By Jake Lawson, LLC Formation Strategist
So you formed a Delaware LLC. Smart choice—you’re in good company with 68% of Fortune 500 companies. But here’s the annual reality check nobody mentions in those “Why Delaware is Amazing” articles: you owe the state $300 every single year, no matter what.
I’ve guided hundreds of Delaware LLCs through this process, and I’ve seen too many entrepreneurs get blindsided by late fees because they didn’t understand the rules. Let me break down everything you need to know about Delaware’s annual franchise tax—the good, the annoying, and the expensive.
Delaware’s Annual Money Grab: What You’re Really Paying For
Delaware’s Annual Franchise Tax is essentially a “privilege fee” for maintaining your LLC’s legal status in the state. Think of it as Delaware’s annual subscription charge for keeping your business entity active and in good standing.
The hard numbers:
- Cost: $300 flat rate (every single LLC pays this amount)
- Due date: June 1st annually
- Late penalty: $200 plus 1.5% monthly interest
- Payment method: Online only (no checks, no mail)
Unlike corporations, Delaware LLCs don’t file annual reports—you just pay the franchise tax. It’s Delaware’s streamlined approach to extracting revenue while maintaining their corporate-friendly reputation.
Real talk: This $300 isn’t based on your revenue, profit, or business activity. Made $10 million last year? $300. Didn’t earn a penny? Still $300. Delaware doesn’t care about your financial performance—they just want their money.
The Timeline: When Your Wallet Gets Hit
Understanding the payment schedule prevents expensive mistakes. Here’s how Delaware’s franchise tax calendar works:
Your first payment: Due June 1st of the year following your LLC formation.
Example scenarios:
- LLC approved January 15, 2025 → First payment due June 1, 2026
- LLC approved November 30, 2025 → First payment due June 1, 2026
- LLC approved February 10, 2024 → First payment was due June 1, 2025
Annual payments thereafter: Every June 1st until you dissolve your LLC.
This grace period for your formation year is one of Delaware’s few generous policies. Use it wisely to prepare for the ongoing financial commitment.
The Penalty Trap: How $300 Becomes $500+
Miss the June 1st deadline, and Delaware’s penalty structure kicks in fast:
Immediate late fee: $200 (that’s 67% of your original tax) Monthly interest: 1.5% on the total balance Compounding effect: Interest charges accumulate monthly until paid
Real-world example: Miss your June 1st payment, ignore it until December:
- Original tax: $300
- Late fee: $200
- Six months of 1.5% interest: ~$45
- Total owed: $545
I’ve helped clients who turned a $300 obligation into $800+ penalties through procrastination. Don’t be that entrepreneur.
Delaware’s Reminder System (Don’t Count on It)
Delaware sends franchise tax reminders to your registered agent address in February. Sounds helpful, right? Here’s why you shouldn’t rely on this system:
Mail delivery issues: Postal delays, address changes, or registered agent problems can prevent delivery Timing gaps: February to June seems like plenty of time, but life happens Legal responsibility: You’re still liable even if you never receive the reminder
My recommendation: Set up your own calendar reminders starting in January. Treat Delaware’s notices as backup, not primary notification.
Strategic Payment Timing: When Smart Entrepreneurs Pay
While June 1st is the deadline, Delaware allows payments starting in February. Here’s my recommended payment strategy:
Early bird approach (February-March):
- Eliminates deadline stress
- Ensures payment completion before busy spring season
- Pairs well with annual business planning
Tax season timing (April):
- Coordinate with federal tax obligations
- Handle all tax payments simultaneously
- Easier for accounting and cash flow management
Never recommend: Waiting until May. Murphy’s Law guarantees technical problems or cash flow issues when you’re cutting it close.
The Step-by-Step Payment Process
Delaware forces all franchise tax payments through their online portal. Here’s the exact process I walk clients through:
Step 1: Access the Delaware System
Navigate to Delaware’s Corporations Information System: icis.corp.delaware.gov/Ecorp/logintax.aspx?FilingType=FranchiseTax
Pro tip: Bookmark this URL. You’ll use it annually.
Step 2: Locate Your File Number
You need your Delaware LLC File Number (also called Business Entity File Number) to proceed.
Where to find it:
- Original Delaware formation documents
- Delaware entity search database
- Registered agent correspondence
Lost your file number? Search Delaware’s database at: icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx
Step 3: Enter Payment Information
The system displays your current balance (including any late fees). Select “Pay Full Amount” and choose your payment method:
Payment options:
- ACH bank transfer (typically faster processing)
- Credit card (convenient but may incur card fees)
Required information:
- Payment details
- Billing address
- Contact information for confirmation
Step 4: Confirmation and Records
Delaware emails payment confirmation immediately. Critical: Print and file this confirmation with your LLC records. It’s your proof of compliance.
When Things Go Wrong: Getting Help
Delaware’s Franchise Tax Division handles payment issues and questions:
Contact information:
- Phone: 302-739-3073 (press option 3)
- Email: DOSDOC_Ftax@state.de.us
- Hours: 8 AM – 4:30 PM ET, Monday-Friday
Common issues they resolve:
- File number lookup problems
- Payment processing errors
- Late fee disputes
- Account status questions
My experience: Delaware’s franchise tax staff is generally helpful and knowledgeable. Don’t hesitate to call if you encounter problems.
The Hidden Costs of Delaware LLC Ownership
That $300 annual franchise tax is just the beginning of Delaware’s ongoing costs:
Registered agent fees: $100-300 annually (unless you maintain Delaware address) State filing fees: Various amounts for amendments, changes, etc. Professional services: Legal and accounting costs for Delaware compliance
Annual reality check: Budget $400-600 yearly for basic Delaware LLC maintenance, not just the franchise tax.
Strategic Considerations: Is Delaware Still Worth It?
After helping hundreds of entrepreneurs with Delaware LLCs, here’s my honest assessment:
Delaware makes sense if:
- You’re raising venture capital (investor expectations)
- You plan to go public eventually
- You need sophisticated legal protections
- You’re operating a complex business structure
Delaware might be overkill if:
- You’re running a simple, local business
- Cost minimization is priority
- You don’t need Delaware’s legal advantages
- Annual compliance feels burdensome
Alternative consideration: Many entrepreneurs choose Wyoming or Nevada for lower costs and simpler compliance. The “Delaware magic” isn’t necessary for most small businesses.
Compliance Calendar: Staying Ahead of Deadlines
Here’s the annual Delaware LLC compliance schedule I recommend to clients:
January: Review registered agent status, confirm Delaware address accuracy February: Watch for franchise tax reminder notices March: Pay annual franchise tax (early bird approach) April: Handle federal tax obligations June: Deadline passes with confidence December: Year-end planning and compliance review
The Bottom Line: Plan for the $300 Reality
Delaware LLC formation is easy and fast. Delaware LLC maintenance requires ongoing attention and annual costs. That $300 franchise tax isn’t going away—it’s the price of admission to Delaware’s business ecosystem.
My recommendation: Budget for the annual franchise tax from day one. Set up automatic calendar reminders, maintain accurate records, and pay early to avoid penalties.
Delaware offers legitimate advantages for the right businesses, but don’t let the marketing hype blind you to the ongoing financial commitments. That $300 annual bill is as certain as death and taxes—because it literally is a tax.
Smart move: Automate your compliance process. Set calendar reminders, bookmark the payment portal, and treat franchise tax payments like any other essential business expense.
Delaware wants to be your business domicile—they just expect you to pay for the privilege every single year.
Ready to explore all your options? Check out our comprehensive state-by-state LLC comparison to understand how Delaware stacks up against alternatives like Wyoming, Nevada, and your home state. Or review our tested formation service recommendations to find the right partner for your Delaware LLC journey.
Got specific Delaware compliance questions? Reach out—I’ve probably navigated your exact situation and can save you time, money, and stress.
Jake Lawson is an LLC Formation Strategist and founder of llciyo.com. He’s guided over 1,200 entrepreneurs through U.S. business formation, including hundreds who’ve chosen Delaware for its unique advantages and learned to navigate its ongoing requirements.