The state offers three tiers of preclearance service: routine, 24-hour, and 2-hour.

The filing experts at the SOS will go over the document with a fine-toothed comb looking for any deficiencies or discrepancies. The state will return your document along with a detailed letter describing whether your document would be acceptable for filing.

Even better, the state is expanding their preclearance service to include annual reports. As of May 1, 2010, you will be able to submit any required annual reports with your preclearance document and receive filing officer notes on that as well. You can always contact your corporate service provider if you need any help in utilizing this service.

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2/12/2010 Update: First Corporate Solutions’ Delaware Branch Office is open today and businesses are back to normal.

Due to severe snowstorm in Delaware, First Corporate Solutions’ Delaware Branch Office is closed today (2/11/2010).  Please contact our California office at 800.406.1577 or at www.ficoso.com if you have any questions.

From our Delaware Branch Staff:

For those of us located in the Mid-Atlantic Region, this should come as no surprise since we’re currently experiencing the second major snow storm in five days, but for those of you in the rest of the country we think it’s important to note that Governor Jack Markell has declared a State of Emergency in all three counties in the state of Delaware. What this means for the people snowed in Delaware is that the roads are off-limits to all non-essential personnel, and anyone found driving unnecessarily can be ticketed. For those of you outside the state of Delaware, this means that if you need any searches, certificates, or copies from the Secretary of State, you’re out of luck for the time being. This State of Emergency, which was declared as of 12:01 a.m. on February 10th, will continue until terminated by the Governor. For current information on the storm, you can keep checking with the State via twitter: http://twitter.com/destorminfo.

You can follow this link to a comprehensive list of the State’s noise words: http://corp.delaware.gov/uccsearch.shtml

A quick comment on the State’s list – It is important to note that the ending noise words are just that: they will only be dropped if they appear at the end of your search name. That means that if you search “ABC Company,” your listing will include filings indexed under “ABC Company” as well as “ABC LP” and “ABC Limited Liability Company,” but will not include filings indexed under “ABC Company Holdings” or “ABC Company, a Delaware Corporation,” for example.

Lastly, please keep in mind that although the State programmed their system to drop certain noise words, errors can occur. If you ever get results that you suspect are not correct, always check in with your UCC & corporate service provider or the Secretary of State to double-check.

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ALL corporations incorporated in the State of Delaware are required to file an annual report, and all but exempt domestic corporations are required to pay taxes. The annual report filing has been raised to $50.00 this year, with minimum tax at $75.00 and maximum tax at $180,000.00.

Any corporations who do not file their annual report on or before March 1st will be required to pay an additional penalty of $100.00, as well as interest on any unpaid tax balance which accrues at 1.5% per month.

It’s also important to note that any corporations that owe $5,000.00 or more pay estimated taxes in quarterly installments.

All annual reports and tax payments must be completed online via the DE SOS website: http://corp.delaware.gov/paytaxes.shtml

The site is very easy to use, but the folks at the State office are always ready to answer any questions that might arise.

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The addition signed into law by the 145th General Assembly and the Governor is as follows:

Amend § 391, Title 8, Delaware Code, by adding a new subsection (j) as follows:

“(j) As used in this section, the term “exempt corporation” shall be defined as any corporation organized under this chapter that is not authorized to issue capital stock and that:

(1) is exempt from taxation under § 501(c) of the United States Internal Revenue Code or any similar provisions of the Internal Revenue Code, or any successor provisions;

(2) qualifies as a civic organization under § 8110(c)(1) of Title 9 or § 6840(4) of Title 16;

(3) qualifies as a charitable/fraternal organization under § 2593(1) of Title 6;

(4) is listed in § 8106(a) of Title 9;

(5) is organized primarily or exclusively for religious or charitable purposes; or

(6)(i) is organized not for profit and (ii) no part of its net earnings inures to the benefit of any member or individual.”

This filing, which the SOS asks to be completed and returned by November 30, 2009, will be filed at no charge. Any corporations meeting one of the above listed requirements will pay an Annual Report filing fee of $25 rather than the $50 fee required from non-exempt corporations.

Any questions can be directed to the Delaware Division of Corporations: 302-739-3073.

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As of 9/1/2009, some of the UCC fees are being increased as well.

The fee for filing and indexing a UCC document will increase from $75.00 to $100.00; if there are additional pages, the fee is $2.00 per page, and if there are more than two debtor names, the fee is $25.00 per additional debtor name.

Expedited services are also being raised: the two-hour service increases to $500.00, same-day increases to $200.00 and 24-hour will increase to $100.00. The SOS is also adding a one-hour priority service, which will cost $1,000.00.

Any web UCC filings submitted through the e-Corp Web Application will double in price from $15.00 to $30.00.

Any questions about these changes can be directed to the Secretary of State at 302-739-3073 or via email to corp@delaware.gov.

We should have also pointed out in the post about corporate fees that franchise taxes will be raised for the 2009 tax year. The maximum franchise tax due for a corporation will increase from $165,000 to $180,000, and corporations that file on the Assumed Par Value Capital Method will increase from $250 to $350 per $1,000,000 of total taxable gross assets. A synopsis of the changes can be found here: http://www.corp.delaware.gov/09taxHB267chgs.pdf

As it gets closer to the Annual Report due date of 3/1/2010, make sure you check back in to our blog for some helpful tips for calculating your franchise tax!

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The DE SOS already offers one-hour and two-hour expedited services for corporate filings (along with the usual same-day and 24-hour expedites), and now they’re rolling out a 30-minute service for a small fee of $3,000.00. Without trying to bilk the SOS out of well-deserved funds, it’s important to note that when times are slow, even the 1-hour and 2-hour expedited filings often come back within a half-hour (or less in many instances), especially when you file through a service company who will put filings “on the system” since that does a lot of the legwork for the State. With that being said, it’s nice to know that if you’re in a time crunch and need that filing asap, the option is there for you.

Filers will note that the SOS is now eliminating the $100 charge that is assessed on the “must approval” expedite when the agent of record does not submit the filing. There is good and bad that goes along with this news; in the past, filers would get a $10 break in price for submitting on the must approval basis, provided that they are named as registered agent on the filing in question. With the must approval fee going up to $50.00, filers are no longer receiving the break in price, but they can now file any corporate document on a must approval regardless of the named registered agent.

There are also going to be some changes to the corporate forms, all of which can be found here: http://corp.delaware.gov/corpforms.shtml

A complete list of the new fees (along with the old fees which are still effective until 8/1/09) can be found here: http://corp.delaware.gov/fee.shtml

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The other issue is that since Delaware requires that you run a UCC search through an agent (they publish a current list of agents on their website), it’ll be dumb luck whether you’ll get one that will search and provide name variations. Because the folks processing the searches tend to each process a little differently depending on how long they’ve been in the industry and with whom they trained, the processes might even be different within the same company from person to person. The bottom line is, if you want name variations, just make sure you ask when you place your search request with someone; some provide them with all searches, some will charge an additional fee to provide them, and some won’t provide them at all. It’s important to know into which category your service provider falls to ensure you’re not missing any important liens when you’re performing your due diligence.

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The easy answer to this question is that it doesn’t cost much to incorporate in Delaware compared to most other states; plus, if you don’t actually conduct business in Delaware you don’t have to pay corporate taxes, and you don’t even need to be a Delaware resident to incorporate in Delaware.

If you ask a lawyer, however, the first thing you might hear is that Delaware’s Court of Chancery is one of the most highly regarded in the country. Dating back to 1792, the Court of Chancery came to be the place where corporation law issues were concentrated, and therefore the Court developed an expertise in corporation law matters. This expertise brought more cases which, in turn, gave the Court more expertise. Additionally, the Delaware legislature gives high priority to corporation law matters.

The Delaware General Corporation Law itself is written with every effort to make drafting documents as simple as possible, and with a bias against regulation. When businesses were threatened to be deprived of able leaders due to high cost of liability insurance for directors and officers, Delaware led the way in permitting stockholders to limit the liability of directors by using appropriate verbiage in the charter document.

One of the big selling points of Delaware is that its law is studied and accepted as standard throughout the United States, so managers of Delaware corporations don’t have to look elsewhere for guidance in legal matters.

Those of us who work with Delaware on a daily basis know how easy the Secretary of State is to deal with, and is a modern, user-friendly office. Thanks to the second shift, documents can be filed until 11:59pm, and filings can be submitted on a wide array of expedites including 24-hour, same-day, 2-hour and even 1-hour. Online registered agents can view documents and obtain plain and certified copies, certificates of good standing, and UCC searches themselves on a same-day basis, as well as submit filings directly to the SOS.

This means that Delaware provides some of the best service in the United States, so when you add that to the benefits of simple corporate law and tax breaks, why wouldn’t you incorporate in Delaware?

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