Franchise Taxes are levied upon corporations in certain states (like Delaware) for the right to be charted in the state.
In Delaware, the default method for calculating franchise taxes (called the “authorized shares” method) varies based on the number of shares in the corporation’s certificate of incorporation as of December 31. The alternative method (called the “assumed par value capital” method) is based on the number of authorized shares in the corporation’s certificate of incorporation, the number of issued shares and the corporation’s gross assets as of December 31. The assumed par value method is strongly recommended, as it often results in far less Franchise Taxes payable.