What is the Delaware Franchise Tax?

The Delaware Franchise Tax is an annual tax that all businesses incorporated in Delaware must pay, regardless of whether they are actively conducting business operations in the state. This tax is determined based on the company's structure, including its share capital or assets. It's worth noting that the franchise tax can be calculated using two different methods, and businesses have the option to select the method that leads to a lower tax liability.

Explanation of the Two Calculation Methods:

  1. Authorized Shares Method: This method calculates the franchise tax based on the number of authorized shares the company has.
  2. Assumed Par Value Capital Method: In contrast, this method uses the assumed par value capital to determine the franchise tax amount.
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