AgedCorporations.com’s answer is that a Delaware shelf corporation exists but is uncommon, because every year a Delaware entity sits on the shelf costs more in state tax than the same year in the low-fee states. A dormant Delaware corporation still owes a minimum franchise tax and an annual report fee, and a Delaware LLC owes a flat annual tax. For a buyer who wants Delaware law and an older date, domesticating or converting an existing entity is often the more practical route.
Franchise tax floor for a dormant corporation and the LLC annual tax
Delaware charges for existence, not activity. The Division of Corporations states that all corporations incorporated in Delaware are required to file an annual report and to pay a franchise tax, with the tax and report due by March 1 of each year.1 The minimum tax depends on the calculation method: one minimum applies to corporations using the Authorized Shares method and a higher one to corporations using the Assumed Par Value Capital method.1 A non-exempt domestic corporation also pays a filing fee for its annual report.1
LLCs are simpler. Delaware LLCs, limited partnerships and general partnerships do not file an annual report, but they are required to pay an annual tax, due on or before June 1.1 Late payment carries a penalty for both corporations and LLCs, and interest accrues at 1.5 percent a month.1
Every figure below is a state government charge from the Division of Corporations page. The registered agent charges its own yearly fee; that fee is set by the agent, not the state, so it is described in words and left out of the table.
| Item | Corporation | LLC | Source |
|---|---|---|---|
| Franchise tax or LLC tax | $175 minimum (authorized shares method) or $400 minimum (assumed par value method) | $400 flat annual tax | Delaware Division of Corporations |
| Annual report | $50 | None (LLCs file no annual report) | Delaware Division of Corporations |
| Total each year at the minimum | $225 | $400 | Delaware Division of Corporations |
| Due date | March 1 | June 1 | Delaware Division of Corporations |
| Late payment penalty | $200 plus 1.5 percent a month interest | $200 plus 1.5 percent a month interest | Delaware Division of Corporations |
The corporate figure is a floor, not a typical bill. The Division says a corporation using either method has a maximum tax, and corporations owing larger amounts pay estimated tax in quarterly installments.1 A shelf corporation formed with a small number of authorized shares is the case the minimum describes. The full ten-state comparison is on the annual fees by state page.
Why Delaware shelf stock is scarce
This section is AgedCorporations.com’s inference from the figures above, not a finding the site has seen in any state source. The site has not found a count of Delaware shelf entities offered for sale.
Two features of Delaware law make holding inventory expensive. The first is the carry cost. On the site’s chart, a dormant Delaware corporation costs several times as much each year at the minimum as a Wyoming one, and a Delaware LLC costs more each year than a Nevada LLC. A seller who holds an entity for five or ten years before selling has paid that difference every year, and a Delaware entity has to recover it.
The second is how quickly a lapse becomes fatal. Under 8 Del. C. 510, a corporation that “neglects or refuses for 1 year” to pay its franchise tax, or to file a complete annual franchise tax report, has its charter declared void and all powers conferred on it by law declared inoperative, unless the Secretary of State has given further time for good cause.2 For an LLC, the certificate of formation is canceled if the annual tax is not paid for three years from its due date.4 In the site’s reading, a seller holding many entities cannot let any of them slip, because one missed year of corporate tax ends the unbroken record that gives the entity its value.
The consequence for buyers is practical. A Delaware entity described as aged deserves more checking, not less, because the incentives to let a year lapse and revive later are strongest where the carry is highest. How to compare an aged entity with a new one on cost and risk is set out in aged vs new.
Void and forfeited status and revival
A void Delaware corporation can come back. Under 8 Del. C. 312, a corporation whose certificate of incorporation has become forfeited or void may at any time procure a revival, together with its rights and privileges and subject to its duties, debts and liabilities, by filing a certificate of revival authorized by its board or governing body.3 The certificate must state, among other things, the date the original certificate of incorporation was filed and the date the certificate became forfeited or void.3
Revival has a cost in tax and in history. The reviving corporation must pay a sum equal to all franchise taxes, penalties and interest due at the time it became void; if it has been void for more than five years, it instead pays three times the annual franchise tax for the year of revival, computed at the then current rate.3 Once revived, the corporation is treated as if its certificate had never been forfeited or void, and acts done in the meantime within its powers are validated.3 The Division of Corporations adds that a corporation reinstating its status to good standing is required by law to file an annual report and pay any and all tax due.1
LLCs follow a parallel path. Under 6 Del. C. 18-1109, an LLC whose certificate of formation was canceled for unpaid tax may be revived by filing a certificate of revival and paying the filing fee, the annual tax and all penalties and interest due at the time of cancellation.4 The certificate states the date the original certificate of formation was filed.4
The site’s position is that a revived entity is not continuously aged. The law restores its legal existence as if it had never lapsed, but a corporation’s certificate of revival itself records the date its certificate became forfeited or void,3 and a lender who reads the record will see the break. The same point is made for every state on the verify before you pay page.
Domestication as an alternative to buying age
Delaware law offers a way to bring an existing entity’s date into Delaware. Section 388 governs non-United States entities: a corporation, LLC, trust, partnership or other entity formed under the laws of a foreign country or other jurisdiction outside the United States may become domesticated as a Delaware corporation by filing a certificate of corporate domestication and a certificate of incorporation.5 On domestication, “notwithstanding § 106 of this title, the existence of the corporation shall be deemed to have commenced on the date the non-United States entity commenced its existence in the jurisdiction in which the non-United States entity was first formed, incorporated, created or otherwise came into being.”5 The statute also provides that domestication does not affect obligations or liabilities incurred before it, and that the corporation is deemed the same entity as the one that domesticated.5
Section 388 does not cover an entity formed in another US state. For that case, section 265 lets an LLC, partnership, other unincorporated business or foreign corporation convert to a Delaware corporation, and it uses the same rule for age: the corporation’s existence “shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.”6 The conversion is a continuation of the converting entity, not a dissolution.6
In AgedCorporations.com’s reading, this is why buying a Delaware shelf entity is rarely the only way to get Delaware law and an older date. An owner who already holds an older entity elsewhere, or a buyer who acquires one in a low-fee state, can move it into Delaware, after confirming that the law of its home jurisdiction allows it to leave. The same limit applies either way: the date carried into Delaware is the entity’s formation date, and it says nothing about who has operated it. The legal limits of relying on that date are covered in is it legal to buy a shelf corporation, and the purchase steps are in how to buy a shelf corporation.
Verifying on the Division of Corporations site
Delaware’s entity search shows, free of charge, the entity name, file number, incorporation or formation date, registered agent name, address and phone number, and residency.7 The Division says additional information, including a certificate of status, can be obtained for a fee through a Delaware online agent or its document request service.7 It also warns that a name appearing in the search results “is not an indication of the current status of an entity.”7
That makes three steps essential:
- Match the record. Confirm the exact name, file number and formation date against the seller’s listing.
- Order status, do not infer it. Obtain a certificate of status, or require the seller to deliver one dated shortly before closing, since the free search does not show status.
- Confirm the tax is paid. For a corporation, the annual report and franchise tax for the most recent year; for an LLC, the most recent annual tax. Ask whether any revival appears in the entity’s filed documents.
Then make the seller responsible in writing for any tax, penalty or interest that predates the sale. And when a lender, landlord, agency or counterparty asks how long you have owned or operated the business, give the purchase date, not the formation date.
Questions readers ask
Does a dormant Delaware corporation owe franchise tax?
Yes. The Division of Corporations says all corporations incorporated in Delaware must file an annual report and pay franchise tax, with a minimum tax under each of the two calculation methods, plus an annual report fee. LLCs file no annual report but pay a flat annual tax. None of these depends on the entity doing business.
What happens if a Delaware corporation stops paying franchise tax?
Under 8 Del. C. 510, a corporation that neglects or refuses for one year to pay its franchise tax or to file a complete annual franchise tax report has its charter declared void, unless the Secretary of State has given more time for good cause. A void corporation can be revived under section 312 by filing a certificate of revival and paying the taxes, penalties and interest owed.
Why are Delaware shelf corporations hard to find?
AgedCorporations.com's inference is that the cost of carrying a Delaware entity for years, set by a franchise tax floor and annual report fee for corporations and a flat tax for LLCs, is higher than in the low-fee states, and that a single missed year can void a corporation's charter. Both make it expensive to hold Delaware inventory for sale.
Can an older company from another place become a Delaware corporation and keep its date?
Delaware law provides for it. Under section 388 a non-United States entity may domesticate as a Delaware corporation, and under section 265 a domestic or foreign LLC, partnership or foreign corporation may convert to one. In both cases the statute deems the corporation's existence to have begun when the original entity was first formed.