Learn about the yearly tax filing requirements for Delaware limited liability companies.
To establish and operate a Delaware limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant continuing reporting and state tax filing obligations for Delaware limited liability companies.
Table of Contents
Report Annual
In contrast to the majority of states, Delaware does not require LLCs to produce annual reports. The state, however, requires LLCs to pay an annual tax (see below).
State Corporate Taxes
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income taxes by default; only its members do.
Delaware, on the other hand, levies an annual tax on LLCs. The tax, which was recently raised, is a flat $300 payable to the DOS. The tax must be paid by June 1st. Late payments are subject to a $200 penalty. The tax may be paid online at the DOS website.
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) Delaware, like practically every other state, taxes corporate revenue. The Delaware company income tax is a flat 8.7% of taxable federal income. The tax must be paid to the Division of Revenue (DOR). Use the company income tax return from your state (Form 1100)
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Delaware employers must additionally pay state taxes.
To begin, you must withhold and pay employee income taxes to the DOR. Begin by registering your company with the DOR, either online (through the Delaware One Stop website) or on paper (using Form CRA, Combined Registration Application). After you’ve enrolled, you must submit withholding taxes on a regular basis (for example monthly or quarterly). You must also submit an annual reconciliation of your LLC’s tax withholding on some variation of Form W-3.
You’ll also need to register to pay state unemployment insurance (UI) taxes. The Delaware Department of Labor is in charge of these taxes (DOL). These taxes may be registered for electronically or on paper using Form UC-1, Report to Determine Liability. Then, each quarter, utilize Forms UC-8 and UC-8A to record your salary and pay your unemployment insurance taxes.
Tax on Gross Receipts
Delaware is one of just a few states without a sales tax. However, Delaware has a gross receipts tax, which is a tax on goods dealers. The tax is calculated based on the gross income of the vendor. The gross receipts tax now ranges from.1006% to.7543%, depending on the kind of company.
Other States Registration
If you want to do business in places other than Delaware, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.