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Editorial 10 MIN READ

Delaware fees in mid-2020: the table that did not move

An LLC still forms for $90 and costs $300 a year, a C-corp floor still sits at $450, and the Division kept the schedule intact through a pandemic

The Editors
Staff, Incorporator.org
10 min read Updated
Contents 5 sections
  1. What the schedule says on June 23, 2020
  2. What could have moved but did not
  3. What the stability signals about Delaware's posture
  4. Who this state still makes sense for in 2020
  5. Sources

elaware raised no filing fees in 2020. The Division of Corporations kept its schedule intact through the first wave of COVID-19, and the numbers on the Certificate of Formation line, the annual LLC tax line, and the corporate franchise tax table read the same in June as they did in January. For founders who track the Delaware fee schedule the way other people track the federal funds rate, this is the story: nothing moved.

The absence is worth writing about. Other states have quietly tacked on pandemic surcharges, paused expedited service, or rerouted paper filings to closed buildings. Delaware did not.

What the schedule says on June 23, 2020

The Division publishes its fee schedule at corp.delaware.gov, and the document the site serves today is the same one it served on January 1. The LLC-side numbers any founder needs to know:

Certificate of Formation (LLC). $90. This is the statutory filing fee under 6 Del. C. § 18-1105(a)(2), unchanged since the last rate adjustment predating this decade. The filing is a single short document with the LLC's name, its registered-office address in Delaware, the name and address of its Delaware registered agent, and a signature. The 2016 Delaware LLC formation guide walks through the six-line mechanic of the form; nothing in the statute has altered the process.

Annual LLC tax. $300, due June 1 of each year, flat, under 6 Del. C. § 18-1107(b). No proration for mid-year formations. No credit for mid-year dissolution until a Certificate of Cancellation is filed. Miss June 1 and § 18-1107(g) imposes a $200 penalty plus 1.5% monthly interest. The 2020 cycle closed three weeks ago. Founders who let the notice sit on the kitchen counter are already in penalty territory.

Certificate of Incorporation (stock corporation). Filing fee indexed by authorized-shares count, starting at $89 for a minimum filing (the $50 base receiving-office fee plus a $15 county fee plus $24 for up to 1,500 shares of no-par stock) and rising from there. The standard startup template (10,000,000 authorized shares of $0.0001 par common) files for roughly $109, depending on shares issued at formation. This is where most VC-backed founders land.

Annual franchise tax report filing fee (domestic stock corporation). $50, separate from the franchise tax itself, owed every year under 8 Del. C. § 502 and the Division's fee schedule.

Franchise tax floor. $175 under the authorized shares method (for 5,000 or fewer authorized shares) or $400 under the assumed par value capital method. A startup C-corp with 10,000,000 authorized shares, eight million issued to founders at $0.0001 par, and modest gross assets still files at the $400 floor under § 503(2), plus the $50 annual report fee: $450, unchanged from 2019. The 2019 piece on reading a Delaware franchise tax notice shows the arithmetic; HB 385's $400-per-million rate is the current law and has not been amended.

Franchise tax cap. $200,000 under both methods, with a separate $250,000 Large Corporate Filer tier added by HB 385 (149th General Assembly) for public companies meeting the revenue and assets thresholds in 8 Del. C. § 503(c). The Secretary of State publishes the Large Corporate Filer designations each year. If you need to ask whether your company qualifies, it does not.

Expedited service. The menu the Division has run for years: $50 for 24-hour processing, $100 for same-day, $200 for two-hour, $500 for one-hour, $1,000 for 30-minute. All five tiers continued through the March and April stay-at-home period and all five remain available in June. The two-hour tier is still the lane that closes emergency holding-company formations when a deal sheet lists an entity that does not yet exist.

Registered-agent requirement. 6 Del. C. § 18-104 (LLCs) and 8 Del. C. § 132 (corporations) still require a Delaware registered agent at a Delaware physical address. The Division does not set the price. Commercial agents in 2020 range from roughly $50 a year at the commodity end to several hundred at full service.

There are no new line items on the schedule. The Division did not add a COVID-era surcharge, an electronic-filing convenience fee, or a backlog-clearance premium. It did what it always does.

What could have moved but did not

Three pieces of 2019 legislation and one 2020 procedural shift are worth naming because each had the capacity to land on the fee table and, in the event, did not.

The first is Senate Bill 88, signed on June 19, 2019, amending the General Corporation Law and the LLC, LP, and partnership statutes. SB 88 addressed ratification of void corporate acts under § 204, tightened the blockchain-records provisions § 219 added in 2017, loosened a few procedural requirements around public benefit corporations, and made housekeeping changes to the LLC Act (6 Del. C. Chapter 18). The bill's provisions took effect August 1, 2019 for the corporate changes and were signed along with the LLC Act amendments in HB 133. Neither package touched the filing fees or the annual tax amounts. A founder reading the 2020 fee schedule next to the 2018 schedule would not see the SB 88 and HB 133 changes in any dollar figure; the changes are procedural and definitional.

The second is HB 385 itself, the 2017 revenue bill that raised the franchise tax ceiling to $200,000, added the $250,000 Large Corporate Filer tier, and moved the assumed par value rate to $400 per million. HB 385 took effect for the tax year beginning January 1, 2018 and the 2019 filing cycle was the second full run at the new rates. The 2020 cycle is the third. The rates have held. There is no 2020 amendment to § 503 adjusting the cap, the Large Corporate Filer threshold, or the per-million rate. If your 2020 bill is larger than your 2019 bill and nothing about your balance sheet changed, the most likely explanation is a Schedule L asset figure that rose because the corporation closed a priced round in 2019, not a rate adjustment.

The third is the Division's procedural response to COVID-19. When Governor Carney's State of Emergency declaration went into effect on March 12 and the stay-at-home order followed on March 24, the Division closed its public counter but did not close its filings. Electronic submission through the Delaware Corporations Information System continued without interruption. Paper filings routed through commercial agents continued because those agents held filing accounts with the state and could submit electronically on behalf of the customer. Expedited service tiers stayed open. The Division issued guidance allowing remote notarization under Governor's Proclamations issued in March and April (tracking the emergency orders on notarial acts), which mattered for certificate amendments and LLC dissolutions that require notarized signatures in some circumstances. None of that touched the fee schedule.

The fourth non-event is what we are not seeing in the 2020 numbers on formations. Through the first quarter of 2020, the Division reported that new domestic entity filings continued at roughly prior-year pace, with LLC formations leading corporate formations by the usual four-to-one ratio. Early second-quarter figures, when they publish, are expected to show the same pattern. Delaware formation does not appear to have slowed with the economy; if anything, the LLC-formation rate ticked up in April and May as newly unemployed professionals filed to stand up solo consultancies and to chase the PPP eligibility question. None of that reached into the fee schedule, either. The state collected the same $90 per Certificate of Formation, the same $50 annual report fee, and the same $300 LLC tax per entity it collected in 2019.

What the stability signals about Delaware's posture

State fee schedules move for three reasons: revenue targets, service costs, and competitive positioning. The Delaware fee schedule has held at 2018 levels because none of the three pressured it enough in 2020 to force a change, and because the Division has a long institutional preference for stability in the table itself.

On revenue: Delaware's corporate filings and franchise tax remain the single largest source of non-tax state revenue, producing on the order of $1.4 billion in FY 2019 across the Division's fees, the franchise tax, and related collections, according to the Department of Finance's annual financial statements. That is roughly a quarter of the state's general fund. The General Assembly has historically adjusted the revenue line in the franchise tax (as HB 385 did) rather than in the filing fees. Filing fees are the visible number a founder sees before signing; the franchise tax is the recurring number that corporations pay after they are already domiciled. Adjusting the latter is easier.

On service costs: the Division runs a modern electronic filing platform, staffed counter services in Dover, and expedited processing that matches or beats any state in the country. Those operations cost money. The expedited fee schedule covers expedited work at a healthy margin. The Division has not floated a base-fee increase because the margin on expedited work and the franchise tax cover its operational cost.

On competitive positioning: Delaware's audience is not the walk-in founder comparing $90 to Wyoming's $100 or New Mexico's $50. It is the venture-backed C-corp and the holding-company structure where the choice of forum is not price-sensitive. Moving the LLC fee from $90 to $120 would not materially change the decision of a founder who has already been told by counsel to form in Delaware. It would, however, generate headlines of a kind Delaware prefers to avoid. The Division is cautious about the optics of fee increases for that reason.

Put those three together and a stable 2020 schedule is the predictable outcome, pandemic or not. The Division has no reason to raise the LLC fee, a targeted reason (HB 385) to have raised the franchise tax ceiling two years ago, and strong reasons to keep the rest of the table still.

Who this state still makes sense for in 2020

The math for Delaware in June 2020 is the same math that held in 2016 and in 2019. An LLC that will not raise institutional money and operates entirely in a single home state still does not need to form in Delaware; forming locally saves the $300 annual tax and the registered-agent fee, and avoids the foreign-qualification paperwork in the state where the business actually operates.

A C-corp that plans to raise money from a priced round still needs to start in Delaware. The investor term sheet will say so. Starting here avoids the conversion cost (several thousand dollars in legal and tax work, a short gap in the cap table) that an out-of-state startup pays when the Series A lead insists on re-domestication. The $450 floor under § 503(2) plus the $50 annual report fee is a known recurring cost and is dwarfed by the legal spend on a single financing round.

A holding company whose subsidiaries may sue or indemnify one another still belongs in Delaware for the Court of Chancery case law. That calculus has not changed.

For a solo consultant standing up an LLC in June 2020 because PPP eligibility or 1099 consulting income pushed the question to the top of the pile, Delaware is almost certainly the wrong state. Form at home, pay your state's formation fee (typically $100 or less, sometimes under $50), and revisit the Delaware question if and when the business acquires outside capital or interstate operations.

One genuine loose end from the 2020 cycle is timing on the next franchise tax amendment. HB 385 was a 2017 revenue package enacted during a budget crunch. The 2020 fiscal outlook in Delaware, as in every state, is worse than the 2017 outlook. Whether the 151st General Assembly convenes in January 2021 with another franchise tax adjustment on the agenda is the question that will shape the 2021 and 2022 notices. The fee schedule itself, the one a founder looks at before forming, is unlikely to be where any such adjustment lands. It almost never is.

Sources

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