Definition
What is a Delaware C-Corp?
A Delaware C-Corporation is a US entity type incorporated under Delaware General Corporation Law (DGCL). It's the default choice for VC-backed startups, with 95%+ of YC companies and 60%+ of Fortune 500 incorporated in Delaware.
Why Delaware
Why Delaware specifically?
Delaware is the gold standard for several reasons:
- 200+ years of business case law via Court of Chancery
- Most flexible General Corporation Law
- Predictable tax treatment — corporate tax only on Delaware-source income
- Standard for VC investment — VCs prefer Delaware
- Strong privacy for shareholders (directors are public)
- Easy to incorporate online, fully remote
Structure
C-Corp structure.
C-Corp = separate taxable entity (vs LLC pass-through).
- Pays federal corporate tax (21%) + state corporate tax (Delaware: 8.7% on Delaware-source only)
- Owners (shareholders) receive dividends — taxed again at individual level (double taxation)
- Can issue multiple classes of stock (common, preferred, etc.)
- ESOP-friendly — easy to issue stock options
- Can have unlimited shareholders, including non-residents and foreign entities
- Required: Board of Directors, Officers (CEO, Secretary, Treasurer), Bylaws
Best for
Who needs a Delaware C-Corp?
Founders/companies that:
- Plan to raise from US VCs (almost always require C-Corp)
- Need clean preferred-stock cap table
- Want to issue ESOPs to US/global employees
- Plan to acquire / be acquired by US company
- Want to do IPO eventually (NYSE/Nasdaq)
- Need QSBS (Section 1202) for tax-free exit ($10M+ gain exclusion)