The corporation most venture-backed startups end up in, and the one an investor's lawyer already knows by heart.
A Delaware C-Corp is a regular corporation formed under the Delaware General Corporation Law. Its certificate of incorporation sets out the authorized stock, and if there's more than one class, the rights attached to each [1]. That's the whole trick: equity you can slice into common, preferred and anything else a cap table needs. For federal tax purposes a C-Corp is a separate taxpayer, taxed at a flat 21% on its income, and shareholders are taxed again when profits come out as dividends [6][7]. It is also the only entity type whose stock can qualify as Qualified Small Business Stock (QSBS), the federal tax break on gains from selling stock in a qualifying early-stage company [11].
Four reasons founders raising money default to Delaware, and one reason privacy is a partial story here.
The certificate can authorize multiple classes of stock and spell out each class's rights [1]. Stock issued by a domestic C-Corp is also the only kind that can qualify for QSBS: for stock acquired after 4 July 2025, 50% / 75% / 100% of gain can be excluded after 3 / 4 / 5 years, up to the greater of $15 million or 10x basis, if the company's gross assets stay at or under $75 million [11][12].
Delaware's default is one vote per share, but the certificate of incorporation can provide for more or fewer votes on any share [2]. That's the legal hook for founder super-voting stock.
Delaware's Court of Chancery hears equity matters, and its docket is mostly corporate disputes alongside trusts, estates and commercial and contract cases [3].
The certificate must list the registered office, registered agent and the incorporator's name and mailing address, but it doesn't have to name any stockholders. Directors are named only if the incorporator's powers end at filing [1]. Your registered agent's Delaware address does the public-facing work.
Same state, very different tools. Pick based on who's going to hold equity in it.
| Delaware C-Corp | Delaware LLC | |
|---|---|---|
| Annual state cost | Franchise tax (minimum $175 on the authorized shares method, $400 on the assumed par value method) plus a $50 annual report fee, all due March 1 [4][5] | $400 flat annual tax, due June 1. Raised from $300 by Delaware H.B. 400, effective for the 2026 tax year [4][14][15] |
| Federal entity tax | Taxed as a separate entity at 21%, dividends taxed again to shareholders [6][7] | Not taxed at the 21% corporate level unless it elects corporate treatment (see your tax adviser) |
| Foreign-owner reporting | Form 5472 with the Form 1120 if at least 25% foreign-owned and there are reportable transactions [8] | A foreign-owned single-member LLC files a pro forma Form 1120 with Form 5472 [8] |
| QSBS eligibility | Yes, stock of a domestic C-Corp can qualify [11] | No. Partnerships and S corporations don't qualify [11] |
| Beneficial ownership (BOI) filing | None for domestic companies since 14 August 2026 [13] | None for domestic companies since 14 August 2026 [13] |
| Typical use | Venture-backed startups, employee option pools, founder super-voting stock | Operating entities, funds and feeders, SAFT issuance vehicles |
The LLC isn't the lesser option, it's the right one for different jobs. Compare costs on the live order pages and check your tax position with an adviser.
Every Delaware corporation files an annual report ($50 for a for-profit corporation) and pays franchise tax by March 1. Missing the report costs a $200 penalty, unpaid tax accrues 1.5% interest per month, and a corporation that neglects the tax or report for more than a year can have its charter voided [4]. Delaware offers two calculation methods, and the default authorized shares method scales with how many shares you authorize: it adds $85 for every 10,000 shares or portion above 10,000 [4][5]. Check the method before you authorize a big pile of shares.
A 25% foreign shareholder (direct or indirect, by votes or value) can make the company a reporting corporation, and Form 5472 carries a $25,000 penalty if not filed [8]. Dividends to foreign persons are generally subject to 30% US withholding unless a tax treaty reduces it [9]. Otonomos's EIN application is for non-US owners and can take up to 60 working days [16].
FinCEN's final rule, effective 14 August 2026, permanently exempts domestic reporting companies from Corporate Transparency Act beneficial ownership reporting. Only foreign-formed entities registered to do business in a US state still report. Litigation over the underlying statute isn't fully resolved [13].
What Otonomos charges to set one up. Government franchise tax and annual report fees are paid to Delaware, not included here.
| STARTER KIT | |
|---|---|
| Incorporation (one-time) | included |
| Registered Agent and Local Address (annual) | included |
| Total | $595 |
| PACKAGES | |
|---|---|
| Skinny Start-up: U.S. fiat bank account opening, crypto exchange account opening | $3,460 |
| VC Ready: U.S. fiat bank account, guidance (IP assignments and Employee Stock Option Plan are mentioned on the order page) | $4,260 |
| Super-founder Shares: Super-Founder Articles, guidance, crypto exchange account opening | $5,200 |
| POPULAR ADD-ONS | |
|---|---|
| EIN Application (non-US owners, up to 60 working days) | $180 |
| Annual Report Compliance (annual) | $400/yr |
| Nominee Stockholder (annual) | $1,200/yr |
| Fiat bank account U.S. (includes EIN application and banking resolution) | $2,260 |
| Bank account resolution | $80 |
| Super-Founder Articles | $2,000 |
| Cross-jurisdictional guidance | $2,000 |
| US Mailing Address (Dover, Cheyenne, Miami or Austin), each | $240/yr |
The order page has the live pricing, add-ons and checkout. This page was just the homework.
It's an election to pay tax on restricted stock's value at grant instead of as it vests. It must be filed no later than 30 days after the property is transferred, and the IRS has a dedicated Form 15620 for it [10]. Whether it makes sense for your vesting setup is a question for a tax adviser, but the 30-day clock is not flexible.
Not for a domestic Delaware corporation. FinCEN's final rule, effective 14 August 2026, permanently exempts domestic reporting companies [13].
Otonomos says as little as 2 business days for a fully operational entity [16]. Treat that as a best case, not a promise.