Who owes it
Delaware corporations (Inc, Corp). Delaware LLCs pay a flat $300 annual tax instead and have no franchise tax or annual report.
The two calculation methods
- Authorised-shares method. A flat per-share schedule. Simple to calculate but often produces very large bills for startups that authorised, say, 10,000,000 shares at formation.
- Assumed par value capital method. Based on your total gross assets and issued shares. For most early-stage startups this method dramatically lowers the bill.
Delaware lets you pay under whichever method gives a lower result, with a minimum tax. The annual report filed alongside determines which method the state will apply.
Timing
Due 1 March with the annual report. The report fee is $50. The franchise tax itself ranges from a minimum of $175 (authorised-shares method) or $400 (assumed par value capital method) up to a cap of $200,000 for very large corporations. Most early-stage startups land near the minimum under the assumed par value method.
See also: registered agent.