Delaware, decoded.

If you are raising money from US investors, this guide is short: form a Delaware C-Corp. Their documents assume it, their lawyers expect it, and deviating costs you legal fees and credibility at exactly the wrong moment.

If you're not raising, Delaware may be the wrong choice and this guide will tell you that too.

Why Delaware, specifically

• Investor familiarity. US venture documents - term sheets, stock purchase agreements, option plans - are drafted around the Delaware C-Corp. Anything else means review, negotiation, and often restructuring before the round closes.
• Developed case law. Delaware has the most tested body of corporate law in the US and a dedicated business court. For a company with multiple share classes and option holders, that predictability is worth something real.
• Clean equity mechanics. Stock options, preferred rounds, SAFEs and conversions work the way counsel expects out of the box.
• Enterprise comfort. US enterprise customers contract with Delaware entities without a procurement conversation.

C-Corp or LLC?

C-Corp if institutional investors are in your future. It's a separate taxable entity - profits are taxed at the corporate level and again on distribution - and that double layer is the trade-off for the structure investors want.

LLC if the business is owner-operated and profits flow to you. Simpler, more flexible, generally a pass-through. Convertible to a corporation later, but conversion costs fees and time and tends to land right when you're busy closing a round.

What setup involves

• Structure decisions first - authorised shares, founder split, vesting. Cheap to get right at formation, expensive to fix later.
• Certificate of Incorporation filed with the Delaware Division of Corporations - same or next day for standard filings.
• Registered agent in-state, which is mandatory and renews annually.
• EIN from the IRS - your federal tax ID, needed for banking and payroll. Founders without a US Social Security Number follow a different, slower route.
• Founder documentation - stock issuance, and 83(b) considerations to discuss with counsel within the statutory window.
• Bank account.

The franchise tax surprise

Delaware levies an annual franchise tax that is not based on income. One calculation method is tied to your authorised shares, which is why founders who authorise millions of shares without thinking about it receive alarming bills.

This is entirely avoidable by setting authorised shares sensibly at formation and using the correct calculation method. It's a good example of why the cheapest incorporation service can cost you more than it saves.

Tax obligations

A C-Corp files a federal corporate return. State-level obligations may also arise wherever you actually operate or employ people - incorporating in Delaware does not mean Delaware is the only state that cares about you.

Non-US founders face additional considerations, and foreign-owned entities have information-reporting obligations that apply regardless of whether tax is due. US tax is genuinely complex; we work with licensed US tax advisors rather than guessing.

Banking as a non-resident

Workable but not automatic. You'll need the EIN, formation documents, and identity verification for beneficial owners. Several banks and fintech providers now onboard non-resident-owned Delaware entities remotely.

The practical advice is to target institutions that accept your profile rather than applying broadly - rejections leave a record and each one makes the next application harder.

Cap table hygiene

Investors will diligence this. Stock issuances, option grants and vesting should be properly documented from day one. Reconstructing a messy cap table during a raise is both expensive and a bad look at the precise moment you want to look competent.

When Delaware is the wrong answer

If you're profitable, owner-operated, not raising, and optimising for low cost and privacy, a Delaware C-Corp gives you double taxation, an annual franchise tax and more admin in exchange for benefits you won't use. Wyoming is usually the better answer, and we'll say so.