Clarification on Franchise Tax


As the annual franchise tax season approaches many clients become confused with the term “franchise tax”. On a daily basis we hear, "my company is not a franchise, why do I have to pay this fee?" Many people's immediate reaction to the word "franchise" quickly congers up images of McDonalds, Subway, Burger King etc.


When speaking from a corporate standpoint, think of the term franchise as the right or privilege granted to operate a company. Delaware is granting the entity the right or privilege to own/operate a company under the Delaware Corporate Law Structure, (which we know is the best in the nation!) and for that right or privilege Delaware would like compensation in return; this compensation is what we call the Delaware Franchise Tax.


Title 8, Chapter 5 § 502 of the Delaware Corporate Code clearly states:

Annually on or before March 1, every corporation now existing or hereafter incorporated under Chapter 1 of this title or which has accepted the Constitution of this State, shall make an annual franchise tax report to the Secretary of State. The report shall be made on a form designated by the Secretary of State and shall be signed by the corporation's president, secretary, treasurer or other proper officer duly authorized so to act, or by any of its directors, or by any incorporator in the event its board of directors shall not have been elected.”


The annual franchise tax for the corporation is due on March 1st of ever year. No worries, as your registered agent we will provide plenty of notice to remind you of this deadline. The franchise tax is due even if the business didn’t conduct any activity or lost money.


We strive to make paying the franchise tax as easy as possible for you. You can pay it now, quickly and easily by using our franchise tax filing service on our website.


If you have any questions feel free to call 800 345 2677, Ext 6904 or email

More By Brett Melson
Leave a Comment
* Required
* Required, will not be published