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All three values are required. You can find these on your balance sheet and certificate of incorporation.
Delaware defaults to the Authorized Shares Method, which can result in tax bills over $80,000. Use the Assumed Par Value Method to legally reduce your bill — potentially to as low as $400.
All three values are required. You can find these on your balance sheet and certificate of incorporation.
The Delaware Franchise Tax Calculator is an essential financial tool for startup founders and corporate officers whose companies are incorporated in Delaware. Every year, Delaware C-Corporations are required to pay a Franchise Tax for the privilege of being incorporated in the state. However, the state sends out an initial tax bill based on the "Authorized Shares Method," which often results in a shocking tax bill of tens of thousands of dollars for early-stage startups with millions of authorized shares.
This calculator helps you recalculate your tax liability using the alternative, state-approved Assumed Par Value Method. By factoring in your company's actual gross assets and issued shares—rather than just the total authorized shares—this method can often legally reduce a $80,000+ tax bill down to the state minimum of just $400.
The State of Delaware allows corporations to calculate their Franchise Tax using two different methods. You are allowed to choose whichever method results in the lower tax bill.
This is the method Delaware uses to generate your initial bill. It strictly looks at the total number of shares your company is authorized to issue, completely ignoring your actual assets or valuation. Startups typically authorize 10,000,000 shares upon incorporation to easily issue equity to founders, employees, and investors. Under this method, a company with 10 million authorized shares is hit with an exorbitant tax bill (often $85,000+).
This is the method our calculator uses. It recalculates your tax based on your Gross Assets and Issued Shares. Here is the step-by-step formula:
If your Assumed Par Value Capital is less than $1,000,000, your tax defaults to the absolute state minimum of $400.
Sarah just incorporated her tech startup, CloudScale Inc., in Delaware. Like most startups, she authorized 10,000,000 shares. She issued 4,000,000 shares to herself and her co-founder. They haven't raised money yet, so they only have $10,000 in the company bank account (their Gross Assets). In February, she receives a tax bill from Delaware for $85,165 based on the Authorized Shares Method. Panicking, she uses the Assumed Par Value Method: $10,000 in assets ÷ 4,000,000 issued shares = an Assumed Par Value of $0.0025. Multiplied by 10,000,000 authorized shares, her Assumed Par Value Capital is $25,000. Because this is under $1,000,000, her final tax bill drops to just $400.
BioMed Solutions has raised significant capital. They have 15,000,000 authorized shares, have issued 8,000,000 shares, and currently have $12,000,000 in Gross Assets. Their initial bill from Delaware is over $120,000. Using the Assumed Par Value Method: $12,000,000 ÷ 8,000,000 = $1.50 Assumed Par Value. $1.50 × 15,000,000 authorized shares = $22,500,000 Assumed Par Value Capital. At $400 per million, their calculated tax is $9,200. While higher than the minimum, it is still a massive $110,000 savings compared to the default method.
For C-Corporations, the Delaware Franchise Tax and the Annual Report are due on or before March 1st every year. Failing to file and pay on time will result in a $200 late penalty plus a monthly interest charge of 1.5%.
Gross Assets refer to the total assets reported on your company's balance sheet (specifically, the U.S. Form 1120, Schedule L) as of December 31st of the tax year. This includes cash, equipment, accounts receivable, and other company property.
No. Delaware LLCs do not calculate their franchise tax based on shares or assets. Instead, all Delaware LLCs pay a flat annual fee of $300, which is due by June 1st of each year.
Yes. The Delaware Franchise Tax is a privilege tax for being incorporated in the state, not an income tax. Even if your company made zero revenue or operated at a massive loss, you must still file the Annual Report and pay at least the $400 minimum tax.