Delaware is a popular jurisdiction for incorporation for many companies seeking to operate in the United States on account of it having a comprehensive and supportive set of favourable laws for corporate shareholders and directors. Part of this popularity also arises from it having the court infrastructure in place to handle the matters which arise from such entities.In addition to corporate income tax, Delaware charges a “franchise tax” every year for the ability to be a Delaware corporation. The franchise tax charged depends on whether the corporation has par value stock (i.e., stock with a minimum value) or no-par-value stock. For corporations with par-value common stock, the franchise tax is a factor of the Delaware corporation’s gross assets and the number of shares issued to stockholders. Generally, a high-growth startup would start by authorizing issuance of 10 - 20 million shares of common stock at a par value of $0.0001 or $0.00001. As long as the corporation’s gross assets are low, or as long as a significant number of those authorized shares are issued to founders (issuing a majority of the authorized common stock to founders is good practice), the corporation should not pay more than $400 per year in Delaware franchise taxes.Alternatively, if you want to get the absolute minimum in Delaware franchise tax, you could incorporate with up to 5000 no-par-value shares of common stock authorized. This setup will ensure the minimum possible franchise tax of $175 per year.If you are incorporating in Delaware, it’s extremely important to confer with counsel to determine how to reduce your Delaware franchise tax rate. A couple wrong moves could leave you with a tax bill of over $200,000 before you make a penny!For a more holistic understanding of incorporating in Delaware, check out Clausehound’s Certificate of Incorporation learning library template, and be sure to click through our tags to learn more about each clause!Author:Phil Weiss and Sahil Kanaya