What is the Delaware franchise tax?

The Delaware franchise tax is an annual tax that all entities formed in Delaware must pay to maintain their legal existence.

For C-Corps, the minimum is $400 per year (due March 1), calculated using either the Authorized Shares Method or the Assumed Par Value Capital Method. Most startups with 10,000,000 authorized shares at $0.00001 par value owe the $400 minimum under the Assumed Par Value Capital Method. For LLCs, the annual tax is a flat $300 (due June 1). This tax is owed regardless of whether your company earns revenue or operates in Delaware. Failure to pay results in penalties ($200 late fee plus 1.5 percent monthly interest) and eventual voiding of your entity. The franchise tax is separate from federal income tax and Delaware state income tax.