 7-digit Business Entity File Number at the time of filling. You can look yours up here.
- Penalty: Failure to file the report and pay the required franchise taxes will result in a penalty of $200.00 plus 1.5% interest per month on tax and penalty.
Delaware Franchise Tax
- What is it: A franchise tax, sometimes called a privilege tax, is a fee you pay for the privilege of doing business in a certain state. All Delaware-incorporated businesses must pay the annual franchise tax.
- Due date: If your business is a corporation, you must pay by March 1st. All LLCs, LPs, and GPs formed in Delaware are not required to pay separate Franchise taxes.
- How to file: You must pay franchise tax and file your annual report electronically on the state’s online filing system. You will need your 7-digit Business Entity File Number at the time of filling. You can look yours up here.
- How to calculate your franchise tax: Depends on which method you use to calculate your Delaware franchise tax: the Authorized Shares or Assumed Par Value Capital method. You can use whichever amounts to the least tax owed. Alternatively, you can also use the spreadsheet-based calculator that the state provides.
- Penalty: Failure to file the report and pay the required franchise taxes will result in a penalty of $200.00 plus 1.5% interest per month on tax and penalty.
Further reading: How to Calculate and Pay Delaware Franchise Tax
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.
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