Delaware C Corp

Delaware C Corp is the default answer when a US investor asks "where are you incorporated?" More than 68% of Fortune 500 companies and the majority of Y Combinator-backed startups are registered in Delaware — not because of tax advantages, but because the state's legal framework is the most founder and investor-friendly in the country. When you incorporate here, you're speaking a language that US venture capitalists, lawyers, and banks already understand.

The federal corporate tax rate is a flat 21% on net profit, filed annually via Form 1120, due April 15 (extendable to October 15). A Delaware corporation that does not conduct business in Delaware is generally exempt from Delaware corporate income tax, but still owes Delaware franchise tax. Where the company does business in Delaware, Delaware corporate income tax applies to income allocated and apportioned to the state — it is not a blanket exemption for all out-of-state revenue.

Delaware franchise tax is a separate annual obligation due by March 1 each year. There are two calculation methods — and which one you use matters a lot:

• Authorized Shares Method: minimum $175, but this can balloon to tens of thousands if you authorize many shares. A corp with 10 million authorized shares owes over $8,600 under this method.
• Assumed Par Value Capital Method: minimum $400, but typically keeps the bill low for early-stage companies with limited assets. Most startups pay $400–500 using this method.

Always use the Assumed Par Value Capital Method when filing if it results in a lower bill — Delaware lets you choose. Set your share par value at $0.0001 when incorporating to access the most favorable tax treatment. The annual report filing fee is an additional $50 on top of the franchise tax.

Other key tax obligations:

• Delaware corporate income tax may apply when the company does business in Delaware
• No US payroll taxes unless you have US employees
• R&D tax credits available at federal level
• Loss carryforward allowed — losses offset future profits
• Dividend withholding tax of 30% applies to non-resident shareholders receiving dividends (reduced by tax treaties in many countries)

If you have no US employees and no US-source income, your US tax obligations are manageable. Once you take a US salary or hire US staff, complexity increases significantly. Budget for a US CPA from year one — expect $1,500–5,000 per year depending on transaction volume and complexity.

Important for non-residents: the US C Corp does not automatically reduce your personal tax burden in your home country. Depending on your country of residence, you may owe personal tax on dividends or distributions from your Delaware company. Get local tax advice before assuming any savings.

Delaware C Corps have an easier time opening US business bank accounts than almost any other structure. Mercury, Brex, and Relay all support non-resident founders with a Delaware C Corp — fully online, no branch visit required.

• Mercury — the most popular choice for early-stage founders. No monthly fees, FDIC insured via partner banks, opens in 1–3 business days. Supports wire transfers, ACH, and a Visa debit card. No minimum balance.
• Brex — better if you need corporate cards, expense management, and bill pay from day one. Particularly useful if you have a team spending money across multiple categories.
• Relay — solid alternative with good multi-user access controls, useful if you want to give bookkeepers or co-founders their own cards with spend limits.
• Chase / Bank of America — traditional banks that most non-residents should skip in the early stages. They typically require a US address, in-person visit, and extensive documentation.

Stripe, PayPal, Paddle, and Lemon Squeezy all work natively with Delaware C Corps. If your business runs on Stripe, this structure is effectively a requirement — Stripe's US entity support is built around C Corps and LLCs.

Delaware has a specialized business court called the Court of Chancery, with over 200 years of corporate case law behind it. This matters when you raise money: investors and their lawyers are comfortable with Delaware terms, standard SAFE agreements, and preferred stock structures — all of which are built around Delaware C Corp law.

The C Corp structure cleanly supports multiple share classes — common, preferred, options — which is why it is effectively required for institutional VC funding. An LLC can be contractually flexible, but it usually does not fit standard venture-capital preferred-stock and cap-table expectations; an S Corp is restricted to one class of stock.

For non-resident founders, the entire setup is remote. You don't need a US address, a US bank account to start, or a US visa. A registered agent — a company that receives legal mail on your behalf inside Delaware — satisfies the state's physical presence requirement for around $50–125 per year.

One important note: working inside the US as a foreign national is a separate matter from owning a Delaware C Corp. There are no citizenship or residency restrictions on shareholders, directors, or officers. But if you plan to physically work in the US, you'll need proper visa and work authorization — the corporate structure doesn't change that.

1. Choose a registered agent — required before filing. Northwest Registered Agent ($125/yr), Harvard Business Services ($50/yr), or Registered Agents Inc are reliable options. Avoid the cheapest providers that upsell aggressively.
2. File Certificate of Incorporation with the Delaware Division of Corporations — $89 state filing fee, done online at corp.delaware.gov. Standard turnaround is 3–5 business days; same-day service is available for a $50 expedite fee.
3. Draft bylaws and issue founder shares — use Clerky or Stripe Atlas for standardized startup docs, or hire a startup lawyer. Set par value at $0.0001 per share for favorable franchise tax treatment.
4. Apply for an EIN (Employer Identification Number) — free through the IRS. Applicants with a qualifying US principal place of business can use the online service. International applicants can apply by phone, fax, or mail using Form SS-4; fax processing is generally faster than mail, but timelines can vary.
5. Open a bank account — Mercury or Brex once you have your EIN and Certificate of Incorporation.
6. Set up a cap table — Carta (paid) or a simple spreadsheet at the very beginning.

Total time from decision to operational bank account: 4–8 weeks, mostly waiting for the EIN.