Forming an LLC in Delaware: What the $300 Franchise Tax Actually Buys You

Delaware is the default answer to "where should I incorporate" for a lot of startup advice — often without explaining what you're actually paying for. Here's the real cost, and who it's genuinely worth it for.

Filing: $110, one of the simplest forms in the country

You form a Delaware LLC by filing a Certificate of Formation with the Delaware Division of Corporations. The fee is $110 under the current fee schedule (older sources online still cite the prior $90 figure, from before a 2024 revision — confirm the current amount before filing). The form itself asks for almost nothing: LLC name, registered agent name and address, organizer name, and organizer signature. No member names, no operating agreement, and no minimum capital requirement are disclosed publicly.

The $300 flat franchise tax — simpler than it sounds

Every Delaware LLC pays a flat $300 annual franchise tax, due June 1 each year, regardless of revenue, activity, or number of members. There's no annual report to file alongside it — just the flat fee. This is dramatically simpler than Delaware's corporate franchise tax, which scales with authorized shares and can run into thousands of dollars; LLCs are spared that complexity entirely.

If the tax goes unpaid for three years, Delaware can cancel your LLC's Certificate of Formation outright, requiring a Certificate of Revival plus back taxes, penalties, and interest to restore it.

What you're actually paying for

Two things make Delaware genuinely different, not just popular:

1. The Court of Chancery. Delaware's specialized business court has over a century of case law on LLC and corporate disputes, decided by judges (not juries) with deep subject-matter expertise. For a business with outside investors, multiple classes of ownership, or a complex cap table, that predictability has real value if a dispute ever arises.
2. Privacy and simplicity. No public disclosure of member names, no publicly filed operating agreement, and — for non-resident owners — no Delaware income tax on income earned outside the state.

Where Delaware doesn't actually save you money

If you form in Delaware but operate your business in another state, you almost always have to foreign-qualify in that state too — meaning you pay Delaware's $300 franchise tax and your home state's LLC fees, plus a registered agent fee in Delaware (typically $50–$300/year if you're not physically there). For a solo founder running a straightforward local business, that's two states' paperwork instead of one, and the Court of Chancery advantage rarely comes into play if there's only one owner and no outside investors.

A distinctly Delaware detail worth knowing

Delaware's default statute of limitations for breach of contract is three years — shorter than New York's six or Florida's five. But under 10 Del. C. §8106(c), parties to a written contract involving at least $100,000 can contractually extend that window up to 20 years, provided the contract specifies the period explicitly. This matters most in M&A and investment agreements, where founders and investors often negotiate extended survival periods for representations and warranties.

Common mistakes

• Forming in Delaware "because startups do it" without outside investors or multi-state complexity that would justify it. For roughly 80% of small LLC owners, forming in your home state is cheaper and simpler.
• Forgetting the registered agent renewal fee when budgeting the "true" annual cost — it's separate from the $300 tax.
• Missing the June 1 tax deadline three years running, which risks outright cancellation of the LLC.

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Forming a Delaware LLC, or deciding whether you should? Talking Tree's LLC Formation Guide walks through the decision, and Find Counsel can connect you with a startup attorney to weigh Delaware against your home state.

This article is for general informational purposes only and does not constitute legal or tax advice. Fees change — confirm current figures with the Delaware Division of Corporations before filing.