If you have a startup incorporated in Delaware, this is franchise tax season. Your franchise taxes for 2015 are due by March 1. Before you do anything, you need to read this post.
There are two methods of calculating your franchise tax, and this is really important – Delaware allows you to choose the method that results in the LOWER tax. So you absolutely need to run your numbers through both methods, using the handy calculator that you can access here, using the calculator at the bottom of the page. We’ll run some typical numbers, so you can see how radically different the results are. Let’s say you have 10 million authorized shares, par value $0.0001, and have issued 7 million to founders. Your company has gross assets of $25,000. If you use the Authorized Shares Method, your franchise tax will be $75,175. No, that’s not a typo. Now plug your numbers into the Assumed Par Value Capital Method. Under this method, your franchise tax will be $350. That’s a huge difference. I just saved you $74,825. You’re welcome!
I can save you even more money. If your registered agent sent you the notice about your franchise tax, they probably offered you their service for paying the tax. Of course they charge a fee for that service. You don’t have to use it, however. You can pay your taxes directly, at this link. Just make sure you try both methods to calculate your tax, and use the method that results in the lower number.
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