Delaware Franchise Tax Calculator

This calculator is designed to estimate your Delaware franchise tax.

Use Tax Calculator

Scott Orn and Healy Jones, Kruze Consulting

If you incorporated in Delaware, you need to pay a Delaware Franchise Tax. The calculator below will help you estimate how much you’ll need to pay. The deadline is typically the last day of February - scroll down to access links to visit the Delaware Division of Corporations webpage where you can pay.

Caveat: The information on this page intended as general guidance for startups and it doesn’t substitute the need to work with a professional. Your company is unique; contact us for a free consultation.

Delaware Franchise Tax Calculator Form

Enter Each Class of Authorized Shares and Their par Value

Delaware Franchise Tax - Answers to Frequently Asked Questions

Do I need to file Delaware Franchise Tax?

If you incorporated in Delaware, yes, you need to file and pay the Delaware Franchise Tax. Most VC backed startups are Delaware C-Corps, which means that most VC-backed startups DO need to file.

When do I need to file the Delaware Franchise Tax?

DE Franchise taxes are now due March 1st every year. Visit the Delaware Division of Corporation’s website to file

Where should I file the DE Franchise Tax?

Do it online, on the the Delaware Division of Corporation’s site:

Where should I file the DE Franchise Tax?

Where should I file the DE Franchise Tax?

Do it online, on the the Delaware Division of Corporation’s site:

Where should I file the DE Franchise Tax?

What Method Should I Use?

The vast majority of our startups use the Assumed Par Value Capital Method because it results it significantly less tax. The other method, the authorized share method, can result in a much higher tax calculation in most instances for early-stage companies.

How much should I expect to pay?

Most of our startups pay between $400 - $10,000 in DE Franchise taxes. Roughly, if you’ve raised $500k to $1M in venture funding, you are likely to owe between $500 to $1,000. If you’ve raised $10M in VC funding, you are going to owe closer to $4,000. If you’ve received a bill for $75K, it is because Delaware has calculated the tax using the Authorized Shares Method. Don’t freak out; recalculate using the Assumed Par Value Capital Method.

How much should I expect to pay?

What is par value?

Par value is the value per share. From the cap tables we’ve seen, the par value is usually set at $0.0001 or $0.00001. The par value has no connection to the market value of the share of stock.

What date should I use to value the Gross Assets?

12/31/XX (most often)

Why Delaware Incorporation is Important to VCs?

We often get the question, “why should my startup consider incorporating out-of-state and become a Delaware C-corp?”. Here are a few reasons why you would want to initially incorporate in Delaware.

Reasons Venture Capitalists Want Delaware C-Corps:

  • A C-Corp structure retains the profits and losses at the C-Corp level. It is not a pass-through entity like LLCs or S-Corps where the profits or losses get passed through to investors, C-Corps C-Corps are friendly with the venture capitalists’ tax structure.
  • There is a ton of litigation and VCs tend to understand what the rules are in Delaware
  • Most importantly, venture capitalists would usually rather fund a Delaware C-Corp and will tell you to switch as soon as they invest in your company.

There are many things you must do after becoming a Delaware C-Corp. Click here to learn more.

Becoming a Delaware C-Corp is simple, but there is a lot of legwork. Our experts here at Kruze are happy to do it for you. Also at Kruze, another option is working with a PEO; that is how you “Incorporate in a state.” Hope that helps, thanks.

Why is my Delaware Franchise Tax so high?

Don’t panic - your Delaware Franchise Tax is likely so high because your accountant has used the wrong calculation method. Use the calculation method in our estimator above to estimate how much you likely owe. Your company will likely need to use the assumed par value calculation method instead of the authorized share method of calculation. 

We’ve outlined the most common reasons your Delaware Franchise Tax may be so high, including multiple issues and mistakes that companies often unwittingly make during the filing process. These range from the overstatement of assets and authorized shares to inaccuracies in the capitalization table. Unapproved payments or not fulfilling estimated tax obligations can also escalate your tax, as well as discrepancies in asset reporting. Failing to file multiple annual reports, or incorrectly calculating your tax based on a complex formula, can lead to more significant tax liabilities. Additional factors include late tax filings, incorrectly identifying your company type, and failing to maintain your Delaware Registered Agent. Understanding these common errors can help your startup navigate the complexities of Delaware Franchise Tax and avoid unexpectedly high bills. It’s always best to work with a qualified CPA who works with DE C-Corps to avoid these pitfalls - and to avoid paying way too much in taxes!

How to reduce your company's Delaware Franchise Tax

If DE sent your startup a huge tax bill for their annual franchise tax, don’t panic - you can likely reduce your Delaware Franchise Tax by using an alternative calculation method. We typically recommend calculating the franchise tax by using the assumed par value method, which our calculator above does, vs. the authorized share method. The authorized share method is generally Delaware’s tax team’s default method of calculating the franchise tax, and it can result in a much higher tax bill vs. the assumed par value method. Ask your accountant if you can use the assumed par value method to reduce your tax bill.

Make sure to use the recalculate button on the Delaware Franchise Tax website

It’s important for founders to remember that the Delaware Franchise Tax website defaults to the largest tax bill possible when you first log into the site. That’s because the state of Delaware doen’t know how many outstanding shares you have or what your asset base is until you fill out that information. If you’re not working with an accounting firm, you’ll need to total up your asset base and enter that number. Then you need to hit the “recalculate” button and wait while the system generates a new balance. The new number will very likely be lower than the original number you saw.

What other taxes do Delaware corporations need to file/pay?

What other taxes do Delaware corporations need to file/pay?

Here is a partial list of taxes, other than the Delaware franchise tax, that startup corporations need to pay or file:

  • Income Tax: Both federal and state tax forms are required for startups, even unprofitable ones.
  • Gross Receipts Tax: A number of cities (such as San Francisco), will tax your Gross Revenue.
  • Franchise Tax: The DE Franchise tax is the most well known, but a startup may also owe this tax if they do business in particular states (California being a common one).
  • Payroll Tax: If you have employees, you have a payroll tax liability due regularly - do not mess this up, the cost and pain of fixing payroll tax issues is huge. 
  • Sales Tax: Many states/counties/towns now levy sales tax on goods (and sometimes services) sold to customers in their jurisdictions - getting a software to manage this is a good idea. 
  • Property Tax: Startups with significant property holdings, whether that be land, or even just computers/tables/chairs, you may be subject to property taxes. 
  • Foreign Tax: If you have a foreign subsidiary or parent company, you might be subject to withholding tax, or FBAR/5471/5472 reporting. 

Why is my DE Franchise Tax getting rejected?

These filings get rejected due to two main reasons. The first is the use of virtual mailboxes, which Delaware does not accept because they require a physical address to know where your company is actually operating from. As a last resort, the CEO can list their personal address, but this is not ideal for everyone. The second reason is bad bank accounts, such as using the wrong bank account on tax filings or not informing your accountant of changes in bank accounts, which can delay tax filings and result in late fees. Learn more about why they get rejected here.


We are the experts at helping seed/VC-backed Delaware C-Corps with their accounting and finances!

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How is franchise tax calculated in Delaware?

The Delaware Division of Corporations provides two methods to calculate Delaware franchise tax.  The first method is based on the authorized share count, and VC-backed startups with option pools can quickly get to thousands of dollars in taxes due. The second method is the “assumed par value” method and is a more complicated formula based on shares issued and the company’s gross assets. This second method often results in lower tax bills for VC-backed startups. 

If your young, unprofitable startup gets a letter stating that you owe a massive tax bill, contact your CPA - or us

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