Happy New Year!
The Velawcity team has never been happier to usher in a brand new year! But with the new year, comes the flurry of annual compliance tasks. And if the added workload makes you twitch, we’re here to help!
Periodic Reports
As part of corporate annual compliance, most states require domestic and foreign entities to file an annual, biennial, or franchise tax report. Notices may be sent directly to the company, the company’s registered agent, and in some states no notice is sent at all. Some states charge a basic fee for filing the annual report while others impose franchise taxes. California for instance, charges an annual minimum $800 franchise tax.
Delaware, Particularly
I’m surely dating myself, but does anyone remember the Delaware “Green Heart Attack”?
Delaware corporations must file annual reports on or before March 1st of each year. By default, franchise taxes are assessed based on the “authorized shares method”, which can literally be tens of thousands of dollars. Years ago, the tax notices were delivered on green paper, leading to the term “green heart attack”. However, Delaware franchise taxes can be drastically reduced, to the minimum of $450 (2020-2021 rate), by using the alternative calculation called the “assumed par value method” which recalculates taxes based on issued stock and gross assets as of December 31st. The gross assets are taken from Schedule L of the federal tax return.
LLCs, LPs and GPs do not file annual reports, but they are required to pay annual franchises taxes of $300 on or before June 1st. The flat tax rate is $300.
Outsourcing the Headache
Everyone knows why we must file those pesky reports but, depending upon the number of states that need to be filed, it can be a tedious management task. When filings are missed, the headaches and expenses can really add up. For instance, Delaware imposes a penalty of $200 immediately after missing the deadline and interest accrues monthly at a rate of 1.5%.
The Velawcity Distinction
Velawcity handles your statutory filings with the same responsibility that we practiced when we worked as corporate paralegals in legal departments and law firms. Because we function as a trusted partner:
- There is no need for completing time-consuming Excel spreadsheets with repetitive information for each entity.
- We make it our business to know your business.
- As a team member of your firm, will reach out directly to your client, using your firm issued email, if you prefer.
- We will track your filings from year to year on our internal database and reach out 30 days prior to the filing in order to confirm current information.
- We pay attention with the same care as if we were on your payroll.
Using Velawcity to manage your compliance, means that you can turn your attention to more important matters and never lose sleep over worrying about compliance.
As your trusted partner, Velawcity Legal Support Services will:
- Audit your corporate portfolio and provide a comprehensive compliance report with current entity status from domestic and foreign jurisdictions.
- Set up, track, and maintain corporate governance requirements.
- Prepare and file all state reports for domestic and foreign jurisdictions.
- Coordinate signatures via DocuSign or file online whenever possible.
- Advance funds for established clients.
Velawcity can also:
- Create and/or update minute book summary sheet and foreign qualification spreadsheet as required.
- Prepare stockholders and directors annual consent/minutes.
For your easy reference, download Velawcity’s 50 State Annual Report Reference Chart
If you need assistance with annual compliance filings, we’re happy to help! Velawcity Legal Support Services will track, prepare and file annual reports for your clients. We can correspond directly with your client, if you’d like. Or, we can report to you and never contact your client. Velawcity provides on-demand support for virtual and traditional law offices. Contact us to learn more about how we can help maximize operational efficiency, meet client expectations, and adhere to legal and ethical rules.
More About Velawcity Legal Support Services
Velawcity Legal Support Services is an Alternative Legal Services Provider (ALSP) that provides competitive edge solutions to empower lawyers nationwide with high-quality, efficient and cost-effective paralegal services. Velawcity paralegals are virtual, on-demand senior paralegals, each with a minimum of fifteen years’ experience working in law firms and corporate legal departments. Whether you need assistance with year-end dissolutions, a daily addition to your legal team, periodic paralegal support, quick research or assistance on a specific project, Velawcity Legal Support Services is your cost-effective, responsive team member.
DISCLAIMER: Velawcity Legal Support Services provides services exclusively to lawyers and their clients. Velawcity does not provide legal advice. To determine which entity is best suited for your business, please consult a licensed business attorney or contact us to be put in touch with one of our attorney clients.
