The “authorized share method” is Delaware’s default method of calculating annual franchise tax, based only on how many shares a Company has authorized in its charter. This method can be prohibitively expensive for a young startup with a lot of authorized shares and result in initial tax bills of $100,000 or more.

Fortunately, a startup can choose to be taxed under the Assumed Par Value Method instead, which for early stage startups will almost always yield dramatically lower tax bills.