The only experience with taxes I have is the 1040. Maybe someone else can make heads or tails of this.
Link: http://dedo.delaware.gov/information/databook/taxes.shtml#tax%20advantages
TAXES APPLYING TO BUSINESS:
Businesses should note that Delaware has no tax on inventories and no tax on process machinery or equipment. Businesses and individuals alike will be pleased to find no sales tax, no personal property tax, no unitary tax, no machinery or equipment tax, and no State-level real property tax in Delaware .
Corporate Income Tax
The tax rate is 8.7 percent on net income. Taxes are not paid on interest from United States or State of Delaware obligations or subdivisions of either, nor on gains from the sale of United States or Delaware securities. Taxes are not paid on dividends of foreign corporations that qualify for, and claim, foreign tax credit on federal returns. Investment and holding companies maintaining and managing intangible investments, and collecting and distributing income from such investments or from tangible property outside Delaware , are exempt from State corporate income tax.
Income from interest, rents and royalties, patent and copyright royalties, and gains and losses from the disposition of real property is allocated directly to the states where the property is physically located or where the transaction took place, reduced by applicable expenses.
For those businesses which operate interstate, unallocated corporate income is apportioned on an equally weighted three-factor formula that averages the ratios of: (1) Delaware property to total property, (2) Delaware wages to total wages, and (3) Delaware gross receipts to total gross receipts. The apportionment formula is applied to a company's entire taxable income, excluding allocated and exempt income.
Partnerships, sole proprietorships and shareholders of S Corporations are not subject to State corporate income taxes. Individuals carrying on business as partners or sole proprietors, or those who are shareholders of S Corporations, are liable for personal income taxes imposed by the State only on their proportionate share of partnership, proprietorship or S Corporate income. The business may be subject to occupational and/or business license fees, as well as a gross receipt tax on sales/services within Delaware .
Bank Franchise Tax
The rate of tax for banks, trust companies, and national banks is 8.7 percent of taxable income not in excess of $20,000,000; 6.7 percent of taxable income in excess of $20,000,000 but not in excess of $25,000,000; 4.7 percent of taxable income in excess of $25,000,000 but not in excess of $30,000,000; 2.7 percent of taxable income in excess of $30,000,000 and, effective January 1, 1997, 1.7 percent of taxable income in excess of $650,000,000. Taxable income, for bank franchise tax purposes, begins with net operating income before taxes reported on line eight of the FDIC Consolidated Report of Income.
Corporation Franchise Tax
A domestic corporation may be established under the General Corporation Law of Delaware by filing the proper documents with the Secretary of State. The initial cost is based on a company's authorized capital stock, either (A) par value stock or (B) no par value stock, as follows:
A. Par Value Stock
Up to $2,000,000 $.20 per $1,000
Over $2,000,000 to $20,000,000 $.10 per 1,000
Over $20,000,000 $.04 per 1,000
B. No Par Value Stock
Up to 20,000 shares $.01 per share
Over 20,000 shares to 2,000,000 shares $.005 per share
Over 2,000,000 shares $.0020 per share
Once a corporation has established Delaware as its legal home, the annual franchise tax includes:
A. Annual Report Filing Fee $20.00
B. Tax (lesser amount computed by (1) or (2) below):
1. Authorized shares - par or no par:
3,000 shares or less $30.00 per year
3,001 shares to 5,000 shares 50.00 per year
5,001 shares to 10,000 shares 90.00 per year
Each additional 10,000 shares or part thereof 50.00 per year
2. In the case of par value stock under $100, an alternative is offered based on assumed capital, found by dividing gross assets by all issued shares and multiplying quotient by such authorized par value shares; provided, however, that if said quotient is less than the par value of any shares having par value, such shares shall be multiplied by their par value instead of by said quotient. Rate of tax is $200 per $1,000,000. Minimum tax--$30, maximum--$150,000.
Whether the franchise tax is computed according to (1) or (2) above, the minimum tax is $30 per year, and the maximum tax is $150,000 per year.
License Fees and Gross Receipt Taxes
Most occupations and businesses require the purchase of a license in order to operate legally in Delaware . Although license fees are minimal, several types of businesses, including those listed below, are required to pay a gross receipts tax in addition to the business license fees. Gross receipts tax information for types of businesses other than those listed may be obtained from the Delaware Economic Development Office.
· Manufacturers - $75 annual fee for each place of business, plus a tax of 0.180 percent (effective January 1, 2000 ) on the gross receipts for all goods manufactured in Delaware , regardless of the location of sale. In computing monthly gross receipts, the first $1 million in receipts are not subject to taxation.
· Wholesalers - $75 annual fee for each place of business, plus a tax of 0.384 percent on the gross receipts of all goods physically delivered within Delaware to the purchaser. In computing monthly gross receipts, the first $50,000 in receipts is not taxable. Manufacturers that also wholesale their products are subject to both the manufacturing and wholesale tax on gross receipts.
· Retailers - $75 annual fee, plus $25 for each separate branch or additional business location. Each retailer pays an additional tax of 0.720 percent on the aggregate receipts in excess of $50,000 per month.
· Restaurants - $75 annual fee, plus $25 for each separate branch or location, plus an additional fee of 0.624 percent on aggregate receipts in excess of $50,000 per month.
· Food Processors - $75 annual fee for each place of business, plus a tax of 0.192 percent on gross receipts, in excess of $50,000 per month, from all goods sold within Delaware .
· Petroleum Products Wholesalers - $75 annual fee for each place of business, plus 0.9 percent (Hazardous Substances Cleanup Tax) and 0.384 percent on aggregate receipts in excess of $50,000 per month. Wholesalers are also subject to a surtax of 0.24 percent (.0024) on the sale of petroleum products.
· Petroleum Products Retailers - $75 annual fee for each place of business, plus additional fees of 0.9 percent (Hazardous Substances Cleanup Tax) and 0.72 percent on aggregate receipts in excess of $50,000 per month. (Retailers are exempt from 0.9 percent and 0.72 percent tax if the Hazardous Substances Cleanup Tax was paid to their supplier.)
· Occupational/Professional/General Services - $75 annual fee for first location and $25 for each additional location for most, plus an additional fee of 0.384 percent on aggregate receipts in excess of $50,000 per month.
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