Legal Question in Business Law in Delaware
Delaware tax per authorized shares
I am forming a Delaware corporation and want to authorize 1,000,000 common shares. How can I mitigate the franchise tax based on authorized shares, other than to reduce the authorized shares to a di minimis amount?
2 Answers from Attorneys
Re: Delaware tax per authorized shares
Set up your corp/LLC in another state.
Re: Delaware tax per authorized shares
Why are you setting up a Delaware corporation? Unless it is for a huge business, probably one whose shares will qualify for an IPO and listing on a major exchange, or the business will actually be conducted in Delaware, there is no advantage to being incorporated there. Someone has sold you a bill of goods. If you insist on being a Delaware corporation, then issue 100 shares and do a 10,000-for-one split when you really need 1,000,000 shares and can afford it.
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