Delaware franchise tax for startups: how to pay $400, not $85,000

A Delaware C corporation owes franchise tax and a $50 annual report every year by March 1. Delaware's default bill uses the Authorized Shares method, which charges a startup with 10,000,000 authorized shares $85,165. Filing with the Assumed Par Value Capital method instead, using your gross assets and issued shares, usually brings it down to the $400 minimum.

Updated September 30, 2026 · 4 min read · By the Accountable team

The short version

Every Delaware corporation files an annual report and pays franchise tax by March 1; the report fee is $50.
The Authorized Shares method costs $175 for 5,000 shares or less, but $85,165 for the 10,000,000 shares most startups authorize.
The Assumed Par Value Capital method starts at $400 and uses your total gross assets and issued shares at December 31.
Delaware charges whichever method you file under, so you choose the lower one by entering gross assets and issued shares in the annual report.
Filing late costs a $200 penalty plus 1.5% interest a month on the tax and penalty.

Why Delaware's notice says you owe tens of thousands of dollars

Delaware sends every corporation a notice computed with the Authorized Shares method, because it is the only method Delaware can compute without your numbers. It charges by how many shares your charter authorizes, not by how big your company is.

Startups usually authorize 10,000,000 shares or more at formation so they can issue founder stock and an option pool. Under this method that count alone produces a five-figure bill, even for a company with no revenue.

Authorized Shares method, from Delaware's published rates
Authorized shares	Franchise tax
5,000 or less	$175 (the minimum)
5,001 to 10,000	$250
Each further 10,000 or part of it	Add $85
10,000,000	$85,165
Maximum	$200,000

How the Assumed Par Value Capital method works

This method taxes the value your balance sheet supports. You need two numbers from December 31 of the tax year: total gross assets (everything on the balance sheet, the same figure as your federal return's Schedule L) and the number of shares issued.

Step 1: Divide total gross assets by issued shares. The result is the assumed par value per share.
Step 2: If the assumed par is higher than your stated par value, multiply it by your authorized shares. If it is lower, use the stated par value for those shares instead.
Step 3: The total is your assumed par value capital. Round it up to the next $1,000,000.
Step 4: Divide by $1,000,000 and multiply by $400. The minimum is $400 and the maximum is $200,000 ($250,000 for large corporate filers).

Worked example: a seed-stage startup

Authorized shares: 10,000,000 at $0.00001 par. Issued shares: 8,000,000.

Total gross assets at December 31: $1,000,000.

Assumed par: $1,000,000 ÷ 8,000,000 = $0.125 a share.

Assumed par value capital: 10,000,000 × $0.125 = $1,250,000, rounded up to $2,000,000.

Tax: 2 × $400 = $800, plus the $50 annual report = $850 instead of $85,215.

A company with under about $1,000,000 in gross assets and most of its authorized shares issued lands on the $400 minimum. The fewer shares you have issued compared with authorized, the higher this method runs, so check both methods each year.

What to file by March 1, step by step

Step 1: Close your books for December and pull total gross assets from the December 31 balance sheet.
Step 2: Count issued shares at December 31 from your cap table, including all founder and employee stock that has been issued.
Step 3: Sign in to Delaware's online annual report with your company's file number.
Step 4: Enter total gross assets and issued shares in the annual report. Delaware recalculates the tax with the Assumed Par Value Capital method.
Step 5: List your officers and at least one director, then pay the tax and the $50 fee.

If you owe $5,000 or more, Delaware wants estimated payments: 40% by June 1, 20% by September 1, 20% by December 1 and the rest by March 1.

Delaware LLCs pay a flat $300 by June 1

A Delaware LLC, LP or GP does not file an annual report. It pays a flat annual tax of $300 due June 1, with a $200 penalty and 1.5% monthly interest if it is late. Founders who run a holding LLC and an operating C corporation owe both: $300 in June for the LLC and the franchise tax in March for the corporation.

Questions founders ask

Why is my Delaware franchise tax so high?

Delaware's notice uses the Authorized Shares method, which charges by authorized share count. With 10,000,000 authorized shares it comes to $85,165. Recalculate with the Assumed Par Value Capital method by entering gross assets and issued shares in your annual report.

What is the minimum Delaware franchise tax?

$175 under the Authorized Shares method (5,000 shares or less) and $400 under the Assumed Par Value Capital method, plus the $50 annual report fee.

When is Delaware franchise tax due?

March 1 every year for corporations, covering the calendar year before. Delaware LLCs pay their $300 tax by June 1.

What happens if I pay the Delaware franchise tax late?

Delaware adds a $200 penalty plus 1.5% interest a month on the tax and the penalty. A company that stays unpaid long enough loses its good standing.

Where do I get total gross assets?

From your balance sheet at December 31: total assets, the same number as Schedule L of your federal return. Closed, reconciled books make this a two-minute lookup.

Your gross assets, ready on January 1

Accountable closes December by itself, so total gross assets for the annual report are on your balance sheet the day the year ends, and your CPA gets the tax package in one click.

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Sources, checked September 30, 2026: