30.2.3: Archived - Delaware Organization Franchise Tax

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Abstract

Each state exacts a one-time filing fee and an annual franchise tax in consideration of its grant of limited liability to corporations domesticated in that state. These expenses may appear trivial to someone intent on organizing a multimillion-dollar enterprise, but a few hundred dollars is no joke to many start-ups. While a limited liability company does require a central filing with the state secretary and the payment of a fee, the fees are more modest than those charged for the limited liability afforded to those operating in the corporate form. The annual franchise tax in Delaware is a prime source of heart failure for entrepreneurs having organized Delaware corporate entities and authorized the deemed necessary amount of shares... say, 15,000,000. See "Note on Number of Authorized Shares". The problem is that, on its face, the franchise tax is calculated on the number of authorized shares which, given...