Delaware to increase franchise taxes for LLCs and corporations
Companies incorporated in Delaware will soon have to pay higher fees and taxes. As so many businesses are incorporated in Delaware, these changes will have a nationwide impact.
According to the News Journal, Delaware Governor Jack Markell is planning spending cuts and tax increases as part of an effort to balance a $3.8 billion budget. The governor's plan calls for higher corporate formation taxes as part of an effort to generate an estimated $51 million that will help balance out higher health care and public education costs. In addition, the budget calls for $40 million to be cut from the Transportation Trust Fund to help pay for regular state expenses.
The minimum annual corporate franchise tax, currently $75, will be increasing by $100. The annual tax for LLCs, General Partnerships and Limited Partnerships will increase $50 from the current rate of $250. The full details of the bill can be read here.
The increase will take effect on July 1, 2014 when the next budget takes effect. This means that the old fees will apply for 2014 reports for all entity types filing for dissolution before July 1. If you wish to save the $50 increase on any dissolution for LLCs or LPs, you must file a Certificate of Cancellation with the State of Delaware no later than July 1, 2014.
Companies incorporated in Delaware will feel some effects from the increase, but can still take advantage of the benefits of incorporating in Delaware. If you have questions about where and how to incorporate your business, an online incorporation services company can help you find the solution that's right for you.