Delaware corporate law requires that a corporation files a report updating the State on the status of that company. This report is due annually on March 1. The content of this report (specifically the capital structure) dictates how much the company will have to pay in corporate franchise tax. Here is a list of things that must be included in the annual report:
- Physical address of the company
- The names and addresses of all directors of the company
- The names and address of at least one officer in the company
(Shareholders or beneficial owners are not required to be listed)
Many companies file the same annual report every year. It is legal to do this. It is not legal to file a report saying “no changes from last year”. Everything must be listed again in the report. These reports are kept on record with the secretary of state.
If you want to simplify your annual report, we recommend two actions:
Authorize “standard shares” when you form your company.
This means the corporation will pay the minimum franchise tax. For most companies there will never be the need for more shares. And even if your company goes on to have an IPO (initial public offering) you can amend for more shares at that time. Taking this approach will save you time and money.
Have your registered agent file the annual report
Registered agents are organized to perform this service for you in an efficient and timely manner. It is well worth it to have your agent accomplish this important task. Failure to file properly can lead to penalties. Failure to file for two years in a row will lead to administratively dissolution by the Secretary of State.
The annual report is an important, but not burdensome, part of keeping your corporation in good standing. The simplest way to meet this obligation is to direct your registered agent to file it on your behalf. The modest fee will ensure that your company is maintained in good standing with no unnecessary penalties or risk of falling out of compliance.