Starting a business in the US — the Delaware C-corp playbook

Delaware C-corp is the default because:

• The Delaware Chancery Court has 200+ years of corporate-law precedent — fewer surprises at scale.
• Preferred stock norms (with liquidation preferences, anti-dilution, etc.) are well-established. Investors don't need to renegotiate the basics in every term sheet.
• All institutional VCs are set up to invest in Delaware Cs. Raising in any other structure adds 2-6 weeks of legal friction.
• Stripe Atlas, Clerky, and most YC docs assume Delaware C-corp.

When it's the wrong answer:

• You're a profit-distribution business (a profitable agency or consultancy) — an LLC or S-corp passes through, avoiding double taxation.
• You're solo, bootstrapping, and don't plan to raise — LLC is simpler and cheaper to maintain.
• You're a high-margin small business with no exit plan — same logic.

The franchise tax surprise: Delaware C-corps pay annual franchise tax. Default method is "Authorised Shares" (potentially $90k+ for a startup with 10M authorised shares). You almost always want the "Assumed Par Value Capital Method" which is ~$400-$2,000. File the franchise tax report each March; pick the cheaper method.

Day 1: Incorporate. Stripe Atlas ($500 one-off) or Clerky ($300-400) handle Delaware formation + standard founder docs (bylaws, stock purchase agreements, board consents, EIN application). Don't DIY this — the standard docs are battle-tested and free with the service.

Day 2-5: EIN. Application is via IRS Form SS-4. Atlas/Clerky handle it; standalone applications take 4-6 weeks (US founder) or up to 8 weeks (non-US founder).

Day 5-10: Issue founder shares. Default: 10,000,000 authorised shares of common stock; founders buy their allocation at par value ($0.0001/share, so $1,000 buys 10M shares — i.e. you literally write a $1,000 cheque to the company). Document the purchase with a Stock Purchase Agreement.

Day 10-30: File 83(b) elections. The most-skipped step. The 83(b) election tells the IRS to tax you on the founder share grant TODAY (at par value, so ~$0 of tax) rather than at vesting (which would tax you on the appreciated value, potentially $millions). File certified mail with return receipt within 30 days of the share grant. Miss the window and you can never fix it.

Week 3-4: Set up everything else. Mercury or Brex for the business bank account, Stripe for payments, Carta/Pulley for cap-table management once you have employees or investors.

The mistake: you incorporate in Delaware but live and work in California (or NY, TX, MA, etc.). You think you're a "Delaware company". You're not — you're a Delaware company doing business in your home state. Almost every state requires "foreign qualification" — registering as an out-of-state company in the state where you actually operate.

What it costs to skip: California franchise tax minimum is $800/year. NY publication requirement after foreign qualifying is a separate fee. If a state catches you operating without foreign qualifying, you can owe back-fees, penalties, and lose access to local courts.

The right move: foreign-qualify in every state where you have substantial business activity (employees, office, ongoing customer operations). Use a registered-agent service (Atlas + Clerky handle this) and stay current on franchise taxes in both Delaware and your home state.

Special note for non-US founders: you can incorporate in Delaware without ever setting foot in the US. Stripe Atlas was built for this. You still need an EIN, a registered agent in Delaware, and a US bank account (Mercury and Brex both work for non-US founders).