If your company is incorporated in Delaware, paying the Delaware franchise tax is a mandatory annual requirement. This applies even if your company is inactive, pre-revenue, or operated entirely outside Delaware.
In my experience advising U.S. and international founders for over a decade, most franchise tax problems arise because founders don’t understand how to pay it correctly, not because the process itself is complicated.
This guide explains exactly how to pay Delaware franchise tax, including who needs to pay, when it’s due, how to calculate the correct amount, how to submit payment online, and what happens if you miss the deadline.
Who Needs to Pay Delaware Franchise Tax?
Before paying, confirm that your entity is subject to this tax.
You must pay Delaware franchise tax if:
- Your company is a Delaware C-Corporation
- Your corporation is active, inactive, or pre-revenue
- You raised capital or issued shares
- You are a foreign-owned company incorporated in Delaware
You do not pay corporate franchise tax if:
- Your entity is a Delaware LLC (LLCs pay a separate flat annual tax)
- The corporation was properly dissolved before the tax year
This article applies specifically to Delaware corporations, which is where most compliance issues occur.
When Is Delaware Franchise Tax Due?
For Delaware corporations:
- Deadline: March 1 of each year
- Extensions: Not available
- Filing requirement: Franchise tax and Delaware Annual Report must be filed together
If March 1 falls on a weekend or holiday, Delaware does not automatically extend the deadline. Filing late triggers penalties immediately.
Where Do You Pay Delaware Franchise Tax?
All payments are made through the Delaware Division of Corporations online filing system.
You will need:
- Your Delaware file number
- Company name
- Authorized and issued share information
- Financial data (for certain calculation methods)
Delaware does not accept franchise tax payments by mail for corporations. Payment must be made online.
Step-by-Step: How to Pay Delaware Franchise Tax
Step 1: Access the Delaware Online Filing System
Visit the Delaware Division of Corporations franchise tax filing portal and select the option for corporate annual report and franchise tax filing.
Have your file number ready, this is required to proceed.
Step 2: Choose the Franchise Tax Calculation Method
Delaware provides two calculation methods:
- Authorized Share Method
- Assumed Par Value Capital Method
Delaware automatically applies the Authorized Share Method unless you choose otherwise. This is a common and costly mistake, especially for startups with large authorized share counts.
Best practice is to calculate both methods and select the one that results in the lower tax.
Step 3: Calculate the Franchise Tax
Using Delaware’s online calculator, you’ll enter:
- Total authorized shares
- Total issued shares
- Total gross assets
- Par value (if applicable)
The system will display:
- Tax due under each method
- The minimum and maximum limits, if applicable
Always review the calculation carefully before proceeding.
Step 4: Complete the Delaware Annual Report
You cannot pay franchise tax without filing the Annual Report.
The report requires:
- Registered office address
- Names and addresses of officers and directors
- Share structure information
Errors in the annual report can cause issues later during audits, fundraising, or banking reviews.
Step 5: Submit Payment and Save Confirmation
Delaware accepts the following payment methods:
- Credit card
- Debit card
- ACH bank transfer
After payment:
- Save the confirmation receipt
- Download a copy of the filed annual report
- Store records for future compliance or due diligence
Your corporation is considered in good standing only after successful filing and payment.
How Much Is the Delaware Franchise Tax?
The amount varies widely depending on company structure.
Key points:
- There is a minimum franchise tax
- Tax increases based on share structure
- There is a maximum cap, but many companies incur high amounts before reaching it
Startups often overpay because they don’t select the correct calculation method.
What Happens If You Miss the Franchise Tax Deadline?
Missing the March 1 deadline triggers immediate consequences:
- A late penalty is applied
- Interest accrues monthly
- Your corporation may lose good standing
- Continued non-payment can result in void status
A void corporation:
- Cannot legally operate as a Delaware entity
- May face banking restrictions
- Can struggle with fundraising or contracts
Reinstatement requires paying all back taxes, penalties, and interest.
Paying Delaware Franchise Tax as a Foreign-Owned or Out-of-State Company
Delaware franchise tax applies regardless of where the business operates or where founders reside.
Important considerations:
- Franchise tax does not replace federal or state income taxes
- You may also need to register as a foreign corporation in other states
- Delaware compliance is a separate obligation
Foreign founders frequently underestimate this, leading to multi-state compliance issues.
Common Mistakes When Paying Delaware Franchise Tax
From years of handling corrections and reinstatements, these are the most common errors:
- Relying on Delaware’s default calculation
- Filing on the deadline instead of early
- Forgetting to file the annual report
- Not updating share data after fundraising
- Assuming inactive companies are exempt
All of these mistakes are preventable.
Practical Tips to Pay Delaware Franchise Tax Correctly
- Calculate both tax methods every year
- File at least 1–2 weeks before March 1
- Review share structure after equity changes
- Keep balance sheet information accessible
- Maintain good standing even if the company is inactive
Delaware compliance is predictable when managed properly.
Commenda helps businesses stay compliant with Delaware franchise tax and annual reporting from day one.
Our team supports founders, startups, and international companies by:
- Calculating Delaware franchise tax using the correct method each year
- Preparing and filing Delaware annual reports accurately and on time
- Monitoring deadlines to prevent penalties, interest, or loss of good standing
- Assisting with corrections, late filings, and reinstatements if issues arise
- Coordinating Delaware compliance with multi-state and foreign business obligations
Whether you’re an early-stage startup, a venture-backed company, or a foreign founder operating in the U.S., Commenda ensures your Delaware corporation remains compliant, investor-ready, and in good standing, without you having to navigate the complexity alone.
If you’re unsure whether your franchise tax calculation is correct, have missed a deadline, or want to set up a reliable compliance process going forward, working with a specialist early can save significant time, cost, and risk later.
FAQs: How to Pay Delaware Franchise Tax
1. How do I pay Delaware franchise tax online?
You pay it through the Delaware Division of Corporations online filing system by submitting the annual report and franchise tax together.
2. Can I pay Delaware franchise tax without filing the annual report?
No. For corporations, the annual report and franchise tax must be filed and paid at the same time.
3. What is the deadline to pay Delaware franchise tax?
The deadline is March 1 each year. Delaware does not offer automatic extensions.
4. Can I pay Delaware franchise tax late?
Yes, but penalties and interest apply immediately. Late payment is significantly more expensive than paying on time.
5. What payment methods does Delaware accept?
Delaware accepts credit cards, debit cards, and ACH bank transfers through its online system.
6. How do I know how much Delaware franchise tax I owe?
You must calculate the tax using Delaware’s online calculator and compare both available calculation methods.
7. Do I still have to pay if my company is inactive?
Yes. Inactive Delaware corporations are still required to file and pay franchise tax.
8. Do foreign founders have to pay Delaware franchise tax?
Yes. Franchise tax applies regardless of founder nationality or company operating location.
