Incorporating in Delaware is a popular move for SaaS founders—but missing the annual Franchise Tax filing can lead to serious penalties, interest, and even loss of good standing. Whether your Delaware C-Corp is pre-revenue or profitable, this blog covers what you need to file by June 1, 2025, to stay compliant and stress-free.
Relevant IRC Codes & Definitions
The Delaware Franchise Tax is governed by state law, but the following federal codes apply to related tax treatment:
- IRC §162 – Franchise taxes paid to Delaware are generally deductible as ordinary business expenses.
- IRC §6012 – Requires corporations to file income tax returns (Form 1120) annually.
- IRC §11 – Establishes the federal corporate income tax rate (21%).
While not a federal tax, Franchise Tax payments may impact your corporation’s federal deductions and balance sheet.
IRS & State Form References
Federal Filings:
- IRS Form 1120 – Required for all U.S. C Corporations
Delaware State Filings:
- Delaware Annual Report – Required for all domestic corporations
- Franchise Tax Payment – Due by June 1, 2025
- Form of Payment – Online portal; amount based on either:
- Authorized Shares Method
- Assumed Par Value Method
Real-World Example
Case Study:
SaaSmart Inc., a Delaware C Corporation with 10 million authorized shares and no revenue, used the Authorized Shares Method to calculate Franchise Tax.
- Tax Due: Over $70,000 using default method
- By switching to Assumed Par Value, the tax dropped to $400 (minimum payment)
Outcome: By calculating properly and filing on time, SaaSmart avoided penalties and saved tens of thousands in unnecessary tax.
Step-by-Step Guide to File Franchise Tax by June 1, 2025
- Log into Delaware’s online filing system with your corporation’s credentials
- Choose your calculation method:
- Authorized Shares (default)
- Assumed Par Value (recommended for startups)
- Calculate total tax (minimum is $400; max is $200,000)
- File the Annual Report (required alongside payment)
- Submit payment by June 1, 2025
- Save confirmation for CPA and future reference
Conclusion
Delaware’s Franchise Tax may look simple, but filing incorrectly or late can cost thousands—especially for early-stage SaaS startups with large authorized share counts. Filing by June 1, 2025, with the correct method ensures you stay compliant, reduce your tax burden, and avoid late fees.
Call to Action
Confused about which method to use or how much you owe?
👉 Schedule a call now with Anshul Goyal, CPA, and we’ll handle your 2025 Delaware Franchise Tax filing from start to finish.
Disclaimer
This article is intended solely for informational purposes. It does not constitute legal, tax, or financial advice. Delaware Franchise Tax obligations depend on your company’s structure, share count, and capital structure. Taxpayers are advised to consult a licensed tax advisor before filing.
Anshul Goyal, CPA EA FCA, is a licensed Certified Public Accountant in the United States, admitted to practice before the IRS as an Enrolled Agent, and a Chartered Accountant in India. He provides tax strategy, compliance, and entity structuring services to U.S. and international founders with Delaware and multistate corporations.
FAQs (Top 5 High-Searched)
Q1. When is the Delaware Franchise Tax due in 2025?
A1. It’s due by June 1, 2025, along with the Annual Report.
Q2. What is the minimum Franchise Tax in Delaware?
A2. $400 for corporations using the Assumed Par Value Method.
Q3. How can I reduce my Franchise Tax?
A3. Use the Assumed Par Value Method instead of the default Authorized Shares Method.
Q4. Do I need to file if I had no income?
A4. Yes. All Delaware corporations must file regardless of revenue.
Q5. What happens if I miss the deadline?
A5. Your corporation will incur late fees, interest, and may lose good standing.
About Our CPA
Anshul Goyal, CPA EA FCA, is a cross-border tax strategist, U.S.-licensed CPA, Enrolled Agent with the IRS, and Chartered Accountant from India. With over 2,000 clients and $200M+ in tax savings delivered, Anshul helps SaaS founders and C-Corp startups manage Delaware compliance, tax filings, and international growth strategies.