Delaware Stock Structure

By Michael Banner - Jul 30, 2012     

 

When forming a corporation in Delaware, you must first determine the number of

authorized shares of stock and the par value of each share.

 

Keep in mind that the state assesses a “capital” value on the shares based on these two variables that could increase the filing fee you will pay at time of formation and later when your franchise tax bill comes do each year.

Minimum Fee

The state charges a $15 tax, which is part of the $89 total filing fee.  This $15 tax is based on an assessed “capital” valuation of $75,000 or less.   Again, this is determined by the par value of each share of stock and the total authorized shares of stock. 

 

If stock has a par value

The state has set up a handy spread sheet to help you calculate the “Capital” Value of the shares:  Use Calculator

 

For the purpose of computing the tax on par value stock each $100 unit of the authorized capital stock shall be counted as 1 taxable share.

 

If stock has no par value

If your stock has no par value, use the following method to come up with the tax:

If less than 20,000 shares (at no par value) = $0.01 per share

The next 20,001 to 2,000,000 shares = $0.005 per share (+$200)

Additional shares over 2,000,000 = $0.004 per share (+$10,100)

 

In no case shall the amount paid be less than $15.

 

1,500 shares at no par value = $15 (the minimum)

The state also provides a calculator for no par: Use Calculator

 

Annual Franchise Taxes

These are the taxes assessed each year (on March 1st) based upon the corporation's stock structure. See Annual Franchise Taxes for more information.

Similar Pages

Delaware State Info – More details on stock structure, annual filing requirements, and more

How to decide on number of authorized shares

About Michael Banner
  CEO & Founder of SmallBiZ.com, created over seventeen years ago to help small business owners simplify the process of starting & managing their small businesses. SmallBiZ.com now serves over 10,000 businesses per year with various filing and subscription services; in addition to the 1000's of daily visitors to www.smallbiz.com, accessing free services, help pages, & educational videos & webinars.


Connect with Michael Banner on Google+