How to Pay Your Delaware Franchise Tax
What the Delaware Franchise Tax Is and Who Pays It
Delaware's franchise tax is an annual fee that corporations, limited liability companies (LLCs), and certain other business entities pay to the state in order to remain authorized to do business there. It is not a tax on profit or income — it is a registration fee tied to the legal right to operate under Delaware law. Even if your business made no money that year, you still owe it.
The amount you owe depends on the type of entity and, for corporations, on the number of shares authorized (not issued). For LLCs, the tax is a flat fee unless your LLC is taxed as a corporation, in which case the share-based calculation applies. The Delaware Division of Corporations sets the rates and updates them periodically.
If your business is incorporated or formed in Delaware but operates elsewhere, you still owe the franchise tax to Delaware. If you are incorporated in another state but do business in Delaware, you may owe Delaware's annual report fee instead, which is different. The distinction matters for payment timing and amount.
Key Takeaways
- The franchise tax is due by March 1 each year; if you miss that date, penalties and interest begin to accrue immediately.
- You can pay online through the Delaware Division of Corporations website, by mail, or in person at their Dover office.
- The amount owed depends on your entity type and, for corporations, the number of authorized shares — check your certificate of incorporation or formation to find this number.
- Late payment triggers a penalty equal to a percentage of the tax owed, plus interest calculated daily, so paying even a few days late costs more than the original tax.
- If you dissolve your business, you must pay any outstanding franchise tax before the Division will process the dissolution.
When the Franchise Tax Is Due and What Happens If You Miss the Deadline
The franchise tax is due on March 1 each year. This date does not move and does not depend on when your business was formed or when your fiscal year ends. If March 1 falls on a weekend or holiday, the deadline does not shift — the Division expects payment by that date.
If you do not pay by March 1, the Division assesses a penalty. The penalty amount varies depending on how late the payment is, but it is calculated as a percentage of the unpaid tax. Interest also accrues daily on the unpaid balance. A payment that arrives on March 15 costs more than the original tax amount because both penalty and interest have been added. A payment that arrives in June costs significantly more.
If you remain delinquent for a full year without paying, the Division can revoke your certificate of incorporation or formation, which means your business loses its legal standing in Delaware. You cannot conduct business, sign contracts, or sue in court under that entity's name. Reinstatement requires paying all back taxes, penalties, interest, and a reinstatement fee.
How to Calculate What You Owe
The franchise tax calculation depends on your entity type. For a Delaware corporation, the tax is based on the number of shares authorized in your certificate of incorporation. You do not pay based on how many shares you actually issued — only the authorized amount matters. The rate per share bracket is set by the state and changes periodically; the Division publishes a tax table each year showing the brackets and corresponding tax amounts.
For example, if your certificate authorizes 10,000 shares, you would look up that number in the current year's tax table and find the corresponding tax amount. If you authorized 100,000 shares, the amount would be higher. The table is available on the Delaware Division of Corporations website and is updated before each tax year.
For an LLC taxed as a partnership, the franchise tax is a flat annual fee set by the state. For an LLC taxed as a corporation, the calculation follows the same share-based method as a corporation. For other entity types — limited partnerships, statutory trusts, and others — the Division publishes specific rates on its website.
If you do not know how many shares your corporation authorized, check your certificate of incorporation. If you formed your business through a registered agent or online service, they should have a copy. You can also contact the Delaware Division of Corporations directly, and they can tell you what is on file.
Payment Methods and Where to Send Payment
The Delaware Division of Corporations accepts franchise tax payments through three methods: online, by mail, and in person.
Online payment is the fastest and most common route. The Division's website has a payment portal where you enter your entity name, identification number, and tax amount, then pay by credit card or electronic bank transfer. Online payments are processed immediately, and you receive a confirmation number. This method is open year-round and does not require you to mail anything.
Payment by mail requires you to send a check or money order to the Delaware Division of Corporations at their Dover address. The Division publishes the mailing address on its website. Include your entity name, identification number, and the tax year on your check. Mail payments take several days to arrive and be processed, so sending payment in mid-February is safer than waiting until late February if you want to avoid the March 1 deadline.
In-person payment is possible at the Division's office in Dover during business hours. You can pay by check, money order, or cash. This method is useful if you are in the area or need immediate confirmation of payment, though it is not necessary for most businesses.
What to Do If You Paid Late or Cannot Pay by March 1
If you realize you will miss the March 1 deadline, pay as soon as possible. The penalty and interest will still apply, but they are calculated from March 1 forward, so the sooner you pay, the smaller the total amount owed. There is no grace period and no way to waive the penalty, but paying immediately limits the damage.
If your business is facing cash flow problems and you cannot pay the full amount by March 1, contact the Delaware Division of Corporations to discuss your situation. The Division does not offer formal payment plans, but in some cases they may work with you on timing or provide information about your options. Do not ignore the deadline — the longer you wait, the more expensive the penalty becomes.
If you have already received a notice of delinquency or revocation, you can still reinstate your business by paying all back taxes, penalties, interest, and the reinstatement fee. The Division will tell you the exact total owed. Once payment is received and processed, your certificate is reinstated and your business regains its legal standing.
How Franchise Tax Differs From Other Delaware Business Taxes
The franchise tax is separate from Delaware's income tax. Corporations incorporated in Delaware do not owe Delaware income tax on their profits unless they have a physical presence in the state and conduct business there. The franchise tax is purely a registration fee for the right to exist as a Delaware entity.
If you are a Delaware LLC taxed as a partnership, you do not owe Delaware income tax on the LLC's profits — the members pay tax on their share of profits in their home states. If your LLC is taxed as a corporation, you owe both the franchise tax and Delaware corporate income tax on profits.
Delaware also has an annual report fee that is different from the franchise tax. Corporations and LLCs must file an annual report with the Division each year, and that filing carries a separate fee (currently $25 for most entities). This is in addition to the franchise tax, not instead of it. Both are due by March 1.
What Happens When You Dissolve Your Business
If you decide to close your Delaware business, you must file a certificate of dissolution with the Division. Before the Division will process the dissolution, you must pay any outstanding franchise tax, penalties, and interest. If you are current on your franchise tax, the dissolution can proceed without additional payment.
Dissolution does not happen automatically when you stop doing business. You must file the paperwork and pay what is owed. Until you do, your entity remains on the books and the franchise tax continues to be due each March 1. If you ignore the deadline, penalties and interest continue to accrue even though you are no longer operating.
Frequently Asked Questions
Can I pay the franchise tax before March 1 to get ahead?
Yes. You can pay early, and the Division will credit the payment to the current tax year. Paying early does not reduce the amount owed, but it ensures you meet the deadline and avoid penalties. Some businesses pay in January or February to avoid the rush in late February.
What if I formed my business after March 1 — when is my first franchise tax due?
Your first franchise tax is due on March 1 of the following year. If you form a corporation in June, your first tax is due the following March 1, not in June of that year. The Division will send you a notice before the deadline.
Do I owe franchise tax if my business made no profit?
Yes. The franchise tax is not based on profit — it is a fee for the right to exist as a Delaware entity. Even if your business had zero revenue or lost money, you still owe the full franchise tax by March 1.
What if I authorized more shares than I need — can I reduce the number to lower my tax?
You can amend your certificate of incorporation to reduce the number of authorized shares, which would lower your franchise tax going forward. However, the amendment itself carries a filing fee, and the change takes effect only after it is filed and processed. For the current tax year, you owe tax based on the number of shares authorized as of March 1.
Can I pay the franchise tax with a credit card?
Yes, through the online payment portal on the Delaware Division of Corporations website. The Division accepts major credit cards for online payments. Payment by mail requires a check or money order.