Delaware remains the most popular state of incorporation for businesses of all sizes, including startups and family investment vehicles to Fortune 500 companies. What some corporate owners and advisors overlook, however, is that forming a corporation in Delaware creates ongoing Delaware compliance obligations, regardless of whether the corporation ever conducts business in the state. Understanding the distinction between Delaware’s corporate income tax return and the separate Delaware Division of Corporations annual report and franchise tax is critical to avoiding penalties, interest, and potential loss of good standing.

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