Why nearly every venture-backed startup incorporates in Delaware as a C-corp, when to do it, and the annual maintenance that catches founders off guard.
If you plan to raise institutional capital, you'll be a Delaware C-corp. Doing it up front is cheaper than converting later. Doing it wrong costs money at every subsequent milestone.
Predictable corporate law with a specialized business court (Chancery). Every US institutional investor's legal team already knows Delaware; incorporating elsewhere adds friction to every financing.
Preferred stock, multiple share classes, and clean cap-table mechanics require C-corp status. LLCs and S-corps don't support the preferences, protections, and equity structures institutional investors require.
Before hiring your first employee, granting equity, or taking outside money. Founders often delay to save fees, then pay 3–5× more converting an LLC or foreign entity at Series A.
$300–$500 in filing fees. Add $1,000–$3,000 for a solid attorney (Cooley, Wilson Sonsini, Gunderson) or use Stripe Atlas / Clerky for a self-serve version. Total: under $2,000 done properly.
Delaware franchise tax (typically $400–$4,000/year based on shares authorized and assumed par value method — use the assumed par value calculation). Annual report. Registered agent fees ($100–$500/year). State income tax in the state where you operate. Missing any of these compounds fast.
Choosing 'authorized par value' franchise tax calculation instead of 'assumed par value' (10× more expensive). Missing the March 1 franchise tax deadline. Forgetting to file an 83(b) election within 30 days of founder stock issuance.
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