Delaware Franchise Tax: LLC vs Corporation

What is the core difference between LLC and corporation franchise tax?

The single most important thing to understand is that Delaware does not have one franchise tax — it has two separate systems that happen to share a name. The Delaware LLC system is flat and trivial: every LLC pays exactly $300 per year, due June 1, with no report and no math. The Delaware corporation system is variable and report-bound: the tax is calculated from your share structure and assets, ranges from $175 to $200,000, comes with a $50 annual report, and is due March 1.

Confusing the two is the most common franchise-tax mistake we see. A founder who reads “Delaware franchise tax is $300” and then incorporates a C-corp will both miss the March 1 deadline and owe the wrong amount. The rest of this guide treats the two regimes side by side so you can see exactly where they diverge. If you have not formed yet, our Delaware LLC formation guide and the C-corp guide walk through which structure fits your goals before you commit.

How much does a Delaware LLC pay in franchise tax?

Every Delaware LLC pays a flat $300 franchise tax each year. There are no tiers, no calculation, and no relationship to income, revenue, or assets. An LLC that never opened a bank account owes the same $300 as one doing seven figures. The tax is due by June 1, and the obligation begins the year after formation — an LLC formed in 2026 makes its first payment by June 1, 2027.

Crucially, Delaware LLCs file no annual report. Paying the $300 is the entire annual state obligation. That is the whole appeal of the LLC regime: it is flat, predictable, and impossible to get wrong on the arithmetic. The only thing you have to do is remember the date. For the full breakdown of when it is due and the grace mechanics, see our Delaware franchise tax overview and the dedicated franchise tax deadlines page. Note the $300 is separate from your registered agent renewal, which runs about $99 per year.

How much does a Delaware corporation pay in franchise tax?

A Delaware corporation pays a variable franchise tax plus a $50 annual report fee, both due by March 1. The tax is calculated two different ways, and the corporation pays whichever is lower:

• Authorized Shares Method. Based on the number of shares your certificate authorizes. It is $175 for up to 5,000 shares, $250 for up to 10,000, and +$85 per additional 10,000 shares (or part thereof). See the dedicated Authorized Shares Method page.
• Assumed Par Value Capital Method. Based on issued shares and total gross assets. It charges $400 per $1,000,000 (or part) of assumed par value capital, with a $400 minimum. See the Assumed Par Value Method page.

Both methods cap at a $200,000 maximum. Because the two methods can produce wildly different numbers, never pay the first figure you see — recalculate. Our franchise tax calculator runs both methods so you can see which one wins.

What is the deadline difference: June 1 vs March 1?

The deadlines are different, and that difference catches people off guard. A Delaware LLC pays by June 1. A Delaware corporation pays — and files its annual report — by March 1. They are roughly three months apart, which means an owner who internalizes one deadline will reliably miss the other if they switch entity type or run both.

This is more than a trivia point. We regularly see corporation owners who read general “Delaware franchise tax” content, absorbed the June 1 date that applies to LLCs, and blew past their actual March 1 obligation — triggering a penalty and interest. If you operate a Delaware corporation, March 1 is the date that matters. If you operate a Delaware LLC, June 1 is the date that matters. Put the correct one on your calendar the day you form. The full calendar, including how the obligation starts the year after formation, is on our deadlines page.

How do the annual report rules differ?

This is one of the cleanest distinctions between the two entities. Delaware LLCs file no annual report — ever. There is no form, no officer disclosure, no $50 fee. The flat $300 franchise tax is the complete annual filing.

Delaware corporations must file an annual report every year, alongside the franchise tax, by March 1. The report carries a $50 fee and requires you to list the corporation’s officers and directors and the address of its principal place of business. So a corporation has two things to handle every March 1 — the variable franchise tax and the $50 report — while an LLC has exactly one thing to handle every June 1: the flat $300. For founders who want the absolute minimum administrative footprint, the LLC’s no-report rule is a meaningful simplification. Our Delaware annual report guide covers the corporation report in detail.

LLC vs corporation franchise tax: the side-by-side table

The pattern is clear: the LLC trades flexibility for simplicity, and the corporation trades simplicity for the share-structure flexibility that venture investors and stock-option plans require. Neither is “better” in the abstract — it depends on whether you are building a fundraising company or a lean operating business. For a fuller treatment of how the two corporate methods compare to each other, see our Authorized Shares and Assumed Par Value guides.

Worked example: a $300 LLC vs a startup corporation

Numbers make the contrast concrete. Imagine two founders who each start a Delaware company in 2026 and reach their first franchise-tax year.

Founder A forms an LLC. On June 1, the obligation is a flat $300. There is no notice to interpret, no method to choose, and no report to file. Total state cost for the year: $300. Every subsequent year is identical.

Founder B forms a corporation with 10,000,000 authorized shares, of which 8,000,000 are issued, and $500,000 in gross assets. Delaware mails a notice computed on the Authorized Shares Method: the first 10,000 shares ($250) plus 999 additional blocks of 10,000 at $85 each, which is about $85,165. That figure is alarming but not real. Recomputing on the Assumed Par Value Method — using the issued shares and the $500,000 asset base — produces assumed par value capital under $1 million, so the tax lands near the $400 minimum. Add the $50 annual report, and Founder B’s real total is roughly $450 by March 1 — but only if they ignore the notice and recalculate.

The lesson: the LLC’s $300 is locked in and effortless, while the corporation can be cheap ($450) or catastrophic ($85,000+) depending purely on whether the owner knew to switch methods. Run both numbers on the franchise tax calculator before paying. This is illustrative, not a quote — confirm exact figures on the state portal.

What happens if you pay either one late?

The penalty structure is the same for both entities, even though the deadlines differ. Miss the date — June 1 for an LLC, March 1 for a corporation — and Delaware adds a $200 penalty plus 1.5% interest per month on the unpaid balance. More importantly, the entity loses its good standing, which can block a Certificate of Good Standing right when a bank, investor, or another state asks for one.

For a corporation, the stakes are higher in dollar terms because the underlying tax can be larger, and an unfiled annual report compounds the problem. For an LLC, the penalty often exceeds the tax itself — a missed $300 becomes $500+ fast. Either way, the real cost is rarely the interest; it is the lost good standing. Our franchise tax late fee page breaks down how the penalty and interest accrue over time for both entity types. This is not legal or tax advice — confirm the exact amount owed on the state portal.

Which entity should you choose if franchise tax matters to you?

If predictable cost and minimal admin are your priorities, the LLC wins on franchise tax alone: $300, flat, no report, forever. There is genuinely nothing to manage beyond the June 1 date. Most freelancers, agencies, e-commerce sellers, and single-product operators are well served by this simplicity, and it is why the LLC is the default for non-VC businesses.

The corporation is the right call when you need its share structure — issuing stock options, taking institutional investment, or running a cap table that VCs expect. In those cases the franchise tax is a manageable cost (often $450 with the Assumed Par Value Method), and the corporate form unlocks fundraising the LLC cannot. Franchise tax should rarely be the deciding factor on its own; it is one line item in a larger entity decision. For the full cost picture across Year 1 and Year 2, see our Delaware LLC cost page. This is not legal or tax advice.

How do federal tax filings differ between the two?

Franchise tax is a Delaware state fee and is entirely separate from federal income tax, but the two regimes do diverge federally as well. A single-member LLC is a disregarded entity by default, and a foreign-owned one must file a pro-forma Form 1120 plus Form 5472 — failure carries a $25,000 penalty. An LLC can also change its tax treatment with Form 8832, or elect S-corp status with Form 2553 — though S-corp owners must be US citizens or residents, so non-residents are not eligible.

A corporation files its own Form 1120 and pays corporate income tax at the federal level, separate from the Delaware franchise tax and the $50 annual report. The takeaway: do not conflate the state franchise tax with your federal filing obligations — they are different calendars with different consequences. Our Delaware LLC tax filing guide and the Delaware LLC taxes overview map the full federal picture. None of this is tax advice — consult a qualified advisor for your situation.

Do non-residents face a different franchise tax for each entity?

No — residency does not change the franchise tax. A non-resident with a Delaware LLC owes the same flat $300 by June 1 as a US-based owner, and a non-resident with a Delaware corporation owes the same variable tax plus the $50 report by March 1. The franchise tax attaches to the entity type, not the owner’s passport or income. Having no US-source income does not exempt either entity.

What does change for non-residents is the surrounding compliance: the Form 5472 requirement for foreign-owned single-member LLCs, the EIN needed to open a US bank account, and the fact that S-corp election via Form 2553 is off the table because it requires US citizenship or residency. For founders abroad, the LLC’s flat $300 is usually the simplest path; pair it with our non-resident guide and, for an EIN or ITIN, our sister sites ein.so and itin.so.

Is the BOI / FinCEN report part of either franchise tax?

No. Beneficial Ownership Information (BOI) reporting is a federal filing with FinCEN, completely separate from the Delaware franchise tax for both LLCs and corporations. It is worth keeping straight because founders tend to lump every “compliance” item together. Under a March 2025 FinCEN interim final rule, BOI reporting was removed for US domestic reporting companies, and US persons are generally exempt — only certain foreign reporting companies were left with an obligation.

Because this area is still evolving, confirm the current requirement directly with FinCEN or a qualified advisor before assuming you do or do not need to file. What has not changed is the Delaware franchise tax: the LLC $300 is due every June 1 and the corporation tax plus $50 report is due every March 1, regardless of where BOI rules land. Treat franchise tax (state) and any BOI obligation (federal) as separate calendar items. Our BOI report and FinCEN reporting pages cover the current status in detail.

What does the first-year franchise-tax timeline look like for each entity?

The two regimes also diverge on when the obligation actually begins, and walking through a calendar makes it concrete. Form a Delaware LLC in, say, March 2026 and you owe nothing in 2026 — the flat $300 first comes due on June 1, 2027, and on every June 1 after that. There is no notice to decode and no report to assemble; you simply pay $300 and you are done for the year. Many non-resident founders find this the single most reassuring feature of the LLC: one date, one number, forever.

• LLC: form 2026 → first $300 due June 1, 2027 → flat $300 every June 1 thereafter, no report.
• Corporation: form 2026 → first tax plus $50 report due March 1, 2027 → recalculate every year because issued shares and gross assets change.

The corporation’s timeline is busier because the number is never static — a year of fundraising or asset growth can move the Assumed Par Value figure, so March 1 is a recalculation event, not a copy-paste. The LLC’s June 1 is the same arithmetic every single year. For the full calendar logic, our franchise tax overview lays out how the first obligation lands the year after formation. This is not legal or tax advice.

What are the most common franchise-tax mistakes for each entity?

Knowing the rules is one thing; the errors people actually make are another. For LLCs, the classic mistake is waiting for a bill that may never arrive — Delaware often does not mail an LLC notice, yet the $300 is still due, so owners who assume “no letter, no payment” quietly fall out of good standing. A second LLC mistake is conflating the $300 franchise tax with the separate ~$99 registered agent renewal, then assuming one payment covered both. They are two different obligations on two different bills.

For corporations, the signature mistake is paying the Authorized Shares notice as printed. That mailed figure — sometimes five figures for a startup with 10 million authorized shares — is almost never the real number once you run the Authorized Shares method against the Assumed Par Value method and pay the lower one. The other corporate trap is forgetting the $50 annual report entirely, which keeps the entity non-compliant even after the tax is paid. For non-residents, an added pitfall is assuming no US income means no franchise tax — it does not, and a foreign-owned single-member LLC still faces the Form 5472 obligation on the federal side. Run both corporate methods on our franchise tax calculator before you pay anything. This is not legal or tax advice — confirm figures on the state portal.

How does DelawareLLC.co handle franchise tax for each entity?

For a Delaware LLC, we track your June 1 deadline at formation and reach out well before it, whether or not you have renewed any other service. If you want us to, we file and pay the flat $300 on your behalf and send the confirmation, so the entity never quietly slips out of good standing. Because the LLC obligation is flat, there is no method to choose — just the date to hit.

For a Delaware corporation, we go a step further: we run the Assumed Par Value calculation so you are not staring at an inflated Authorized Shares notice, then file the $50 annual report and pay the lower tax by March 1. We also flag the separate registered agent renewal so both obligations are handled in one pass. Support is over WhatsApp, our filing and EIN work carry a money-back guarantee, and our Year 1 service is a flat $397 all-inclusive (Delaware state fee included). If you are still choosing between the two structures, start with how it works, compare on the pricing page, and use the franchise tax calculator to model the corporation number before you decide.