Delaware Franchise Tax- Instructions for Calculating

Assumed Par Value Capital MethodWith this method your Delaware Franchise Tax bill is calculated based on issued shares, authorized shares and total gross assets. 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. 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.

How to Use the Assumed Par Value Capital Method

1. Your corporation will owe an estimated $85 for each 10,000 shares authorized.
2. Typically, this corporation is better off to use the second calculation option.
3. So if your Delaware corporation has a million authorized shares, your annual franchise tax will be approximately $7,500.
4. Authorized Share Method5000 shares or less, pay the minimum $175 tax.5001 to 10,000 shares pay $250 tax.For each additional 10,000 shares, add $75 to the tax total, with a maximum franchise tax of $180,000.
5. There are two methods that corporations can figure their annual franchise tax.
6. For more help with tax and compliance matters, see How can my corporation get help complying with Delaware’s requirements?.

Simply report your corporation’s total gross assets and the number of shares issued when completing the online filing. Authorized Share Method5000 shares or less, pay the minimum $175 tax.5001 to 10,000 shares pay $250 tax.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.

How to figure out your corporate franchise tax in Delaware:

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. You can calculate your corporation’s franchise tax using the Assumed Par Value Capital Method when you file the annual franchise tax report on the Delaware Division of Corporations website.

DE Annual Franchise Tax:

The minimum tax when using this method is $175, and the maximum tax is $200,000. For more help with tax and compliance matters, see How can my corporation get help complying new pcori fee released with Delaware’s requirements?.

This method calculates the tax based on your corporation’s total 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.