Authorized shares method
In accounting, authorized shares method means the default Delaware franchise tax calculation, from the number of shares the charter authorizes: $175 for 5,000 shares or fewer, $250 for 5,001 to 10,000, and $85 for each further 10,000 or part of 10,000, up to $200,000. It is what Delaware's notice computes, and for a startup with millions of authorized shares it runs to five figures.
Authority: Delaware Division of Corporations — franchise tax (opens in a new tab). Sources
The lesson that teaches this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- First-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
- Startup tax deadlines by month for a C-corpFederal tax deadlines for a calendar-year C-corp, month by month: W-2s, 1099s, Form 941, Form 1120, estimated taxes and Delaware franchise tax.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- assumed par value capital method
- the franchise tax (the lower of the two methods is the tax)
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
Also in Tax
Defined in Lexicon. This page is generated from that document, so the two can't disagree.