Startup Lawyer | Delaware Franchise Taxes
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Delaware Franchise Taxes

Posted 06 Jan 2012

If you haven’t already received your Delaware franchise tax statement in the mail, then it’s probably on the way.

You have to give credit to Delaware — they make paying your corporation’s franchise taxes “thrilling.”

For example, if you authorized 10,000,000 shares of common stock in your certificate of incorporation, you will receive a franchise tax bill stating “$75,075″ as the amount owed. This total is computed based on your startup’s number of authorized shares.

But it’s a good thing for your startup that Delaware offers an alternative way to compute your franchise tax bill: the “Assumed Par Value Capital Method.”

This was the topic of a post I wrote 2 years ago titled “The Delaware Freak-Out.” If you have a startup that is incorporated in Delaware, it’s probably a good time to revisit that post.

2 Comments
  • Where should I incorporate? : The Nelson Law Chambers
    Posted at 00:17h, 13 January Reply

    [...] Delaware franchise taxes—You will have to pay these. Some states do not have franchise taxes, but Delaware does. If you structure your company properly then these taxes should not be too high, but they are still another cost of choosing Deleware. Ryan Roberts discusses Delaware franchise taxes on his Startup Lawyer blog here. [...]

  • Taron
    Posted at 15:28h, 05 April Reply

    Hey Ryan,

    Thank you for all the wonderful posts, especially the “startup cheatsheet.” Our startup is not venture backed and we are from California, do you recommend incorporating in Delaware? I am asking because we have to pay the $800 in California again for operating as a foreign business, so should we incorporate in California? Thank you.

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