The end of the year is typically a good time to handle any housekeeping issues. If you have a corporation or an LLC, your state may require you to make some kind of annual filing. Here is a quick overview of the requirements for Ohio, Delaware, Kentucky, and California.
You can relax, corporations and LLCs in Ohio do not have to file an annual report.
Delaware for-profit corporations must file an annual report and pay a franchise tax. The filing fee for corporations is $50, plus the taxes due upon filing of the annual report. These are due no later than March 1 of each year. The minimum tax is $175, and the maximum tax is $180,000. Taxpayers owing $5,000 or more pay estimated taxes in quarterly installments on the following schedule: 40% due June 1, 20% due by September 1, 20% due by December 1, and the remaining 20% due March 1. There is a franchise tax calculator available here for figuring out your tax obligation.
When computing your Delaware tax liability, keep in mind that there are two alternate methods: the authorized shares method, and the assumed par value capital method. They produce very different results. Let’s look at the example of a corporation with 10 million authorized shares, par value $0.0001 per share, of which 5 million are issued, and gross assets of up to $500,002. Under the authorized shares method, the tax liability is $75,175. Yikes. Under the assumed par value capital method, the tax bill is only $350. Make sure you try both methods when preparing your annual return.
Delaware LLC’s do not have to file an annual report, but they do have to pay an annual tax of $300. This tax is due no later than June 1 of each year.
Most businesses operating in Kentucky must file an annual report with the Kentucky Secretary of State. The exception is for sole proprietorships. Kentucky will send out a postcard reminder in January to all registered corporations and LLCs. Businesses will then have until June 30 to complete and return the postcard (or file online). There is a filing fee of $15.
Kentucky also imposes an entity-level tax on corporations and pass-through entities (like LLCs and S corporations). This is called the “limited liability entity” tax, or “LLE” tax. The LLE tax calculation is equal to the lesser of 9.5¢ per $100 of the taxpayer’s gross receipts or 75¢ per $100 of the taxpayer’s Kentucky gross profits. The minimum LLE tax is $175. There is a credit available for shareholders and partners of pass-through entities that they can claim on their personal tax returns.
In California, corporations and LLCs must file a Statement of Information within 90 days after filing their original articles of incorporation (or registration, in the case of “foreign” corporations or LLCs), and every two years after that. The filing fee is $25, and can be done online. You can find more information on how to file at this link.
In addition, corporations and LLCs in California must pay an annual franchise tax. The minimum annual franchise tax is $800, even if your company has zero revenue. This franchise tax is due by March 15 of each year. Which form you use depends on what kind of organization you have, and how it is taxed. Your accountant will be able to determine the appropriate form.
That’s it for your end-of-year corporate housekeeping. Make sure to mark your calendars if you have upcoming filing obligations. In the meantime, have a happy new year!