Delaware franchise tax

In accounting, delaware franchise tax means the annual tax every Delaware corporation owes for the privilege of being incorporated there, whether or not it does business or makes money there — the lower of the authorized shares methodTaxAuthorized shares methodThe 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 and the assumed par value capital methodTaxAssumed par value capital methodThe alternative Delaware franchise tax calculation: assumed par (total gross assets ÷ issued shares) times authorized shares, taxed at $400 per $1,000,000, minimum $400 — usually far below the authorized shares method for a startup with millions of authorized shares, minimum $175 or $400, maximum $200,000, due with a $50 annual report by March 1 and prorated in the first year.