4 ms·
I don't think this is the right forum/thread to point it out but Clerky defaults to 10,000,000 shares while incorporating and this was a big mistake for us (and
by ganeshkrishnan 8y ago
I don't think this is the right forum/thread to point it out but Clerky defaults to 10,000,000 shares while incorporating and this was a big mistake for us (and for most startups) down the lane as Delaware has higher taxes if the company has more than 5,000 shares (regardless of the share value).
We lost nearly a month's revenue paying off taxes and filing legal amendments.
Also you guys handed over my account to CSC as agent and we weren't even aware of it.
- swampthing 8y agoIt sounds like you might have gotten some bad advice from elsewhere – most new startups with 10 million authorized shares pay a DE franchise tax that is very close to the minimum (around $400). There are two different ways to calculate franchise tax for DE - the "authorized shares" method and the "assumed par value" method. The letter DE sends out uses the former to estimate your franchise tax, which is usually some huge amount. But when you go to pay your franchise tax, you can just use the "assumed par value" method and pay what is typically a very small amount. I'll shoot you an email on this as well!
- ganeshkrishnan 8y agoThe minimum can be $150 if your shares are less than 5000. If the difference between $400 and $150 is inconsequential then yes it doesn't matter. The advice was from Delaware government customer service.