Short answer
Every Delaware corporation pays a yearly franchise tax and a $50 annual report fee, both due March 1. The tax is at least $175 under the authorized shares method or $400 under the assumed par value capital method. A startup with 10,000,000 authorized shares usually pays far less by filing with the assumed par value method.
Every Delaware corporation pays a franchise tax and a $50 annual report fee each year. Both are due on March 1. The tax depends on your shares, so the number of shares you authorize matters.
Calculate your tax
The two methods
1. Authorized shares method
- 5,000 shares or fewer: $175.
- 5,001 to 10,000 shares: $250.
- Each additional 10,000 shares, or part of 10,000: add $85.
- Maximum: $200,000.
Example: a startup with 10,000,000 authorized shares owes $85,165 with this method.
2. Assumed par value capital method
- Divide your total gross assets by your issued shares. This is your assumed par.
- Multiply your authorized shares by the assumed par, or by your par value if that is higher. This is your assumed par value capital.
- Pay $400 for each $1,000,000 of that capital, or part of $1,000,000. The minimum is $400.
Example: the same startup with 8,000,000 issued shares and $50,000 in assets has an assumed par of $0.00625. The capital is $62,500. The tax is $400.
Why this matters
Delaware’s yearly notice uses the authorized shares method. For a startup with millions of shares, that number can look very large. You can file with the assumed par value method instead and pay much less. You must report your issued shares and gross assets to use it.
How Zovud helps
On Formation + Compliance, we calculate both methods each year and file your annual report with the lower one. The state tax and the $50 report fee are added at cost.
Sources
This guide is general information, not legal or tax advice, and rules change. Confirm figures with the state or IRS, or ask us on a free call.