Delaware

To register an entity in Delaware file certificate of formation or incorporation with the SOS. You must download the form and fill it out from https://corp.delaware.gov/formsentitytype09/ . Once filled out, upload the form using the document upload system (down on weekends) at https://icis.corp.delaware.gov/ecorp2/ . The state will mail it back with the acceptance stamp or contact with the reason for rejection. By March 1st the Annual Report with the franchise tax payment is due. It can be filed at: https://corp.delaware.gov/paytaxes/ .

Franchise Tax Calculation

Delaware allows for 2 methods to figure out your franchise tax - authorized shares and assumed par value capital. Authorized shares is simply based on the number of issued shares. $175 for the first 5,000 ; $250 if between 5,000 and 10,000 and $85 for every 10,000 additional shares. So if the company has 10mm shares, ((10,000,000 - 10,000) / 10,000 ) *85 +250 = $85,165. But is there a way to keep 10mm shares and yet not pay that much franchise tax? Fortunately, yes. Assumed par value takes the total assets at the end of the year, divides by number of issued shares (assuming all shares have the same value) multiplies by number of issued shares that have a low par value than the ratio of assets and issued shares and divides that by 10mm and multiplies by 4. So, with $100 assets and 10,000,000 shares your franchise tax will be ((100/10,000,000)*10,000,000)/10,000,000 * 4 = 0.00004. Since there is a minimum of $400, the actual tax will be $400 + $50 filing fee. Being a popular hub for high-tech investors and startups, it is important to mention that when an entity is formed for the sole purpose of attracting investments and take advantage of the court system in the state, the entity does not typically owe any state income or revenue tax as long as it has no activity in Delaware. And as long as it files the annual report and pays the franchise tax the entity is in a good standing with the state.