Delaware is known for its business-friendly environment, with more than 68% of Fortune 500 companies incorporated within its jurisdiction. However, incorporating in Delaware requires a specific set of financial commitments that businesses should know about.

Whether you’re establishing a new entity or contemplating a move, it’s important to understand the costs and fees associated with joining Delaware’s business community. This guide will discuss what corporations and LLCs need to know about the financial implications of incorporating in Delaware, including initial filing fees, annual maintenance costs, potential tax advantages, and additional expenses that could impact their budget.

What’s in this article?

• How much does it cost to incorporate in Delaware?
  
• Ongoing taxes and fees for Delaware corporations
  
• Ongoing taxes and fees for Delaware LLCs
  
• How to save money and time when incorporating in Delaware
  

How much does it cost to incorporate in Delaware?

There are two main types of costs to consider when incorporating in Delaware: state fees and ongoing fees. Additional expenses can include the cost of hiring a registered agent or service to receive legal documents on your behalf, which is a requirement for businesses incorporated in Delaware but conducting operations out of state. To accurately estimate the total cost to incorporate in Delaware, consider the specific structure of your corporation and any additional services you might choose such as expedited processing.

This chart summarises the state fees associated with incorporating in Delaware.

Ongoing taxes and fees for Delaware corporations

In addition to the initial incorporation costs, there are also ongoing taxes and fees to consider. Here’s an overview.

Annual report fee

• Amount: $50–$125

• Due date: March 1 of each year

• Details: All Delaware corporations must file an annual report with the Division of Corporations. This report provides basic information about the corporation, including its officers, directors, and registered agent. The filing fee is $50 for domestic corporations and $125 for foreign corporations. There is a penalty of $200 for filing an incomplete annual report after the due date.

Franchise tax

• Amount: $175–$200,000

• Due date: March 1 of each year

• Details: Delaware uses a franchise tax system instead of a state corporate income tax. Late payments of franchise tax incur interest at 1.5% per month. The franchise tax is calculated using one of these two methods:

  • Authorised shares method: This method bases the tax on the number of shares a corporation is authorised to issue, as stated in its certificate of incorporation. There are tiers for the tax amount, with a minimum of $175 for corporations with up to 5,000 shares and a maximum of $200,000 for corporations with millions of authorised shares.
    
  • Assumed par value capital method: This method bases the tax on the total par value of its outstanding capital stock. The total par value is based on issued shares, outstanding shares, and the company’s gross assets. This method has a higher minimum tax of $400.
    

Ongoing taxes and fees for Delaware LLCs

Delaware LLCs have fewer ongoing fees than Delaware corporations do, since they don’t file an annual report or pay franchise tax.

Annual tax

• Amount: $300

• Due date: June 1 of each year

• Details: All Delaware LLCs, regardless of size or activity level, must pay an annual tax of $300 to maintain good standing with the state. This fee is due on June 1 of each year. The state imposes a penalty of $200 plus interest for late payments.

How to save money and time when incorporating in Delaware

Through careful planning, it’s possible to save time and money when incorporating. Here’s how to do it.

• Do your research: Understand the fees associated with incorporating in Delaware, such as the filing fee and annual report filing fee. Being aware of these fees can help you budget accordingly and avoid surprises.

• Choose the right package: Service providers offer various packages for incorporation, with different services included. Decide what your business needs and select a package that meets your requirements without including unnecessary extras.

• Use online services: Filing online can save time and save money on postage. The Delaware Division of Corporations offers online filing, which is faster and can reduce the likelihood of errors that might occur with paper filing.

• Strategically authorise stock: The filing fee can increase based on the amount of authorised stock your corporation plans to issue. Only authorise the amount of stock you realistically need to avoid higher fees.

• Maintain annual compliance: Stay on top of annual requirements such as filing the annual report and paying the franchise tax to avoid late fees and penalties. Understanding these obligations can prevent costly mistakes and ensure your corporation remains in good standing.

• Seek professional advice: While there’s a cost to hiring an attorney or accountant, their expertise can save you money in the long run by ensuring that you’re making informed decisions and avoiding costly errors. Delaware also provides various free resources that can help you understand the incorporation process and ongoing compliance requirements.

• Plan ahead: Delayed decisions or last-minute filings can incur expedited service fees. Plan your incorporation process and related tasks well in advance to avoid the need for rush services.

How Stripe Atlas can help

Stripe Atlas sets up your company's legal foundations so you can fundraise, open a bank account and accept payments within two business days from anywhere in the world.

Join 75K+ companies incorporated using Atlas, including startups backed by top investors such as Y Combinator, a16z and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You'll choose your company structure, instantly confirm whether your company name is available and add up to four co-founders. You'll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers and then e-sign all your documents. Any co-founders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your EIN. Founders with a US Social Security number, address and mobile phone number are eligible for IRS expedited processing, while others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g. copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at $100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal Income taxes. Atlas will file it for you – whether you are a US or non-US founder – with USPS Certified Mail and tracking. You'll receive a signed 83(b) election and proof of filing directly in your Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world's leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects such as ownership structure, equity distribution and tax compliance.

A free year of Stripe Payments, plus $50K in partner credits and discounts

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance and operations from industry leaders like AWS, Carta and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you'll access additional Stripe benefits, including up to a year of free payment processing for up to $100K in payments volume.

Learn more about how Atlas can help you set up your new business quickly and easily and get started today.