Delaware Franchise Tax: Deadlines, Amounts, and How Not to Overpay

Written by CA Sumit ChandwaniChartered Accountant & Founder · Reviewed by Minal Bihani, EA

Franchise tax is Delaware's price of admission. It has nothing to do with income.

LLCs: flat and simple

Delaware LLCs (and LPs) pay a flat $300 annual tax, due June 1 every year. No annual report, no calculation. Miss it and a $200 penalty plus monthly interest attaches, and your LLC loses good standing — which quietly breaks bank compliance checks and closings.

Corporations: two methods, wildly different bills

Delaware corporations file an annual report and pay franchise tax by March 1. The tax is calculated under whichever of two methods you choose:

• Authorized Shares Method — based purely on how many shares you've authorized. Cheap for small share counts, brutal for startups with 10,000,000 authorized shares.
• Assumed Par Value Capital Method — based on issued shares and gross assets. For most startups this reduces the bill to a few hundred dollars, with a $400 minimum.

What happens if you ignore it

Penalties and 1.5% monthly interest stack, the state voids your charter after prolonged non-payment, and reviving a voided entity costs more than compliance ever would. Investors and banks check good standing routinely.

If you've stopped using the company

Franchise tax accrues until you formally dissolve or cancel. Walking away doesn't end it — filing a certificate of cancellation (LLC) or dissolution (corporation) does.

The bottom line

LLC: $300 by June 1. Corporation: report + tax by March 1, and always run the assumed par value method before paying. MOREOFTAX tracks these deadlines for clients and files the reports as part of ongoing compliance.