Delaware Corporation Filings
The Delaware Corporation. More corporations are formed in Delaware than any other state in the country, and for good reason. Delaware corporations benefit from numerous tax advantages and clear state corporate laws laid out by the DE Court of Chancery. Business filings in Delaware are more streamlined than many other states, and maintenance and compliance are straightforward.
Perhaps more than any other advantage, though, is the prestige that comes with owning and managing a Delaware corporation. Delaware is home to hundreds of the most success and profitable corporations in the world, including numerous Fortune 500 companies. This truly is one of the great business capitals of America.
Advantages of the Delaware Corporation
Delaware provides numerous tax advantages for every Delaware corporation. There is no sales tax, no income tax, no inheritance tax for nonresidents, and no ad valorem tax in Delaware. The corporate tax is relatively low, at 8.7%. These various tax advantages make it generally cheaper and more affordable to do business as a corporation in Delaware than in other states.
Low Fees for Small Businesses
If you are starting a small business in Delaware, you may find that your annual compliance costs are lower as a Delaware corporation than as an LLC. A limited liability company pays an Annual Tax of $300. Small corporations with less than 1500 shares of authorized stock can qualify for the minimum Franchise Tax ($175). Added to the Annual Report fee ($50), this means a small corporation’s annual fee can be as low as $225.
Court of Chancery
Delaware corporations benefit from the existence of the Delaware Court of Chancery. The Court of Chancery is the oldest business court in the country, and its business laws have long set the precedent for other courts throughout the nation. This long-standing history has brought a high degree of stability in the realm of corporate law. A Delaware corporation can almost always have a good indication of how corporate litigation will play out because there are so many former decisions in the Court of Chancery’s history to look at for guidance.
Form a Corporation in Delaware
Select a Name for Your Corporation
The name of your corporation must adhere to state law. It cannot be the a name already used by another business entity in Delaware, unless otherwise permitted by written consent.
File Certificate of Incorporation
In accordance with the General Corporation Law of the State of Delaware, a corporation must file a Certificate of Incorporation with the Division of Corporations. The filing fee is a minimum of $109. Documents with more than one page are charged an additional $9 per page. The total cost for a Delaware incorporation is dependent upon the total capital authorized by the corporation (see below).
Hire a Registered Agent
Under Del. Code tit. 8, c. 3 § 131, all corporations are required by law to designate a Delaware registered agent in order to complete a Delaware incorporation. A registered agent receives service of process (notice of litigation) and other important business mail on behalf of clients.
File Federal Beneficial Ownership Information Report
Starting January 1, 2024, most newly-formed corporations are required to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) after company formation. On your report, you’ll need to disclose some basic details about your company and those with the most control over your corporation’s profits and operations. Save yourself from the additional paperwork with our $9 BOI report filing service.
|Formation Document||Delaware Certificate of Incorporation|
|Filing Cost||$109 minimum (additional fee based on capital)|
|Our Fee||$234 minimum|
|Government Agency||Delaware Division of Corporations|
|Expedite Options||$50 (24-Hour) / $100 (Same-Day)|
|Name Reservation||Delaware Name Reservation Application|
|Annual Report Due Date||March 1|
|Franchise Tax Fee||$175 minimum (based on authorized stock)|
|State Corporate Tax||8.7%|
How Do I Calculate the Delaware Incorporation Filing Fee?
To form a corporation in Delaware, you must pay the filing fee to the Division of Corporations, which is calculated based upon the amount of capital a corporation possesses. Capital is the total number of authorized shares multiplied by the par value (PV is not the actual value of the stock, but the lowest amount for which it can be sold).
Because the calculations are quite complicated, the Division of Corporations created online calculators to help corporations determine how much they owe (see links above).
The minimum possible fee to form a corporation in Delaware is $109.
What is the Delaware Corporation Franchise Tax?
After a Delaware Corporation filing is complete, companies will pay a Franchise Tax each year. Though this fee is paid with a corporation’s Annual Report, it is technically a different expense.
The minimum amount owed for FT is $175 (a Delaware LLC, by comparison, pays a flat fee each year).
There are two methods for calculating the FT: the Authorized Shares Method, and the Assumed PV Method. See our page on Delaware Tax to learn more.
Authorized Shares and Par Value For Delaware Corporations
The amount of stock you authorize and the PV you assign will have an effect in two ways:
- The amount you owe to file the Certificate of Incorporation
- The amount you owe each year in FT
Many corporations make the mistake of authorizing huge numbers of shares (literally millions of shares of stock), only to discover that they owe hundreds of thousands of dollars for incorporation and tens of thousands of dollars each year in taxes. Had they authorized a couple hundred shares instead, their tax burden would be a mere few hundred dollars. Understanding how authorized shares and PV effect your corporation and taxes is critical to proper Delaware incorporation.
It is possible to change the amount of authorized stock at any time by filing a Delaware Corporation Certificate of Amendment.