Why is my franchise tax bill calculated on the authorized shares method rather than the par value method?
The official Franchise Tax bill you receive from the State of Delaware is calculated by them using the Authorized Shares Method because that will result in the largest tax payment to the state. Gust Launch establishes your company with 10,000,000 shares for a very good reason (see “Why am I incorporating with 10,000,000 authorized shares?”), but that number of Authorized Shares results in an enormous tax bill when calculated the way Delaware shows you.
However, if you calculate it using the equally legal and acceptable Par Value Method, you will find that your Franchise Tax due has miraculously shrunk to only $350.
Last updated on August 29, 2017