Find answers to your Delaware Annual Report & Franchise Tax questions.
What is the Delaware Annual Report and Franchise Tax?
How much is the Franchise Tax?
When are annual reports and franchise taxes due?
How do I file the annual report and pay the franchise tax with Mosey?
What is the Delaware Annual Report and Franchise Tax?
All corporations incorporated in the State of Delaware (learn more about incorporation state vs home state) are required to file an Annual Report and pay a Franchise Tax every year by March 1.
A franchise tax is not the same as a corporate income tax. Corporations incorporated in Delaware but not conducting business in Delaware are not subject to corporate income tax, but do have to pay Franchise Tax administered by the Delaware Department of State.
How much is the Franchise Tax?
Delaware offers two ways to calculate the franchise tax: Authorized Shares Method, and Assumed Par Value Capital Method. You can use the method that results in the lesser tax. Your tax obligation will never be less than $175 or more than $200,000. When using Mosey to file, Mosey always calculates your franchise tax obligation using the method that results in the lesser tax.
Authorized Shares Method: This amount is calculated based on your company's total number of authorized shares:
- 5,000 shares or less: $175
- 5,001 - 10,000 shares: $250
- Over 10,000 shares: an additional $85 for every 10,000 shares
Example: If your company has 35,000 shares, your franchise tax obligation would be $505. This breaks down to $250 for the first 10,000 shares, and $85 for each set of additional 10,000 (or partial set).
Assumed Par Value Capital Method: To use this method, you must give figures for all issued shares (including treasury shares) and total gross assets in the spaces provided in your Annual Franchise Tax Report. Total Gross Assets shall be those “total assets” reported on the U.S. Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report. The tax rate under this method is $400.00 per million or portion of a million. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $400.00.
💡 In many cases, businesses will outline the share par value in their articles of incorporation.
Example: Your corporation has 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares of stock with a par value of $5.00 , gross assets of $1,000,000.00 and issued shares totaling 485,000.
- Divide your total gross assets by your total issued shares carrying to 6 decimal places. The result is your “assumed par”.
Example: $1,000,000 assets, 485,000 issued shares = $2.061856 assumed par. - Multiply the assumed par by the number of authorized shares having a par value of less than the assumed par. Example: $2.061856 assumed par s 1,000,000 shares = $2,061,856.
- Multiply the number of authorized shares with a par value greater than the assumed par by their respective par value. Example: 250,000 shares $5.00 par value = $1,250,000
- Add the results of #2 and #3 above. The result is your assumed par value capital.
Example: $2,061,856 plus $1,250,000 = $3,311,856 assumed par value capital. - Figure your tax by dividing the assumed par value capital, rounded up to the next million if it is over $1,000,000, by 1,000,000 and then multiply by $400.00.
Example: 4 x $400.00 = $1,600.00 - The minimum tax for the Assumed Par Value Capital Method of calculation is $400.00.
When are annual reports and franchise taxes due?
The annual report and franchise tax is due on March 1.
How do I file the annual report and pay the franchise tax with Mosey?
Mosey can assist you in filing your annual report and franchise tax via automation. To get started:
- Navigate to Location > Delaware
- Once in Delaware, click the "Recurring" tab option across the top
- Locate the "Delaware Annual Report and Franchise Tax" task on that list
- Select the option to Automate with Mosey
- Complete the following form and click "Submit"
When calculating your franchise tax obligation, Mosey will calculate the tax using the method that results in the lesser tax owed.
Mosey will automate your filing request and pay all state fees. Mosey will send you an invoice for these passthrough fees along with confirmation of completion. In order to complete automation through Mosey, you must have a valid payment on file.