Filing Your Delaware Annual Report and Paying Franchise Taxes

Please note: This information is provided for guidance purposes to help you understand the process of filing a Delaware corporation's annual report. Every business situation is unique, and laws can change. While I’ve made every effort to provide accurate information, you should verify current requirements and consider consulting with an attorney or business advisor to review and ensure compliance with all applicable laws and regulations.

Skip to How to File Your Annual Report for step-by-step instructions on filing a Delaware annual report and paying franchise taxes.

Introduction

It's that time of year again. While you're focused on starting the New Year strong, there's an important, but easy to complete, administrative task that can't fall through the cracks: filing your annual report and, if applicable, paying your annual franchise tax.

If your company is incorporated in Delaware, you have a firm deadline of March 1 to file your annual report and pay your annual franchise tax. Miss this deadline, and you will face a $200 penalty plus 1.5% interest per month on any unpaid taxes. Continued non-payment can void your corporate charter entirely, stripping your company of its legal standing.

Fortunately, this requirement is straightforward once you understand what's needed, and this article should have everything you need to know to stay compliant and keep your Delaware company in good standing.

What is an Annual Report

Delaware's annual report is a legal filing that for-profit corporations must submit each year to maintain their active status with the state. The report provides basic information about your company's structure, officers, and directors.

Alongside this report, Delaware corporations must pay a franchise tax, a fee for the privilege of being incorporated in Delaware, regardless of whether they do any business in the state or generate any revenue.

The franchise tax can range from $175 to $200,000. How much you pay depends on which calculation method you choose:

• Authorized Shares Method: Based solely on the number of shares your corporation is authorized to issue. The minimum tax using this method is $175.

• Assumed Par Value Capital Method: Based on your gross assets and issued shares. The minimum tax using this method is $400.

  
  

For most startups that have authorized millions of shares, the Assumed Par Value Method will result in a lower tax, often just the $400 minimum, if your total assets are modest.

Note: Delaware LLCs and Limited Partnerships have different requirements. They pay a flat $300 annual tax due June 1 and don't file an annual report.

Why File an Annual Report

Delaware requires all corporations incorporated in the state to file their annual report and pay franchise tax by March 1 each year. This applies regardless of whether your company operates in Delaware, has any employees, or has generated any revenue.

This matters because your company's good standing status depends on it, and not being in good standing means:

• You can't obtain a Certificate of Good Standing, which is often required for fundraising, opening bank accounts, and closing business transactions

• Investors and lenders will raise red flags during due diligence

• Your corporate veil protection could be compromised

• After more than one year of non-payment, Delaware can void your corporate charter entirely

The penalties add up quickly, too. The $200 late fee plus 1.5% monthly interest might seem manageable at first, but it compounds fast. More importantly, the operational disruptions from losing good standing can delay critical business activities.

How to File Your Annual Report

Filing your Delaware annual report and paying franchise tax is done entirely online through the Delaware Division of Corporations website. Here's your step-by-step guide:

Step 1: Access the Filing Portal

Go to https://corp.delaware.gov/paytaxes/  and log in using your company's information. You'll need your company's Delaware file number (this is on any official Delaware correspondence or can be found by searching the Delaware business entity database).

Step 2: Select "File Annual Report"

Click "File Annual Report" for the current tax year (2025 if you're filing by March 1, 2026).

Step 3: Complete the Annual Franchise Tax Report

You'll see a form with several sections to complete:

Federal Employer ID Number: Enter your EIN.

Stock Information: You'll need your Cap Table here. You need to know:

• Issued Shares: The actual number of shares that have been issued to founders, employees, and investors (not just authorized shares)

• Authorized Shares: The total number of shares your corporation is authorized to issue per your certificate of incorporation

Gross Assets: Enter the total assets as reported on U.S. Form 1120, Schedule L (your Federal Tax Return). If you haven't filed your federal return yet, use your best estimate based on your most recent balance sheet.

Fiscal Year-End Date: Most companies use December 31^st as their fiscal year-end, but enter the date your company uses.

Dates of Inactivity: Note any periods when the company was inactive during the year (most startups will leave this blank).

Nature of Business: Starting in 2025, Delaware requires you to select a business category that describes your company's operations. Choose the option that best fits your business from the dropdown menu provided.

Step 4: Calculate Your Franchise Tax

After entering your stock and asset information, click "Recalculate Tax." The system will calculate your tax using both methods and display the lower amount. The default calculation shown when you first open the form is typically $180,000 (the maximum), but don't panic; this will adjust once you enter your information.

For most early-stage startups with modest assets, you'll pay either $175 (if you have 5,000 or fewer authorized shares) or $400 (using the Assumed Par Value Method).

Step 5: Complete Company Information

Fill in the remaining required fields:

Principal Place of Business: Your company's main business address, phone number, and email

Appointed Officers: Name, title, and address for each officer (typically CEO, CFO, Secretary)

Directors: Name and address for each member of your board of directors

Authorization: Date, name, title, and address of the person authorizing the filing (usually the CEO or another officer)

Step 6: Review and Submit

Carefully review all the information you've entered. Errors can cause delays and complications, so double-check addresses, share numbers, and names for accuracy.

Read the terms and conditions, check the box confirming you've done so, and click "Continue Filing."

Step 7: Pay the Filing Fee and Franchise Tax

You'll be prompted to pay the $50 filing fee plus your calculated franchise tax. Payment can be made via credit card or ACH transfer (required for amounts over $5,000).

Once your payment is processed, save a copy of the confirmation for your records.

Don't Forget Foreign Qualifications

Finally, if your company is registered as a foreign entity in other states (meaning you're doing business in states outside of Delaware), you'll need to file annual reports in those states as well. Each state has its own deadlines and requirements, so you should make sure you're tracking them all.

The deadline is March 1. Don't wait until the last minute and file early to avoid any technical glitches or last-minute issues.