The annual deadline for Delaware Franchise Tax is March 1. If you still haven’t taken care of yours, don’t worry — it’s a straightforward process you can tackle yourself with a little guidance.

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Who needs to pay the Delaware Franchise Tax?

If your company is incorporated in Delaware, you must file the “franchise tax and annual report” every year, even if you haven’t generated revenue or turned a profit yet.

In short: if Delaware is your company’s incorporation home, you owe the franchise tax. There’s no way around it, but thankfully, the filing process is simpler than it seems.

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How to pay the Delaware Franchise Tax?

If you have a tax preparer, check if this filing is included in their services. Many providers handle it free of charge (for example, Pilot Tax subscribers get this filing included). If not, or if you’re handling it last minute, you can DIY it with ease. Here’s a step-by-step guide to help you through the process.

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Step 1: Visit Delaware’s Filing website

Go to Delaware’s Franchise Tax filing website and click “Pay Taxes / File Annual Report.” Enter your business details when prompted. If you don’t know your Business Entity File Number, use the search tool to locate it. Double-check your entries to avoid paying someone else’s tax!

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Step 2: File your annual report

Once logged in, you’ll see a potentially large “Amount Due” (it could show $10,000+). Don’t panic! The system defaults to calculating taxes using the “Authorized Shares” method, which isn’t ideal for most startups.

Here’s how to minimize your tax liability:

• Authorized Shares Method: Based on your company’s total authorized shares. This calculation often results in higher taxes.
• Assumed Par Value Method: Based on your issued shares and gross assets. This usually results in much lower taxes for early-stage startups. The minimum tax using this method is $400. This is the method you’ll almost certainly want to use.

Select the Assumed Par Value Method to lower your tax amount. For details on both methods, see Delaware’s Franchise Tax website.

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Step 3: Enter stock and asset information

Fill out the stock table with:

• Issued Shares: The total number of shares your company has issued (not authorized). If you’re unsure, check your cap table.
• Gross Assets: Use the “Total Assets” figure from your year-end balance sheet (likely your bank balance as of December 31). If you have questions, confirm this number with your accountant.

Click “Recalculate Tax” to update the amount due. Most startups will end up paying the $400 minimum tax plus a $50 filing fee.

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Step 4: Provide Business and Officer details

Enter your company’s principal business address (not your Delaware agent’s address) and provide the names and contact details of:

• One corporate officer (e.g., your CEO).
• Your board of directors (check your incorporation documents if unsure).

Once everything is complete, submit your filing and pay the tax online.

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Why filing on time matters

Filing and paying your Delaware Franchise Tax on time ensures your company remains in good standing with the state. Missing the deadline could lead to penalties, interest fees, or even jeopardizing your incorporation status.

For early-stage startups, the typical tax amount is $400 per $1 million in gross assets, plus the $50 filing fee. This small investment secures your legal foundation for another year.

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Can a Tax preparer handle this for you?

Some providers charge for this service, but you’ll still need to gather all the details yourself. Instead of paying extra, you can file it on your own with minimal effort.

However, if you already work with a full-service tax provider, check if this is included (e.g., Pilot Tax subscribers get it free of charge).

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Lazo can simplify the process and ensure you're fully compliant. Book a consultation today.

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Don’t forget: Federal Tax Deadlines are next

Filing your Delaware Franchise Tax is just one part of tax season. With the federal corporate income tax deadline approaching, now’s the time to ensure you’re fully prepared.

If you don’t have a tax preparer yet, avoid the last-minute rush and line one up today.

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Reach out if you have any doubts

Confused about any step in the process? Don’t hesitate to reach out — our team at Lazo is here to help.

Book a free consultation and get the support you need to keep your startup compliant and focused on growth.