Delaware Franchise Tax Calculator

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

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.

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.

12/31/XX (most often)

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.

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.

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.