How to Incorporate in Delaware (And Why You Should)

Team Digits

Published January 28, 2025

Despite accounting for less than 1% of America’s land mass, Delaware is home to more than 65% of Fortune 500 countries. And 80% of IPOs in 2023 were registered in Delaware. So, what makes this little state so appealing to all kinds of businesses?

Unlike the NFT run of the early 2020s, the rush to incorporate in Delaware isn’t just hype. Investors prefer Delaware’s laws, legislators, and legal systems over those of other states. Incorporating in Delaware can also be faster for startups looking to hit the ground running. And, you don’t have to do business in the state to incorporate there.

Convinced yet? It’s okay if you’re not. We know how important it is to have all the data before you make a decision as consequential as this. Read on to determine if incorporating in Delaware is the right choice for your company and how to go about doing so.

Why do so many founders choose to incorporate in Delaware?

Incorporating in Delaware allows you to take advantage of practices set by the many companies that came before you. Investors and business owners like Delaware’s clear laws regarding corporations and its legal system with business-friendly practices.

Founders often choose to incorporate as a Delaware corporation to take advantage of the:

• Business-oriented legislature: Because Delaware’s state budget is highly dependent on business taxes, its lawmakers are incentivized to keep laws regarding corporations clear and up-to-date. Delaware legislators frequently amend and update relevant laws to meet the moment.
• Court of Chancery: Delaware has a separate court system to hear corporate cases, meaning litigants are assured judges who thoroughly know and understand business law. Business and legal groups from elsewhere in the US (and around the world) often refer to Delaware court cases when creating their own laws and regulations.
• Expanded privacy rights: When you incorporate in Delaware, there’s no need to identify your board of directors or officers in documents that will be available to the public. Plus, Delaware state law makes it harder for shareholders to access corporate records. This prevents unserious or malicious requests from bogging down your operations.
• Quick turnaround: Most incorporation filings have a 24-hour turnaround — no “hurry up and wait.”
• Startup and SMB-friendly requirements: Many states require companies to have a separate officer, director, and shareholder in their incorporation documents. Delaware allows one individual to hold all three roles.
• Tax benefits (sort of): Even if you’re incorporated in Delaware, you won’t need to pay Delaware income tax if you don’t do business in the state. Shareholders are also free of any state-level tax burden on their holdings.

Most Silicon Valley VCs prefer to back startups incorporated in Delaware, thanks to these benefits. So, though it’s not an official benefit offered by the state, choosing Delaware will make it easier for you to raise funding.

Why should I consider incorporating elsewhere?

Despite the long list of benefits, Delaware isn’t the perfect business environment.

Drawbacks of incorporating in Delaware include:

• Double reporting requirements: If your business is incorporated in Delaware, you’ll need to file annual reports there. Since you’re operating out of a state that’s not Delaware, you’ll also need to file annual reports there.
• Franchise taxes: Delaware charges a tax based on the number of shares your company offers and their price. This fee is minimal for small businesses, but when you hit unicorn status, expect to pay a lot.
• Higher filing fees: The market has spoken — Delaware can charge higher filing fees than other states simply because most businesses think incorporating there is worth it. You’ll also have to pay extra for that 24-hour turnaround.
• Legal cases are heard in Delaware: The fact that Delaware has a Court of Chancery becomes less exciting when you have to travel there to experience it firsthand. Hopefully, your business doesn’t end up facing any lawsuits, but if you do, you’ll need to travel to Delaware and retain a local attorney to defend your case.
• Registered agent requirement: You don’t have to live or operate in Delaware to incorporate there, but you will need a registered agent in the state to handle your legal filings. Easy enough to find — but you’ll have to pay for it.

All locations have benefits and drawbacks, and in our (Delaware-incorporated) opinion, none of Delaware’s requirements are deal breakers.

What other incorporation options do I have?

If you don’t want to incorporate in Delaware, you can always incorporate your new business in your home state. You may not have access to a Court of Chancery or the same quality of corporate law, but each state supports plenty of thriving SMBs.

You could also choose to incorporate in one of the other 48 states that is neither your home nor Delaware. Keep in mind you’ll still need a registered agent in that state, and you may be on the hook for additional taxes. You’ll also have to comply with that state’s filing rules on top of your own. But it could be worth it to avoid your home state’s franchise tax or to gain similar privacy benefits to those offered in Delaware.

How to create a Delaware C corporation in 6 steps

If you’re sold on a Delaware incorporation, you can get started (and possibly finished!) with the process today. We broke it down into 6 steps (so you don’t have to read the dense Delaware Division of Corporations guide).

1. Choose a business structure and directors

Your business may be a sole proprietorship, partnership, limited liability company (LLC), B corporation, C corporation, or S corporation. The type of business entity you choose will determine questions of liability and taxation. Here’s a brief overview of Delaware’s laws.

This guide is for registering a C corporation in Delaware. VCs prefer C corps over LLCs because it’s easier to sell or transfer ownership of a corporation. They prefer C corps over S corps because the latter structure requires all shareholders to be US citizens, residents, and natural persons — and a VC firm is, well, a firm. C corps also have the best stock setup of the three; you can offer common and preferred stock, and trading shares is relatively simple.

Choosing the right business structure is complex — make sure you talk to someone who understands the ins and outs of each option.

If you do choose a C corporation, you’ll also need to appoint at least one director before you can register in Delaware. You’re allowed to choose yourself or any of your other officers for this role. Director(s) don’t have to reside in Delaware, and their name(s) and address(es) don’t need to be listed on the Certificate of Incorporation.

2. Select and reserve a name for your business

Your corporation name must include a certain designation by Delaware law. It also must be unique, so once you’ve chosen yours, make sure it isn’t already taken.

Once you’ve settled on an available name, you can reserve it online — even if you’re not ready to incorporate yet. For $75, you’ll prevent anyone else from registering that business name for the next 120 days.

3. Appoint a Registered Agent

Before you can start the filing, choose a registered agent service. Delaware’s government maintains a whole list of authorized agents, though it doesn’t come with reviews.

You could close your eyes and click…or you could talk to someone who’s been there, done that for a recommendation. We recommend the latter.

4. File a Certificate of Incorporation (and pay the filing fees)

Your registered agent will help you file your Certificate of Incorporation. Delaware provides a form-fillable PDF. Once you have all the information ready, you can usually submit your completed certificate online (though only if you follow Delaware’s schedule. Yep, it’s complex). Or, if the state of Delaware is still building its new eCorp portal, you can submit by mail and pay with a check.

The base filing fee for a Delaware C corporation is $109 as of 2025. You’ll have to pay more if your certificate is more than one page long and if you want a copy. For expedited services, expect to pay fees ranging from $50 to $5,000.

After submitting your certificate, you may have to file with FinCEN as part of a Delaware initiative to combat money laundering, terrorist financing, tax fraud, and corruption.

5. Obtain an Employer Identification Number (EIN)

Once you’ve incorporated in Delaware, you can apply for an Employer Identification Number (EIN). This is a federal program run by the IRS, and every corporation in the US is required to have an EIN for federal tax purposes. You’ll also need it to open a business bank account.

This one is easy — you can apply online in just a few minutes, and your EIN will be granted as soon as you complete the application.

6. Stay compliant with all Delaware business laws and regulations

Failure to maintain compliance with Delaware requirements could result in additional taxes or even a dissolution of your company. All businesses incorporated in Delaware must:

• Register and obtain any necessary state business licenses.
• Maintain a Delaware Registered Agent.
• Submit an Annual Report and pay annual franchise taxes. This document, plus its submission fee and any applicable taxes, is due March 1 of every year.

Additional requirements may apply if you also operate in Delaware.

Keep in mind that you’ll also need to stay on top of federal laws and regulations as well as those in your home state. It’s smart to have an employee, consultant, or agency to help you maintain compliance.

Get accounting help for your Delaware C corporation

Once you’ve decided whether a Delaware C corporation is right for you, the next step is getting your finances organized — and that’s where Digits shines.

We specialize in simplifying accounting for startups, giving you the tools and insights you need to keep your books in check and make informed decisions.

Ready to take the stress out of managing your finances? Learn more about how Digits can support your growing business.