Delaware C Corporation and its advantages:

A corporation, sometimes called a C Corp based on the IRS tax code default, is formally known as a General Stock Corporation in Delaware. A Delaware corporation is a legal entity with perpetual existence that has the same rights and responsibilities as an individual but is separate under the law from the shareholders who own it. The shareholders are not personally liable for the debts of the corporation.

A Delaware corporation, same as in other states, has strict formalities governed by the state. Corporate bylaws are required. In accordance with the bylaws, the shareholders elect the board of directors to oversee the corporate activities, and the officers (i.e. President, Secretary, and Treasurer) are responsible for carrying out the day-to-day management of the corporation. Initial and annual meetings must be held, and records must be kept for minutes, resolutions, and other actions. A stock register is necessary to keep a record of the shares issued by a corporation.

Taxes are imposed on the corporation when earned, and then profit is taxed to the shareholders when distributed as dividends, creating a double taxation. The corporation can elect to be taxed as an S Corp by the IRS for pass-through taxation if it is eligible.

While the names of the initial directors of a Delaware corporation do not need to be listed on the Certificate of Incorporation, the names and addresses of all directors must be publicly disclosed in the Annual Franchise Tax Report which also collects certain other basic business information; shareholder information is not collected. The annual franchise tax is assessed based on the number of authorized shares.

Delaware corporations are popular for companies planning to attract investors.

Non-stock corporations and public benefit corporations are also available in Delaware.

  • Delaware is considered the most attractive state in the nation for organizing.
  • Delaware courts have a reputation of reaching reasonable and fair conclusions when construing the corporation laws.
  • Only one incorporator is required. A corporation may be the incorporator.
  • There is no minimum capital requirement.
  • The franchise tax compares favorably with that of other states.
  • companies doing business outside of Delaware, there is no corporation income tax.
  • Delaware has no sales tax, personal property tax or intangible property tax on corporations.
  • No taxation upon shares of stock held by non-residents and no inheritance tax upon non-resident holders.
  • A corporation may keep all of its books and records outside of Delaware.
  • You may have a principal place of business/address outside of the State of Delaware as well. (Depending on the nature of your business activities, qualification to do business in your state as a "foreign" corporation may be required. Please check with your local authorities).

Delaware Corporation vs Delaware LLC

Delaware Corporation
  • Separates personal assets from business
  • Owned by shareholders
  • Ownership described in shares
  • Managed through Board of Directors: Daily operations overseen by officers
  • Governing Document is ByLaws
  • Structure is recognized in US and Internationally
  • Annual Report Filing Requirement with State of Delaware
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Delaware LLC
  • Separates personal assets from business
  • Owned by Members
  • Ownership described in units or percentages
  • Controlled by Members and/or Managers
  • Governing Document is Operating Agreement
  • Structure recognized mostly in US
  • More Private- no annual report filing requirement
  • Allows for Operational Flexibility
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