Features of Delaware Corporations

Features
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The company (entity type) our clients select when raising capital from the public or Venture Capitalists is the General Corporation. Here are some features of the Delaware General Corporation (C-Corporation):
 

Reporting

• A Delaware Corporation may file a Certificate of Incorporation which does not name the Initial Director.
• A Delaware Corporation is required to file an Annual Report which must include:
  • The phone number and address of the business
  • The name and address of one officer
  • The names and addresses of all Directors
  • The shareholders are not listed on the annual report and are not reported to the state.

Income Tax

• There is no Delaware state corporate income tax on goods or services provided by Delaware Corporations operating outside of Delaware.
• There is no Delaware Sales Tax.
• Tax Status:
  • The default tax status is C-Corporation. The C-Corporation pays income tax at corporate rates and files a corporate income tax return.
  • If eligible, the corporation may elect S-Corporation tax status. An S-Corporation is taxed at personal income tax rates and the profits and losses are reported on the personal income tax return.
  • If organized as a not-for-profit corporation, the company can apply for tax-exempt status from the IRS.

For more information about tax status see the Corporations section of the Delaware Incorporation Handbook.

Liability

• The liability of all shareholders (owners) is limited to their investments in the corporation (unless they personally guarantee other debt incurred by the corporation, commit fraud or commingle funds).

Compliance

• A Delaware Corporation is required by law to maintain a Registered Agent in the state of in the state of Delaware. DBI will be your Delaware Registered Agent and the first 12 months of Registered Agent service is free with the purchase of a New Company Registration Package. The service is $100/year thereafter ($120 outside the US).
• A Corporation authorizing 5,000 shares or less will pay the minimum Franchise Tax of $75 plus a $50 Annual Report Filing Fee. 
• A Delaware corporation has the right to conduct Interstate Business and DBI can qualify a Delaware corporation to conduct Intrastate Business; please see the article on Qualification.

International

• Non-resident, Non-citizens are eligible to form a C-Corporation or a Not-for-Profit organization in Delaware. Non-residents are not eligible to apply for S-Corporation tax status. Please see our section for international businesses. 
• A Delaware Corporation with no US Source Income will not owe US Federal Income Tax. 

Investment

• A Corporation can raise capital by selling shares of stock privately or on a public stock exchange.
• Ownership of a Corporation is recorded on stock certificates.