Are you a non-resident with a Delaware LLC? And are you finding it a little tricky to file your annual report? Then, if you are interested in learning how to file an annual report, follow our step-by-step guide.
We all know that Delaware is known for its business-friendly laws and reputation as a famous state for incorporation. But to maintain good standing with the state, you must follow its annual requirements and regulations. One of those requirements is that you have to file your annual report correctly.
Our guide will help you overcome your problem regarding filing an annual report.
What Is an Annual Report?
Annual Report submission is important for every type of business, including corporations, LPs, LLCs, sole proprietors, partnerships, etc. A company publishes a document annually to give information to its stakeholders. This document includes information regarding its financial performance and activities for shareholders, workers, customers, and the general public.
It also includes a management discussion and analysis of the firm’s financial outcomes, together with its financial data, including the balance sheet, income statement, and cash flow statement.
If you want to have legal transparency with the Delaware state government, you should file an annual report yearly.
Importance of Submitting an Annual Report
Every business structure must follow the Delaware state rules. This includes filing annual reports, paying annual taxes, paying franchise taxes, filing tax return statements, and complying with other regulations specific to the type of company structure. If you want to run your business without any hassle and grow it globally, you should file the annual report properly. We are going to share some important reasons why you should file an annual report.
- Transparency with the Stakeholders: With the Annual report, the company’s overall situation with the stakeholders becomes clear. And allows stakeholders to acknowledge a company’s financial and operational performance.
- Getting Along with State Laws: To stay in a good relationship with the Delaware Division of Corporation, you must submit your company’s annual report. If you build good standing with the state laws, you can have several benefits regarding your business.
- Attract Investors: The annual report can clarify the company’s financial situation to investors. And it helps investors make informed decisions about investing in a company or continuing to hold their shares.
- Record Keeping: With the Annual Report, you can record your company information for seven years. And it helps you get various benefits, conduct business, and secure loans.
Also, when you obey the rules by submitting an annual report, it can give you legal protection and help you avoid penalties.
Why Does a Delaware LLC Need to File an Annual Report?
Do you know why? To maintain their right to conduct business in the state. For every type of company, Delaware requires an annual report. Plus, if you have an LLC, then submitting the annual report is necessary for your business reputation. Because you are running it from outside of the state.
The main reasons why a Delaware LLC has to file an annual report are as follows:
- Maintain Legal Compliance: For an LLC is a legal requirement charged by the State of Delaware. It ensures that your LLC obeys the state rules and regulations. And ultimately, it gives you the benefits of running your business legally. For non-residents, submitting the annual report is more crucial. Because their legality with the state government becomes clear to the government.
- Up-to-date Information: With an annual report, you can provide updated information about your company to the state government. And this information attracts investors to your company.
- Preserve Limited Liability Protection: We know that limited liability protection is an important benefit for an LLC. By submitting the annual report, you can protect your company’s limited liability. If you fail to submit your annual report, it could risk your assets.
Reading this upper list, you can understand that putting your company information into your LLC annual report clears up your company’s condition. And it leads your business to rapid growth.
Delaware LLC Filing Requirements
Non-resident business owners mostly form an LLC in Delaware. In that case, filing an annual report becomes tricky for them. However, the taxation of an LLC in Delaware is more flexible than a corporation. In an annual report, a lot of information is included in the following statements of the IRS. Here, we are going to specify some requirements for filing an annual report.
1. Certificate of Formation
The first criteria for filing an annual report are your company’s formation certificate and operating agreement. You must submit a Certificate of Formation with the Delaware Division of Corporations. These documents prove that your LLC is a legal entity. These documents contain company information and the company’s internal operating information.
2. Necessary Components to File an Annual Report
Here are some necessary components you must include in your annual filing report.
- General corporate information.
- Operating and financial highlights.
- Notes to financial statement.
- Information on corporate governance.
- Management discussion and analysis.
- Statement of cash flows.
- Management’s discussion and analysis (MD&A).
- Income statement.
- Statement of financial position.
- Auditor’s report.
- Shareholder information.
- Accounting policies.
3. Information About the Company Provided in an Annual Report
- At least one officer’s name and address.
- The address and name of every Director.
- The company’s physical address location.
- A form that any officer can fill out to give permission to file the annual report.
- The capacity of a company to make timely payments on its debts.
- If a company’s prior fiscal year was profitable or unsuccessful.
- The growth of a business over many years.
- A company retains estimated earnings to grow its operations.
- The proportion of operational expenses to revenue generated.
4. Forms for Filing LLC Annual Report
The filing process of an LLC annual report could vary by state. You could file an annual report directly in the Delaware Division of the corporation. But in Delaware, all types of LLCs file one kind of form. But you can submit another file according to your business entity. Here are the forms:
- Form 1065: It’s an IRS form. It is used to report the partnerships and multi-member LLCs’ income. This form contains all the information about the company and its members.
- Form 1040: This file is for the business of a sole proprietorship and a single-member LLC. This file is for the resident business owner in the US.
- Form 1040-NR: This form is used for nonresident aliens. Mostly, freelancers and single-member LLCs filed this form. If you have income from US sources but you live outside of the U.S., then you have to submit this form.
5. Calculating Franchise Taxes in Delaware
Yes, it is good news for you if you form an LLC in Delaware because this state doesn’t require sales tax or personal income tax. You only have to pay annual franchise taxes. But calculating franchise taxes could be harder for you—that’s why we will show you how you can calculate it.
Submitting an annual franchise tax report is mandatory in an annual report filing.
In Delaware, you can calculate your due tax in two methods. Remember that the tax rate depends on the type of business(LLC, corporation) and the total number of companies authorized shares.
The methods are:
Authorized Shares Method:
- First, sum up the total number of authorized shares of the LLC, including both issued and unissued shares.
- Multiply these shares by the appropriate tax rate.
- Most of the time, LLCs pay a flat tax rate. The deadline is for filing franchise tax on March 1st of each year, and the flat charge for LLCs in Delaware is $300. This data could vary, so be sure before your filing.
Assumed Par Value Capital Method:
- This is a little complicated to calculate. First, determine the LLC company’s total gross assets (real and tangible property, accounts receivable, and other intangible property).
- Determine the assumed par value of capital. This is a calculated value based on the total gross assets, the number of issued shares, and the par value assigned to each share.
- Multiply the assumed par value of capital by the appropriate tax rate. The tax rate depends on the business entity type (LLC, corporation) and ranges from a minimum tax to a maximum tax based on the assumed par value of capital.
If your Delaware LLC has employees, it must pay employer taxes in the annual report.
Registered Agent
Every Delaware LLC is required to maintain a registered agent in the state. If you are a non-resident US business owner, you also have to keep one. Because your registered agent is responsible for accepting legal documents and official announcements on behalf of your LLC company.
Furthermore, agents keep records of important documents and filings on behalf of your LLC. If you have difficulty submitting your annual report, your agent can assist you in preparing it. A registered agent will also help you by reminding you about the filing time and fees.
How to File Delaware Annual Report for an LLC?
Follow these procedures to file the Delaware annual report for a limited liability company:
Know Your State’s Requirements and the Basics
Every state in the US has its own laws and requirements for submitting annual reports. So, you should be aware of those requirements, like:
- The due date.
- Filing fees.
- The essential information about your business.
Remember that if you miss the due date, you can get penalties; that’s why it’s necessary to acknowledge this necessary information.
Go to the Delaware Division of Corporations Website
As an LLC member, you have to pay your taxes online. Simply visit the Delaware Division of Corporations’ website to submit your annual report. The Delaware Secretary of State maintains the website and provides the necessary resources for business filings.
Find Your Entity File Number
To begin the process, you must find your business entity file number. Because it’s necessary to file your report on the website, you can find your company’s file number on your company’s Certificate of Incorporation. You can search for it on the Delaware government site. Click the “Taxes/File Annual Report” button, then enter your business entity file number.
Fill Out the Delaware Annual Report Information
After you enter the site system, you can begin your process by filing your business information. Including:
- Stock details like stock class, number of shares, par value of shares, gross assets, etc.
- Principal establishment of the business.
- Officer information.
- Directors/board member information.
- Federal tax ID/EIN
- Agent information
Complete the Annual Business Report Forms
Provide all of your company information, including address, member details, agent details, phone number, email, zip code, tax details, company expenses, sales, income, shares, etc.
Pay the Filing Fee
You need to pay your annual report filing fee, along with your franchise fee. The filing fee can vary depending on the business type. Before submitting your report, ensure that you use a valid payment method.
Review and File Your Report
After putting in all the information, you must review it to ensure accuracy. Once you have confirmed it, you can agree with the terms and conditions and submit it.
Prepare for Your Next Annual Report Deadline
To stay in good standing with the Delaware laws, you need to file your annual report on time. So you can prepare your next annual report early to not miss the deadline.
Although it is quite an easy process to submit, non-resident LLC owners can face difficulty filing an annual form. To solve this problem, you can get professional help from Business Globalizer. We can provide you with an accurate and hassle-free service regarding filing an annual report.
How Will Business Globalizer Help You File Your Annual Report?
To submit your annual report, we will follow these steps:
- Consult with our taxation expert.
- Filing your tax.
- Register agents service (sending annual report to the agent).
- Submitting Annual Report.
With us, you can stay stress-free regarding this boring paperwork task. And give your total concentration to your business’s growth. And stay in a good relationship with Delaware’s government and state laws.
FAQs on Delaware LLC Annual Report
Q1: Who should file the Delaware LLC annual filing fee?
Answer: It doesn’t matter whether you are a Delaware domestic corporation, an LLC formed in another state, or a non-resident; you have to pay the filing fee. But Delaware does not require you to do it every year. Plus, the filing could vary according to time.
Q2: When is the Delaware corporate annual report filing time?
Answer: For both resident and non-resident businesses, the filing of annual reports typically occurs on March 1st of each year. But the deadline may change, so check the due date with the Delaware Division of Corporations.
Q3: Is there a penalty for filing my Delaware Annual Report late?
Answer: Yes, there will be a $200 late fee for Delaware (domestic) NGOs, LLCs, LPs, and general partnerships. Also, foreign corporations will be charged a $125 late fee.
Bottom Line
After all the discussion, we can now say that submitting an annual report is necessary, but preparing an accurate one is also essential. An accurate and consistent annual report submission can offer you several benefits for your company.
This document is useful for different purposes and serves different users. An annual report is helpful for its stakeholders to realize the strengths and drawbacks of the business, which can contribute to the success of your company.
