If you have a Delaware LLC or Delaware corporation, there are some annual requirements that you need to know about. If you haven’t kept up with these requirements, your company may have gone “void” or “inactive.” But what does it mean if your Delaware company goes void and what should you do?
Letting your Delaware LLC or corporation go void can land both yourself and your business into legal trouble. This article discusses what to do if your Delaware company is void. It explains the meaning of it. Plus, it provides tips on how to avoid it.
What Does “Void” Mean for a Delaware LLC or Corporation?
A Delaware business entity, such as an LLC or corporation, can become “void”. This happens when the state of Delaware cancels the company. When a company is canceled by the state, it loses its “good standing” status. A void company also loses its limited liability shield in Delaware.
The state of Delaware will cancel an LLC or corporation if the company has not kept up specific requirements. These requirements include:
- Paying Delaware Annual Franchise Tax each year, and
- Paying annual Delaware registered agent fees.
A Delaware LLC or corporation that is in void status does not provide the company’s owners with limited liability protection. Business owners might face risks with an LLC or corporation not in good standing. They could be personally accountable for the business’s debts and liabilities.
How to Revive a Void Delaware Company: 3 Steps
After the state cancels your Delaware LLC or corporation, you can still restore it. Here are the steps you need to follow to revive a void company in Delaware:
Step 1.) Pay The Delaware Franchise Tax Owed
Before you can revive your Delaware LLC or corporation, you will need to pay the company’s Franchise Tax balance to the state. This includes paying any late fees and interest charges that have been added since the company went void.
You can pay the Delaware Annual Franchise Tax on the Delaware Division of Corporation’s website.
Step 2.) Get a Delaware Registered Agent
If your company was canceled because your Delaware registered agent resigned, then you will need to appoint a new agent.
IncNow can assist with filing a New Appointment in Delaware if your Delaware registered agent has resigned and you need a new agent.
Step 3.) File a Certificate of Revival
After paying the company’s franchise tax and appointing a registered agent, you can submit a Certificate of Revival to the Delaware Secretary of State’s office. The Certificate of Revival will put your Delaware LLC or corporation back in active status and return it’s good standing.
A Delaware registered agent, like IncNow, can help file a Certificate of Revival for your Delaware LLC or corporation.
Why Do Delaware LLCs and Corporations Go Void?
Delaware business entities, like LLCs and corporations, need to meet certain requirements to keep their good standing status and stay active. The state of Delaware will cancel an LLC or corporation for one of the following reasons:
Reason #1) Did Not Pay Delaware Annual Franchise Tax:
Delaware LLCs and corporations need to pay the Delaware Annual Franchise Tax each year in order to stay in good standing with the state. If a Delaware company does not pay its franchise tax for 3 years, the state will cancel the entity.
Paying Delaware Annual Franchise Tax is an important part of owning and operating a Delaware LLC or corporation. The Delaware Annual Franchise Tax is like a maintenance fee that Delaware companies have to pay in order to stay active and keep their legal protections.
For Delaware LLCs, the Delaware Annual Franchise Tax needs to be paid by June 1st of each year. For Delaware corporations, the Annual Franchise Tax due date is March 1st.
Reason #2) Not Having a Delaware Registered Agent:
Delaware requires every LLC and corporation in the state to have a Delaware registered agent. A name and Delaware mailing address of a registered agent needs to be listed in the state’s public database at all times for the company to comply with state laws.
Reason #3) Your Delaware Registered Agent Resigned:
If your Delaware registered agent resigns as agent, your company will need to appoint a new agent. If a Delaware company goes more than 30 days without a new registered agent, the state will cancel the company.
Your Delaware registered agent can resign for several reasons. The main reason is that you likely did not pay the annual registered agent fee to renew your service. IncNow offers a useful Customer Portal for their registered agent clients. This tool helps track their companies and timely pay their registered agent bills.
What is Delaware Annual Franchise Tax?
The Delaware Annual Franchise Tax is a yearly maintenance fee. It is required by Delaware LLCs and corporations. They must pay it to the state every year following the company’s formation.
For Delaware LLCs, the Annual Franchise Tax is a flat fee of $300 that is due by June 1st of each year. For Delaware corporations, the Annual Franchise Tax is due by March 1st. The state of Delaware calculates the amount of franchise tax that a corporation owes based on the amount of shares that the company authorizes in its incorporation documents.
Delaware companies need to pay the Delaware Annual Franchise Tax on time to stay in good standing with the state and keep their limited liability shield. Think about the Delaware Annual Franchise Tax like a maintenance fee. You need to pay the franchise tax in order to keep the legal protections that the state provides for your LLC or corporation.
If a Delaware LLC or corporation does not pay its Franchise Tax on time, the company will automatically lose its “good standing” status. If a Delaware company loses its good standing with the state, business owners put themselves at risk of being personally responsible for any debts, liabilities or obligations related to the business.
The easiest way to avoid issues with your Delaware LLC is to pay your Delaware Annual Franchise Tax before the due date. The state of Delaware charges late fees and interest penalties for companies that do not submit their franchise tax payments on time.
A Delaware registered agent, like IncNow, should help you manage the Annual Franchise Tax deadline and submit your payment to the state. For example, IncNow, provides their registered agent customers with both paper and email notices about Delaware Annual Franchise Tax due dates.