Tax Obligations

    Companies formed in Delaware are subject to yearly tax obligations, including:

    • U.S. Corporate Income Tax
    • Delaware Franchise Tax (for C Corporations) or annual LLC tax (for Limited Liability Companies)
    • If your Delaware company’s operations are based in a second U.S. state, you might owe a similar annual tax to that state

    You can use the Stripe Dashboard to help you navigate most of these obligations. (Stripe’s partners can assist you in meeting tax requirements for states outside Delaware.)

    Watch the calendar

    Plan ahead to meet any tax deadlines that apply to your business.

    2018 tax deadlines (for companies active in 2017) include

    • Delaware annual LLC tax: due June 1st, 2018
    • U.S. Corporate Income Tax (C Corporations, if requested an extension by April 17th, 2018): due October 15, 2018

    2019 tax deadlines (for companies active in 2018) include

    • U.S. W-2 and 1099 forms: due January 31st, 2019
    • Delaware Franchise Tax (C Corporations): due March 1st, 2019
    • U.S. Corporate Income Tax: due April 15th, 2019
    • Delaware annual LLC tax: due June 1st, 2019

    Filing U.S. Corporate Income Tax

    Before working with an accountant and filing taxes, you should prepare as much of your company’s year-end financial data as possible. This is part of your bookkeeping responsibilities. There are several tools like Xero and Bench that can help with this, and you might want to view our guide to surviving tax season.

    The information to prepare depends on whether you are forming a C Corporation or a Limited Liability Company (LLC).

    Once your company’s year-end financial data is ready, log in to your Stripe Dashboard and fill out a questionnaire on your business’s activity. This provides your accountant the information that they need to help prepare your taxes. After completing the questionnaire, you can select an accounting service to help with the filing process. These services are used by top startups, and offer discounts of up to 50% for Stripe Atlas users.

    Be sure to have the following information for your corporation (as of the last day of the fiscal year for which you’re filing):

    • General information about your business. This includes your EIN. Some fields might be populated already, so confirm that the information is correct and current.
    • The company’s financials. You can upload your balance sheet, income statement, and general ledger into the questionnaire to share them with your accountant. If some financial information isn’t ready yet, upload what you have, and your accountant can help with the rest. You can learn about year-end financial reports in our guide on surviving tax season. If you don’t have any revenue or expenses for the past fiscal year, there’s a section in the questionnaire to indicate this.
    • Company ownership. Your corporation might have shares held by individual shareholders or business entities. Make sure the information reflects the current ownership.
    • Additional information. If your company employs people, owns property, operates locally in the U.S., or operates abroad, you might have additional tax and reporting requirements. Use this field to provide this information so that your accountant can help you file additional forms if needed. Some of the taxes you might want to ask about include:
      • Transfer pricing, if you’re based outside the U.S.
      • State taxes, if you have business activity in any U.S. state
      • Sales taxes
      • Employment taxes

    The Stripe Atlas Guide to Business Taxes has more information about tax types that might apply to your business.

    Accounting options

    Once you fill out the questionnaire and review the information, you can select an accounting service. The options available to you depend on your business activity. Each service specializes in a different area, so choose the one that’s right for your company:

    • Greenback Business Services ($250), for companies with minimal or no business activity (companies with no activity still need to file tax returns). The package includes a federal tax return (Form 1120) and one state tax return. Additional state returns cost $70 and bookkeeping help costs $60 per hour.
    • Early Growth ($900 to $1,150), for companies with active businesses. Early Growth specializes in supporting startups and can chat with you over the phone to talk through your situation. The package includes a federal tax return (Form 1120), one state tax return, and a free consultation with an accountant. Additional state returns cost $250 and bookkeeping help costs $90 per hour.
    • PwC ($3,000 starting price), for complex business situations. PwC is one of the world’s leading global accounting firms. They excel at navigating complex situations for fast-growing, international businesses.

    Once you select your accountant, they will contact you via email. They’ll answer any final questions, prepare your tax return, and then share it with you to review and sign.

    Be sure to have the following information for your LLC (as of the last day of the fiscal year for which you’re filing):

    • General information about your business. This includes your EIN. Some fields might be populated already, so confirm that the information is correct and current.
    • The company’s financials. You can learn about year-end financial reports in our guide to surviving tax season.
    • Company ownership. Your LLC might have multiple owners (“members”); make sure the information reflects the current ownership.
    • Additional information. If your company employs people, owns property, operates locally in the U.S., or operates abroad, you might have additional tax and reporting requirements. Some of the taxes you might want to ask your accountant about include:
      • Transfer pricing, if you’re based outside the U.S.
      • State taxes, if you have business activity in any U.S. state
      • Sales taxes
      • Employment taxes

    Filing taxes in Delaware

    Your company’s tax and reporting obligations in Delaware depend on whether you are forming a C Corporation or a Limited Liability Company (LLC).

    All Delaware C Corporations are required to pay the Delaware Franchise Tax and to file an Annual Report. Even companies with no revenue in the previous fiscal year should expect to pay some amount.

    Delaware Franchise Tax

    There are two methods for calculating the Delaware Franchise Tax: the Authorized Shares Method and the Assumed Par Value Capital Method. The state of Delaware allows companies to use the method that results in the lesser tax amount. You can read about these methods on Delaware’s site. It’s up to you to decide which method is best for your company.

    Notice of tax due

    The state of Delaware sends notices to companies that have not paid their Franchise Tax and filed their Annual Report, including a proposed bill for the tax payment (an “estimated tax notice”). Delaware uses the Authorized Shares Method to calculate the estimated tax. This method systematically results in a high tax bill for most Stripe Atlas users, though the state of Delaware allows companies to use the method that results in the lesser tax. If the Franchise Tax is not submitted by March 1st, there is a $200 late fee and interest of 1.5% per month on the tax amount originally due.

    Filing using Stripe Atlas

    You can file and pay your company’s Delaware Franchise Tax using Stripe Atlas. The tool helps you calculate the amount owed using the method that leads to the lesser amount. When you’re ready, log in to your Stripe Dashboard. Make sure to have the following information for your company (as of the last day of the fiscal year for which you’re filing):

    • Number of authorized shares: the total number of shares authorized in your company’s Certificate of Incorporation, or the updated value if you changed the number of authorized shares since incorporation.
    • Par value of shares: the price per share listed in your company’s Certificate of Incorporation, or the updated value if you changed the par value of your shares since incorporation.
    • Number of issued shares: the total number of shares issued to shareholders. You can enter 0 if you haven’t issued shares yet.
    • Total gross assets: the total amount of assets that the company owns (e.g., cash, inventory, equipment, investments, land, buildings). This number cannot be an estimate. You can use the value from the total assets you reported for your corporate income taxes.

    After providing the above information and selecting a payment method, your Delaware Franchise Tax and Annual Report are submitted. Filing usually completes within two business days, and Stripe emails you when they’re filed. You can also check the status of your Delaware Franchise Tax and Annual Report on Delaware’s site. You can find your six-digit file number on your Certificate of Incorporation.

    Delaware LLCs pay an annual LLC tax,sometimes referred to as the Business Entity Tax.

    Annual LLC tax

    All LLCs formed or registered in Delaware must pay an annual LLC tax, currently at a flat rate of $300.00. There is no requirement to file an Annual Report.

    If the annual LLC tax is not submitted by June 1st, there is a $200 penalty and interest of 1.5% per month on the tax amount (and penalty) originally due.

    Log in to your Stripe Dashboard for information about filing and paying your company’s Delaware annual LLC tax.

    State taxes beyond Delaware

    If your C Corporation or LLC operates in any states other than Delaware, it might be subject to annual taxation, registration, and reporting requirements in the other states. Stripe recommends that you consult legal and tax professionals about what requirements apply to your business. If you don’t have an attorney or tax advisor, Stripe Atlas can connect you with one of our partners.

    Taxes before dissolving your company

    If you aren’t operating your company anymore, you might still be obligated to file taxes every year until you dissolve it. When you dissolve a company, there might be additional tax filings and obligations for the year in which you dissolve the company. Work with an accountant to calculate the taxes you owe.

    C Corporations can be dissolved in the state of Delaware only after they pay Delaware Franchise Tax and file their Annual Report. LLCs can be dissolved only after they pay annual LLC tax (no Annual Report is required). You can use the Stripe Dashboard to pay and file your Delaware Franchise Tax and Annual Report.

    Next steps

    Now that you’ve know more about Stripe Atlas in detail, you might want to read: