More startups incorporate in Delaware than anywhere else in the United States, but the actual filing work is smaller than most founders expect. The Delaware Division of Corporations publishes the process step by step, and it comes down to a handful of decisions, one form, and a recurring annual obligation that catches many new companies by surprise.
The choices that come first
The state's own guide starts with entity type, and it pointedly does not give legal advice: it recommends an attorney or CPA for that decision. For a startup planning to raise venture money, the usual answer is a C-corporation. The one hard requirement Delaware imposes on every entity is a registered agent with a physical street address in the state - a resident or a business authorized to operate there. A company physically located in Delaware can act as its own agent; everyone else hires one. Reserving a name is optional: for $75 the state holds it for 120 days.
Filing the certificate
The formation document is the Certificate of Incorporation. The state provides fillable sample forms with instructions, submitted through its online Document Filing and Certificate Request Service or by mail to the Division of Corporations in Dover. All filing fees are due on submission, and the state warns that transactions on its site are non-refundable. If a bank later asks for proof of standing, a short-form Certificate of Status costs $50; a long-form version listing every document ever filed costs $175.
The annual report and franchise tax
This is the part that bills founders who forget it. Every domestic Delaware corporation - one actually incorporated in the state - files an annual report, due on or before March 1 each year, and filing is online only; non-exempt corporations also pay franchise tax. The report fee is $50 for a non-exempt corporation and $25 for an exempt one (exempt corporations file but owe no tax). The tax is calculated two ways - the Authorized Shares Method and the Assumed Par Value Capital Method - and you pay whichever produces less. The minimum is $175 under the first method and $400 under the second, with a $200,000 maximum for both, or $250,000 for companies the state designates Large Corporate Filers. Miss March 1 and the state adds a $200 penalty plus 1.5% monthly interest on the unpaid balance. Companies owing $5,000 or more pay estimated tax quarterly: 40% by June 1, 20% by September 1, 20% by December 1, the remainder by March 1.
If you are not a domestic Delaware C-corp
Corporations incorporated in another state but registered in Delaware as foreign corporations follow a separate track: their annual report is due June 30 with a $250 filing fee, and a missed deadline adds a $250 penalty. Delaware LLCs, limited partnerships and general partnerships skip the annual report entirely, but they owe a flat $300 annual tax due June 1.
What this means for you
Formation is the easy part; the recurring cost is the franchise tax, and a young startup usually lands near the minimums. Two habits keep it painless: calendar the March 1 deadline the day you incorporate, and run both tax calculation methods before paying - the Authorized Shares Method can produce an alarming number for a company with millions of authorized shares, and the Assumed Par Value Capital Method usually shrinks it to the minimum.