Delaware incorporation
Delaware incorporation refers to forming a corporation in the State of Delaware, the jurisdiction chosen by more than 68 percent of Fortune 500 companies and by nearly every U.S. venture-backed startup.
Definition
Delaware is a small northeastern state that hosts more than one million companies, including more than 68 percent of Fortune 500 companies, according to public data from the Delaware Division of Corporations. Its corporate statute, the Delaware General Corporation Law (DGCL), is the most mature and predictable in the country. The Court of Chancery, a specialized equity court hearing corporate cases without a jury, has produced a dense body of case law since 1792, offering executives and investors unmatched contractual visibility. The state taxes neither income generated outside its territory nor shares held by non-residents.
In plain English
If you are forming a U.S. company to raise capital, sign with a major account or get acquired, incorporate in Delaware. It is not a tax haven: it is a jurisdiction where the rules are written, known and applied by judges who have done nothing else for two centuries. U.S. venture investors, M&A lawyers, investment banks and attorneys all work daily with the DGCL. Incorporating elsewhere (California, New York, Texas) doubles your future transaction costs, because every investor will require time to digest the local statute. Incorporation costs are modest: roughly 100 dollars in filing fees, plus a mandatory Registered Agent (200 to 500 dollars per year) since you almost certainly have no physical address in Delaware.
RWM transatlantic case study
For a French founder, the typical choice is between a Delaware C-Corp, a Delaware LLC or a Wyoming LLC. We decide based on the project: a planned VC raise points to a Delaware C-Corp without debate. A simpler operating business (e-commerce or B2B services) points to an LLC, sometimes in Wyoming for confidentiality (Wyoming does not publish the members). The Certificate of Incorporation is filed with the Delaware Division of Corporations under section 101 et seq. of the DGCL. The Bylaws are then adopted by the board, and a Stockholders Agreement governs the relationships between founders and investors. The Delaware franchise tax due on 1 March can be a surprise: under the Authorized Shares method, a C-Corp with 10 million authorized shares pays roughly 75,000 dollars per year, versus a few hundred under the Assumed Par Value Capital method. We systematically select the second method at filing.
Points to watch
- Delaware franchise tax due 1 March, Assumed Par Value method preferred.
- Registered Agent with a physical Delaware address required, renewable annually.
- A Wyoming Inc. offers more confidentiality but less credibility for an institutional raise.
- The Court of Chancery sits in Wilmington, with case law available on courts.delaware.gov.
- FinCEN BOI Report required since 1 January 2024 for any Delaware entity.