Hint: If you are an early-stage founder, you probably don’t owe Delaware more than $500. And it's not hard to do on your own.
TLDR:
The Delaware Franchise Tax, due annually by March 1st, is a mandatory requirement for all business entities registered in the state, regardless of their revenue or profitability status. If your company is registered in Delaware, you are obligated to pay this tax.
A common mistake founders make is paying more than $500 for their Delaware Franchise Taxes. There are two methods to calculate your franchise tax, and you can choose the one that results in the lower amount:
| Authorized Shares Method | Assumed Par Value Method | |
|---|---|---|
| Basis of calculation | Total shares authorized in your company charter | Issued shares and gross assets |
| Default method? | Yes: Delaware's default | No: must be elected |
| Startup-friendly? | No: can result in a very high bill | Yes: typically ~$400 minimum |
| Recommended for founders? | No | Yes |
For the sake of our sanity and bank accounts, the Assumed Par Value Method is the way to go. You'll need information from your financial records, such as issued share count and gross assets. For a step-by-step walkthrough of the math, see the Delaware franchise tax calculation guide from the state's Division of Corporations.
Now that you understand the calculation methods, here's a step-by-step for filing your Delaware Franchise Tax:
And that's it. Your tax filing is done, leaving you more time to focus on what truly matters: growing your business.
If your startup is structured as a Delaware LLC or LP (instead of a C-corp), heads up: Delaware House Bill 400 was signed into law and took effect on August 1, 2026. Under HB 400, the annual franchise tax for Delaware LLCs and LPs increases from $300 to $400. Registered series see a bump too, from $75 to $100 per series. The good news: these changes do not affect Delaware corporations, which is the entity type most VC-backed startups use. C-corps continue to calculate and pay franchise tax under the same Authorized Shares and Assumed Par Value methods described above. If you're unsure which entity type you have, check your Delaware certificate of formation: it will say "corporation" or "LLC" at the top.
Here's our best advice to first-time founders: you can do this on your own. Managing your tax obligations efficiently and staying compliant with state regulations matters. By understanding the process and using the free resources available, you can save on unnecessary expenses and invest them back into your startup. While there are accounting services available that can handle your franchise tax for a fee, you can easily handle the tax forms yourself.
However, if you still want help from an experienced accountant, check out our certified accounting partners.
At Puzzle.io, we're committed to empowering startup founders to manage the complexities of finances with ease, allowing them to focus on building and scaling their business. Our free accounting software lets you organize your finances and get real-time insights needed to make the best decisions for your company.
If you still have questions or need any help with Delaware Franchise Taxes, Luke (me!) Puzzle's resident CPA is on standby to help. Book a demo call and reach me in-app.
Learn more: The Founder's Guide to Filling Taxes
The Delaware Franchise Tax is due annually by March 1st. Every business entity registered in Delaware must file and pay by that date, regardless of whether the company generated any revenue or profit during the year.
Most early-stage founders owe no more than $400–$500 — but only if you use the right calculation method. Delaware's default (the Authorized Shares Method) can produce an unexpectedly high bill if you've authorized a large number of shares. Switch to the Assumed Par Value Method, which bases your tax on issued shares and gross assets, and your obligation drops to roughly the minimum for most pre-seed and seed-stage companies.
The Authorized Shares Method — Delaware's default — calculates your tax based on the total shares authorized in your company charter. For startups that authorize millions of shares at incorporation (a common practice), this can result in a very high bill. The Assumed Par Value Method instead uses your issued share count and gross assets. For most early-stage startups, it produces a much lower number — typically around the $400 minimum. You must actively elect the Assumed Par Value Method when filing; it is not applied automatically.
The franchise tax applies to all entity types registered in Delaware — C-corps, LLCs, and LPs alike. However, the calculation method described above (Authorized Shares vs. Assumed Par Value) applies only to corporations. LLCs and LPs pay a flat annual franchise tax. Under Delaware HB 400, effective August 1, 2026, the flat fee for LLCs and LPs increased from $300 to $400 per year ($100 per registered series, up from $75). If you're a VC-backed startup structured as a C-corp, these LLC/LP rate changes don't affect you.
You can file it yourself, and for most early-stage founders, there's no reason not to. The filing is done online through Delaware's Division of Corporations website. You'll need your issued share count, authorized share count, and gross assets figure from your balance sheet. The process takes 15–30 minutes once you have your numbers ready. Accounting services are available if you prefer hands-off help, but the cost is hard to make sense of when the tax itself is likely under $500.
The franchise tax payment belongs under General & Administrative expenses: use a "State taxes and fees" or "Delaware franchise tax" account. Keep it as its own line item instead of burying it in a generic "taxes" bucket. That makes your financials cleaner for due diligence and simplifies year-end reconciliation. The gross assets figure you use for the Assumed Par Value calculation flows directly from your balance sheet, so well-organized books make recalculating each March straightforward.
For a Delaware C-Corp SaaS startup, your chart of accounts should map to how investors, your accountant, and the IRS expect to read your financials. For more detail, see the ultimate guide to SaaS startup accounting. A clean starting structure:
The franchise tax itself belongs under G&A, in a "State taxes and fees" or "Delaware franchise tax" account. Keeping it as its own line (instead of burying it in a generic "taxes" bucket) makes your financials cleaner for due diligence and simplifies year-end reconciliation. Your gross assets figure (which the Assumed Par Value Method relies on) flows directly from your balance sheet, so a well-structured chart of accounts makes recalculating your franchise tax obligation each March straightforward.
Yes, and getting set up early is the whole point. If you connect Puzzle when you register your company (or shortly after), the system imports your transactions from day one, categorizes them automatically, and builds your chart of accounts in a structure that's already GAAP-aligned. That means no retroactive cleanup before your first audit or tax filing. Founders who start on Puzzle typically arrive at tax season with clean, investor-ready books instead of a shoebox of transactions their accountant has to reconstruct at $200/hour.
With a traditional bookkeeper, you get financials two to four weeks after month-end — by which point a cash problem is already a crisis. Puzzle updates your burn rate, runway, and P&L daily as transactions come in. You can open the app any morning and see exactly where you stand, without waiting on anyone. That visibility changes how you run the business: you catch an unexpected expense spike in week two of the month, not week six. Bookkeepers who work with Puzzle use that same real-time data to deliver advisory — they spend their time interpreting your numbers, not entering them.
Puzzle's automated month-end close agent runs your month-end checklist automatically: it balances accounts, flags uncategorized transactions, and surfaces anything that needs your review. Once you've cleared the checklist and approved the AI's work, Puzzle locks the period. That locked state is your signal: the books are accurate enough to share with investors, your accountant, or the IRS. For most early-stage startups with straightforward transaction volume, this process takes minutes instead of hours. If something unusual comes up (a large mismatched transfer, a deferred revenue question), Puzzle surfaces it for human review before closing.
If you're not on a live bank integration — importing via CSV, for example — the AI Close agent still runs the same reconciliation logic. It matches imported transactions against your ledger entries, flags duplicates, and identifies gaps where a transaction is missing from one side of the reconciliation. The main difference: you'll need to re-import an updated file if new transactions arrive after your initial upload. For founders with accounts that don't support direct sync, Puzzle's manual import flow keeps the work minimal — structured CSV templates reduce reformatting on your end.
When you connect a bank login that has multiple accounts attached — personal checking alongside your business account, for instance — Puzzle lets you select only the accounts you want to sync. Personal accounts you don't select are never imported. If personal transactions do slip through (this can happen with some bank login structures), you can mark individual transactions as "personal" or delete them from the ledger directly. Puzzle won't re-import deleted transactions on subsequent syncs from that same connection, so your books stay clean.
Puzzle's AI chat goes beyond answering questions. It can categorize individual transactions, split a transaction across multiple expense categories, generate a mini P&L for a date range you specify, and surface specific line items on demand. Critically, it operates in a human-in-the-loop model: the AI proposes the change, you approve before anything is written to your books. That means you get the speed of AI automation without the risk of silent errors. For bulk work (like recategorizing an entire vendor's history), the AI can queue the changes for a single approval instead of requiring you to click through each transaction one at a time.
Puzzle's free plan covers the core accounting workflow (transaction sync, automated categorization, real-time burn and runway) and is genuinely sufficient for most pre-seed and seed-stage startups with a single entity and straightforward financials. The paid plans add features that become relevant as you scale: multi-entity consolidation, more advanced revenue recognition workflows, priority support, and deeper accountant collaboration tools. The practical answer on when to upgrade: if your accountant is spending meaningful time on manual cleanup, or if you're preparing for a Series A audit, the paid tier pays for itself quickly. If you're bootstrapped, pre-revenue, and just need clean books, start on the free plan and upgrade when the complexity demands it.
Processor fees (Stripe, PayPal, Square, and similar) should be recorded as a separate line item, not embedded inside the gross revenue transaction. The correct treatment: record the full gross payment as revenue, then record the processor fee as a Cost of Revenue expense (typically under a "Payment processing fees" account). Puzzle's Stripe integration handles this automatically when you connect the integration directly: it imports the gross charge, the fee, and the net payout as distinct transactions. If you're also reviewing your full accounting stack, see our guide to accounting software for SaaS startups with Stripe. If you're matching manually, align your bank deposit (the net amount after fees) against the gross invoice total, and post the difference to your processing fees account. Mixing net revenue with gross overstates your COGS and understates revenue, a common cleanup item before fundraising diligence.
