Title & Escrow Companies Bookkeeping in Delaware

Escrow and trust account requirements in Delaware are set by state law and by the underwriters you are appointed with, and they typically cover how funds are held, how frequently the account is reconciled, and what records must exist for each file. The reconciliation that satisfies all of them is the three-way: escrow bank balance, escrow book balance, and the sum of the individual file ledgers, agreeing at one point in time. Two of the three will frequently agree while the third does not, which is precisely why the third exists. The entity is registered with the Delaware Division of Corporations, and because Delaware levies no statewide general sales tax there is no revenue account to maintain alongside it — one fewer Delaware registration to let lapse. We keep that reconciliation current and documented; whether it meets your specific Delaware obligation is a determination for you, your counsel, and your underwriter.

Delaware levies a real estate transfer or deed tax at closing, which means every file passes tax collected from the parties through your escrow account to a recording authority. It is pass-through in the purest sense — never income, never expense, simply money moving across your ledger — and files that run it through revenue can overstate a title company's income by a multiple. Recording fees and any state or county surcharge behave the same way, and the settlement statement is the source document that has to reconcile to what actually left the account.

Registering to do business in Delaware runs through the Delaware Division of Corporations and employer accounts through the Delaware Department of Labor. Because Delaware has no sales tax account to maintain, there is one less registration to let lapse than in most states.

Beyond sales tax, Delaware levies the Gross Receipts Tax on total receipts from goods sold and services rendered in Delaware, payable by the seller, with no ability to itemise it to the customer. rates are set by business activity classification rather than by product, so two Delaware businesses of the same size can owe materially different amounts. A monthly or quarterly exclusion means smaller businesses often owe nothing and still have to file. The consequence for your books is direct: because it cannot be added to an invoice, it is an operating expense rather than a liability held for the state — the opposite treatment from sales tax, and the mistake we see most often in Delaware books. It is registered and filed separately from anything the Delaware Division of Corporations handles, and it accrues on revenue rather than on profit — so it is recorded as it builds, not discovered at year end.