How does Delaware calculate the franchise tax and what is the minimum tax for a startup?
Tax Estimate Rule of Thumb | $350 for each $1,000,000 in gross assets (see Note 1) | $75 for each 10,000 shares authorized
Minimum | $350 | $175
Maximum | $180,000 | $180,000
Information Required from the Company | Total gross assets, number of shares issued | None
Note 1: See How to Calculate Franchise Taxes for a detailed explanation. Under the Assumed Par Value Method, the franchise tax can vary based on the ratio of issued shares to authorized shares. Consequently, a startup generally chooses to issue a meaningful portion of its authorized shares.
If any of the following are true, contact the Delaware Secretary of State Franchise Tax department for special assistance at 302-739-3073 (option 3):
- Total gross assets equal zero
- Number of shares issued equals zero
- Shares are not assigned a par value in the company's certificate of incorporation
Delaware Secretary of State Tax Information and Resources
Explains the ins-and-outs of the Authorized Shares Method and the Assumed Par Value Method.
A tax calculator provided by Delaware for calculating franchise taxes using both the Authorized Shares Method and the Assumed Par Value Method.
Delaware Secretary of State's tax FAQ.