Delaware Annual Report Update: “Nature of Business” Is Now Required

by Nadine Basri

This year when you file a Delaware annual report for a domestic corporation, you may notice a new required field: Nature of Business. This is now a required selection during the Annual Report process, whether you file directly through the State of Delaware or through our filing service, FranTax.

Below is what this new requirement means, what to select, and what to avoid so you do not end up paying extra fees to correct the filing.

What is “Nature of Business”?

Nature of Business refers to what a company does to generate revenue.

Delaware requires domestic corporations to provide this information on the annual report as stated in Section 502(a)(3) of the Delaware corporate code. The state now expects you to choose the closest match from a dropdown list. If you cannot find an exact match for your business, you can select Other and type a brief description.

How to choose the right option

  • Pick the closest match from the dropdown options.
  • If none fit, choose Other and enter a clear, specific description. You cannot put "Other" as the description. 
  • The description must state what you do today to earn revenue.

Examples of acceptable “Nature of Business” descriptions

  • Software development and subscription-based technology services
  • E-commerce retail sales of consumer goods
  • Real estate investment and property management
  • Business consulting and advisory services
  • Construction contracting and project management

Important: You cannot use “any lawful activity” for Nature of Business

Many Delaware corporations are formed using a general purpose clause in their formation document, such as:

“The purpose of the corporation is to engage in any lawful activity.”

That general purpose clause is common for formation documents, but it is not an acceptable Nature of Business statement for the Annual Report. If you try to use “any lawful activity” or similar wording as your Nature of Business, it will not be allowed. 

What happens if you use the general purpose clause?

If you use “any lawful activity” as your Nature of Business statement, your annual report will be rejected and you will be required to refile an amended Annual Report. That amendment comes with an additional fee, meaning it is a mistake worth avoiding the first time.

Reminder: Principal Place of Business rules still apply

While you are filing, Delaware also requires a Principal Place of Business address. This is separate from Nature of Business, but it is another area where business owners often make a mistake when filing.

As a reminder:

  • The address must be a physical location (street and number, city/town).
  • Do not use a PO Box.
  • Do not use the address of your Delaware registered agent, unless your corporation acts as its own registered agent.

Quick checklist before you submit

  • Nature of Business selected from dropdown (or “Other” plus a specific description)
  • No “any lawful activity” or general purpose clause language used for Nature of Business
  • Principal Place of Business is a physical address
  • No PO Box listed
  • Registered agent address not used as Principal Place of Business (unless you are your own registered agent)

FAQ

Is the Nature of Business field required even if I use a filing service?

Yes. This is a Delaware requirement and must be completed regardless of whether you file on the state site or through a service provider.

What if my Nature of Business is not listed in the dropdown?

Select Other and type a short, specific description of what your company does to generate revenue. Do not put "other" as the description. It must be a specific description. 

Can I copy the purpose clause from my formation documents?

No. Formation language like “any lawful activity” is not acceptable as a Nature of Business statement for the annual report. Using it can lead to an amended annual report filing and an additional fee.

Can I use my registered agent address as my Principal Place of Business?

Only if your corporation acts as its own registered agent. Otherwise, Delaware requires your Principal Place of Business to be a physical address that is not your registered agent’s address.

Need help filing your Delaware Annual Report?

Filing your Delaware annual report does not have to be complicated. Our eFiling Service is designed to make the process fast, accurate, and easy to manage year after year. You can complete your filing and franchise tax payment online in minutes, receive prompt email confirmation, and access your submission anytime through your secure login. For corporations, we store your information so you only need to update what has changed, saving you time in future filings. If you are ready to file, get started here. 

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