It is important to note that Delaware will not issue Good Standing Certificates for corporations that have not met the annual report filing requirements. The Delaware corporation annual report must be signed by the corporation’s president, secretary, treasurer, or other duly authorized officer or by any of its directors. If filing an initial report, any incorporator can be an authorized signer in the event the board of directors has not yet been elected.

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. This method calculates the tax based on the number of shares your corporation has authorized. Your corporation will owe an estimated $85 for each 10,000 shares authorized.

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• If the federal income tax return is on extension, other financial data will need to be used for total gross assets.
• If your DE Corporation has high value assets, the Assumed Par Value Capital Method is more complicated, but sets a cheaper tax fee.
• Plus, our calculator is a lot easier to use than the State of Delaware’s spreadsheet.

To use this method, you must provide figures for all issued and outstanding shares and total gross assets in the spaces provided in your annual franchise tax report. Total gross assets shall be those “total assets” reported on the US Form 1120, Schedule L (Federal Return) relative to the corporation’s fiscal year ending the calendar year of the report. The tax rate under this method is $350 (to be increased to $400 effective for the 2018 tax year) per million or portion of a million.

Q: Are there any additional fees required to be paid when filing my corporation’s Delaware annual report?

You’ll need to know your corporation’s gross assets and authorized shares. Plus, our calculator is a lot easier to use than the State of Delaware’s spreadsheet. A corporation with 20,000,000 shares authorized pays $170,165 ($250.00 plus $169,915[$85 x 1999]).

• This method calculates the tax based on the number of shares your corporation has authorized.
• The Delaware Secretary of State charges an additional filing fee of $50 for a Delaware corporation annual report.
• This method calculates the tax based on your corporation’s total gross assets and the ratio of issued shares to authorized shares.
• Assume a Delaware corporation has 20 million of authorized shares with a par value of .001, $50,000,000 of total gross assets and 15,000,000 of issued shares.
• Your corporation will owe an estimated $85 for each 10,000 shares authorized.

Form 1120 Schedule L for tax year ending prior to filing the Delaware franchise tax report. Thus, for a calendar-year taxpayer, total assets reflected in a corporation’s March 1, 2021 Delaware franchise tax filing should tie to Form 1120, Schedule L for the tax year ending in 2020. If the federal income tax return is on extension, other financial data will need to be used for total gross assets. Interests in entities that are consolidated with the Delaware reporting company must be included in “total gross assets” at a value determined in accordance with GAAP. Delaware’s franchise taxes are calculated either using the “authorized shares method,” which assigns a set value to each share, or the “assumed par value capital method,” which takes into account the corporation’s assets.

Ideally, Delaware Franchise Tax liability should be quantified prior to incorporating in the state and prior to any new shares being authorized or issued. There are two methods that you can use to calculate the amount of Delaware franchise tax due for your corporation (the Authorized Shares Method and the Assumed Par Value Capital Method), which result in vastly different amounts due. For corporations using the Authorized Shares Method, the minimum franchise tax is $175 and the maximum franchise tax is $200,000. For corporations using the Assumed Par Value Capital Method, the minimum franchise tax is $350 and the maximum tax is $200,000; however, for the 2018 tax year, the minimum will increase to $400. The Delaware annual report and franchise tax payment are both due by March 1. Your notification of annual report and franchise tax due is sent to a corporation’s registered agent in December or January of each year.

Q: If the tax amount is large, can payments be made by wire to the Delaware Secretary of State?

A professional registered agent company can assist with identifying total taxes due on any given date when you are handling a merger or dissolution. If you are a startup that has chosen Delaware as its state of incorporation, you are likely aware that you are subject to Delaware franchise tax. While the typical franchise tax is based on a corporation’s net worth or capital, the tax can also be based on other criteria such as income or gross receipts.

EisnerAmper LLP is a licensed independent CPA firm that provides attest services to its clients, and Eisner Advisory Group LLC and its subsidiary entities provide tax and business consulting services to their clients. Eisner Advisory Group LLC and its subsidiary entities are not licensed CPA firms. As discussed above, the tax on 20 million of authorized shares is $170,165 ($250.00 plus $169,915.00[$85.00 x 1999]). See our handbook glossary for more information about authorized shares.

DE Annual Franchise Tax:

A corporation with 1,000,000 shares authorized pays $8,665 ($250 plus $8,415[$85 x 99]). A corporation with 20,000 shares authorized pays $335 ($250 plus $85). This article discusses how the tax is calculated, filing and payment due dates and other requirements applicable to for-profit C corporations that incorporate in Delaware. Most startups use the Assumed Par Value Capital Method to calculate their franchise tax bill. This method almost always results in a lower tax for our customers because startups generally have few assets but authorize millions of shares.

How to Use the Assumed Par Value Capital Method

The minimum tax when using this method is $175, and the maximum tax is $200,000. The varying amounts can be contributed to an endless array of options of authorized shares, issued shares, par value and gross assets. Fortunately, the entity only has to pay the lesser amount yielded by the two methods. These large corporate filers pay an annual franchise tax of $250,000 instead of $200,000 and are required to pay their franchise taxes on a quarterly basis.

A refund might be available if the Assumed Par Value Capital Method was not considered. The above calculations must be done for each class of stock that is authorized by a corporation. For more help with tax and compliance matters, see How can my corporation get help complying with Delaware’s requirements?.

If the assumed par value capital is less than $1 million, the tax is calculated by dividing the assumed par value capital by $1 million then multiplying that result by $350. This method calculates the tax based on your corporation’s total 8 incredible tips to ask for donations in person gross assets and the ratio of issued shares to authorized shares. Your corporation will owe an estimated $400 for each $1,000,000 in gross assets. The minimum tax when using this method is $400, and the maximum tax is $200,000.

Foreign Corporations, Nonprofits, Limited Liability Companies, General Partnerships, Limited Partnerships and Limited Liability Partnerships pay a flat-rate annual fee or tax. 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. It is mandatory for Delaware Corporations to file their annual franchise taxes online.

The Delaware Department of Corporations defines total gross assets as “those ‘total assets’ reported on the U.S. Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report”. Well, a minimum stock company (generally an entity with less than 5,000 authorized shares) with zero par value typically pays Franchise Tax under the Authorized Shares Method. This will usually end up to be the minimum of $175, plus the $50 Annual Report Fee, for a total due of $225. This lesser-known requirement can be quite frustrating when it delays time-sensitive filings. We recommend identifying the tax due in these cases well in advance of the date of filing for a dissolution or merger.