2026 tax year
Forming in Delaware
Delaware bills the expensive franchise tax method by default.
Forming in Wyoming, Delaware or Nevada does not remove tax or registration obligations in the state where your business actually operates. An out-of-state entity doing business in its owner's state must usually register there as a foreign entity and pay that state's taxes anyway.
Delaware is where most American public companies are incorporated, and that fact does a great deal of work in marketing aimed at people running one-person businesses. The two situations have almost nothing in common.
What Delaware actually charges is straightforward and, for a small company, modest. An LLC pays a flat annual tax and files no annual report at all. A corporation files a report and pays franchise tax, and that is where the trap is.
What Delaware charges
| State | Entity | Formation | Foreign registration | Annual report | Annual tax |
|---|---|---|---|---|---|
| Delaware | LLC | $110 | $200 | none required | $300 |
| Delaware | Corporation | $109 minimum | $245 | $50 | not established |
The franchise tax method Delaware does not choose for you
Delaware calculates corporate franchise tax two ways and bills you under the one based on authorized shares. For a company with a few thousand shares that produces a small number. For a startup with ten million authorized shares and a modest balance sheet it produces tens of thousands of dollars.
The alternative, the assumed par value method, calculated from what the company is actually worth, usually produces a fraction of that. Delaware is not obliged to work it out for you, and the bill that arrives will not mention it. You elect it when you file the annual report.
This is the single most expensive thing a founder can not know about Delaware, and it has nothing to do with whether Delaware was the right choice in the first place.
What it costs you to use Delaware
Set where you live and where the work actually happens. The comparison keeps your operating state's obligations on every column, which is the whole point, because those do not go away when you form somewhere else.
What decides the numbers
Registered agent prices are a typical market range, not an official fee. Acting as your own agent needs an address in that state, so it is only offered where you live or work.
What changes the warnings, not the arithmetic
Set your states and figures above, then press Compare.
Questions
Do I need a Delaware entity to raise money?
Investors often have preferences about structure, and those preferences are a conversation with them and with a lawyer rather than a number on this page. This calculator measures cost, and cost is not the reason anyone incorporates in Delaware.
Delaware has no sales tax. Does that help me?
Only if you are selling into Delaware. Sales tax follows where the customer is, not where the entity was filed, and this site does not compute sales tax at all.
Is the LLC annual tax the same as the corporation franchise tax?
No, and mixing them up is expensive in both directions. A Delaware LLC pays a flat annual tax and files no report. A Delaware corporation files a report and pays franchise tax computed on one of two methods.
Related
- Compare every state
- Forming in Wyoming
- Forming in Montana or South Dakota
- Delaware franchise tax calculator
- Sole proprietor, S corp or C corp?
General information about what states charge, not tax advice. And not legal advice either. Choosing where and how to form a business involves legal questions beyond cost. Take advice before filing.