Wall 01Investors
Documents written for Delaware
Term sheets, SAFEs and option plans are drafted for a Delaware corporation.
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A Delaware C-Corporation for founders abroad raising from US investors
US venture investors' paperwork assumes a Delaware corporation, because of decades of Delaware case law and standard documents that fit it without changes. If you'll raise from them, form what they expect.
- Usually
- Structure
- Delaware C-Corp
- Plan
- Premium
- On the day
- $1,299
- Every year
- $1,449
01Why a US company
What it does for founders raising from US investors.
A C-Corporation issues stock, which is what a SAFE converts into and what an option plan grants. Delaware's Court of Chancery has decided a century of disputes between founders and investors, and the standard documents were written around those decisions. An investor asked to fund a Wyoming LLC will usually ask you to convert first, and to pay the lawyers who do it.
That recognition has a real cost: $110 to file, an annual report and franchise tax due every 1 March, board consents and minutes, and a corporate tax return on Form 1120. It's worth paying when the investors are real, not in case they might be.
02What stands in the way
Three things in the way, and one way through.
Wall 02Accelerators
Eligibility rules that name Delaware
Accelerators and funds often name a Delaware corporation in their eligibility rules.
Wall 03Your co-founders
Vesting and a cap table
Founders' equity needs vesting, and the cap table will be read by more than one person.
The door
A Delaware C-Corporation, formed to be funded.
Stock, a board and the documents investors expect, with its EIN and a US bank account.
03The honest part
What to know before you order.
01
The 83(b) election has a thirty-day clock
Founders who receive stock that vests file an 83(b) election with the IRS within thirty days of the grant, or pay tax on the stock as it vests, at its value then. A founder abroad without an SSN still files it, with a note in place of the number. Miss the window and there's no way to fix it.
02
A corporation is taxed on its own profit
Unlike an LLC, a C-Corporation pays US corporate tax on its profit, and dividends to a shareholder abroad are withheld on. Most funded startups run at a loss for years, which is why that matters less than it sounds, and why an LLC is better for a business that will be profitable without funding.
03
Your own country
A corporation managed day to day from your country may be resident there for tax. Your accountant will need to know where the company is really run.
The plan that fits
Premium, usually.
Premium files the Delaware annual report and franchise tax, prepares Form 1120 and Form 5472 with a CPA's review, and gives you a named specialist for the questions investors' lawyers will ask.
PremiumFits founders raising from US investors
For founders who want the whole first year of paperwork done for them.
To start
$1,299 once
Delaware fee included · then $1,449 a year
04Questions
Questions from founders raising from US investors.
If yours is not here, email us at [email protected] before you order.
Yes. Delaware doesn't require shareholders, directors or officers to be US citizens or residents. It's the S-Corporation that excludes non-resident owners, not the C-Corporation.
Now, if investors are within two years. Converting a Wyoming LLC into a Delaware corporation works, but it costs legal fees and a few weeks at the moment you least want to spend either.
Ready when you are
Answer the questions. We do the filing.
It takes about four minutes. You see the whole order, state fee included, before anything is charged.
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LLC · DEName checked first · Same business day
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