Kateryna Dzhevaga·IRS CAA · Authorized IRS e-file Provider·Federal practice (all 50 states)·EN · RU · UK
C-Corporation

Open a C-Corporation in the US (Delaware Inc.)

A full corporation for tech startups targeting venture funding and non-residents with international operations. 21% federal corporate tax, separate legal entity, ability to issue preferred shares.

Book a consultation

What is a C-Corporation in the US

C-Corporation (or just "C-Corp") is a fully separate legal entity in the US. Unlike an LLC, a C-Corp pays its own corporate income tax on profits (21% federal + state corp tax where applicable), and the owner pays personal tax separately on distributions (dividends). Key features: • 21% flat federal corporate tax on profits (down from 35% before 2018 TCJA) • Separate entity for legal and tax purposes — strong liability separation • Can issue multiple share classes (common, preferred, voting/non-voting) • No restrictions on shareholder citizenship — NRA can own 100% • Unlimited number of shareholders • Required corporate formalities: annual board meetings, formal minutes, annual shareholders meeting • Files Form 1120 annually + state corp returns The "double taxation" concern: company pays 21% corp tax on profit, then owner pays personal tax (15–20% qualified dividend rate) when profit is distributed as dividends. For a $100K profit fully distributed: $21K corp tax + ~$15K dividend tax = $36K total (36% effective). This is generally worse than LLC pass-through at the same income level — UNLESS specific structural needs justify it.

C-Corp is the right fit for you if:

  • Tech startup planning to raise venture capital within 6–24 months — funds require preferred shares, which only a C-Corp can issue
  • Business with international investors — foreign funds (Cyprus, Singapore, Hong Kong) recognize "Inc." immediately
  • Ready for corporate formality — board meetings, formal minutes, annual shareholders meetings
  • Planning employee stock options (options for employees, RSUs) — only possible in a C-Corp
  • Want to retain profits inside the company without personal tax — Google/Amazon-style strategy

C-Corp is NOT right for you if:

  • Solo entrepreneur with no VC or investor plans — overkill complexity for small business
  • Real estate — distribution of property out of a C-Corp = recognition of gain (IRC §311(b)), big tax
  • Small service business ($50–200K) — you lose to double taxation, LLC + S-Corp election is better
  • Not willing to spend $3,000–5,000/year on compliance (Form 1120, board minutes, audit, payroll)
  • Distribute profit to owner immediately — double taxation eats the benefit

Why Delaware is the C-Corp standard

Delaware is the "corporate Mecca" of the US. Although it has only 1 million residents, over 65% of Fortune 500 companies and 90% of US IPO exits are incorporated there. Reasons: • Delaware Court of Chancery — specialized corporate-law court with 200+ years of precedent. Cases resolved in 3–6 months by expert judges (Chancellors), no juries. The world's most predictable corporate-dispute forum. • Delaware General Corporation Law (DGCL) — the most flexible and pro-management corporate statute in the US. Many directors/officers protections, easy to customize bylaws. • VC and PE familiarity — every Series A term sheet assumes Delaware Inc. Y Combinator, Andreessen Horowitz, Sequoia — they require Delaware C-Corp as condition of investment. • Privacy — only officer/director names appear in public records; shareholder names are private. • Tax — Delaware has no state corporate tax on activities outside Delaware. For most non-Delaware operating businesses, the only state-level cost is the Annual Franchise Tax ($300+ minimum). Downsides: $300+/year Annual Franchise Tax (vs $0 in Wyoming). Annual Report required. Higher Registered Agent fees ($100–$300/year). Doesn't matter for most clients given the compensating benefits.

C-Corp cost and compliance

Delaware C-Corp formation: • Filing fee: $89 • Franchise tax (annual): $300 minimum for Delaware • Registered Agent: $100–$200/year • Initial Board Resolutions package: $200–$500 • Bylaws drafting: $300–$700 • EIN: free via IRS • Stock issuance documentation: $200–$500 • My turnkey service: from $599 Annual ongoing costs: • Delaware Annual Franchise Tax: $300+ (scales with authorized shares) • Annual Report: $50 • Registered Agent: $100–$200 • Form 1120 preparation: $1,500–$3,000 • Board minutes maintenance: $500–$1,500 (if outsourced) • Payroll (if any employees): $500–$2,000/year via Gusto/ADP Typical year-1 total: $2,500–$5,000. Annual ongoing: $2,500–$6,000. This is meaningfully more than LLC ($150–$500/year ongoing). Justified only if structural needs (VC, international investors, options) demand it.

Frequently asked questions — opening a C-Corporation

What a C-Corp is, when you need it, why Delaware, double tax, vs LLC, can a non-resident own it

C-Corporation is a fully separate legal entity in the US. It pays its own 21% federal corporate tax (plus state corp tax where applicable) on profits, and the owner pays personal tax separately on dividends. Files Form 1120 annually. Can issue multiple share classes (common, preferred). No restrictions on shareholder nationality. Standard structure for VC-funded tech startups.

Ready to open a C-Corporation?

Book a consultation — 30 minutes, we'll evaluate whether C-Corp suits your business, pick the state, prepare the formation plan.

Book a consultation