Delaware Annual Franchise Tax Directions

DELAWARE ANNUAL FRANCHISE TAX CALCULATION INSTRUCTIONS

DE Annual Franchise Tax:

Foreign Corporations, Nonprofits, Limited Liability Companies, General Partnerships, Limited Partnerships and Limited Liability Partnerships pay a flat-rate annual fee or tax. Corporations formed in Delaware are a whole different story. There are two methods that corporations can figure their annual franchise tax. The default method for the State of Delaware is the Authorized Share Method. This option is fairly simple; 5000 shares or less you pay the minimum $175. If your DE Corporation has high value assets, the Assumed Par Value Capital Method is more complicated, but sets a cheaper tax fee. Don’t forget to add your $50 annual report fee. It is mandatory for Delaware Corporations to file their annual franchise taxes online.

How to figure out your corporate franchise tax in Delaware:

Authorized Share Method
5000 shares or less, pay the minimum $175 tax.
5001 to 10,000 shares pay $250 tax.
For each additional 10,000 shares, add $75 to the tax total, with a maximum franchise tax of $180,000. So if your Delaware corporation has a million authorized shares, your annual franchise tax will be approximately $7,500. Typically, this corporation is better off to use the second calculation option.

Assumed Par Value Capital Method
With this method your Delaware Franchise Tax bill is calculated based on issued shares, authorized shares and total gross assets.

1. Divide total gross assets by total issued shares. This will give you your assumed par value.
2. Multiply your assumed par value by your total authorized shares. This will be your assumed par value capital.
3. Your annual DE franchise tax will be $350 for each $1,000,000 of your assumed par value capitol. For calculation purposes, you round up to the next million if your assumed par value capital is over $1,000,000. So if your assumed par value capitol comes to $1,001,000, your franchise tax would be $700.

The example corporation with the million authorized shares could likely save thousands by figuring its franchise tax with the ‘Assumed Par Value Capital Method.’

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