Form a C Corporation in Delaware for Free

How to Start a C Corp in Delaware in 7 Steps

Starting a Delaware C Corporation involves several important steps, including choosing a compliant corporate name, appointing a registered agent, establishing your stock structure, filing the Certificate of Incorporation, adopting bylaws, organizing the corporation, and obtaining an EIN.

Let’s have a detailed look at what each step to start a C Corp in Delaware actually involves.

Step 1: Pick a Name for Your Delaware C Corporation

Your Delaware C Corporation needs a name that meets the requirements of the Delaware General Corporation Law (TITLE 8 Corporations). Delaware requires a corporate name to contain an appropriate corporate designator and to be distinguishable from certain names already on state records.

Here are the top naming rules to follow for Delaware C Corporations:

• Must Be Distinguishable: Your corporation’s name must be distinguishable from names already reserved or registered in Delaware for corporations and other business entities, including LLCs, partnerships, limited partnerships, and statutory trusts.

• Include an Approved Designator: Your Delaware C Corporation must contain a corporate designator, such as Corporation, Company, Incorporated, Limited, Association, Club, Foundation, Fund, Institute, Society, Union, or Syndicate, or an approved abbreviation of these terms.

• Avoid the Word “Trust”: Delaware generally prohibits corporations from using the word “Trust” in their names, except where permitted under applicable law.

• Use “Bank” Only When Permitted: The name generally cannot include “Bank” or a variation of the word unless the corporation falls within the specific banking-related exceptions provided under Delaware law. The word may also be permitted when used in a context that clearly does not refer to a banking business and is not misleading.

Search the Delaware Division of Corporations' entity search database before committing to your preferred Delaware C Corporation name. It is also sensible to review federal and state trademark records because state name availability does not establish trademark rights.

Keep a few backup names available in case your first choice cannot be registered. If you need ideas, Swyft Filings' free business name generator can help you develop alternatives.

Step 2: Appoint a Delaware Registered Agent

A Delaware corporation must maintain a registered agent and registered office in Delaware. The registered agent receives service of process and other official communications for the corporation.

Your registered agent generally must:

• Have a Delaware address: The Delaware registered agent must maintain a physical office in the state where official documents can be received.

• Remain available: The registered agent must be generally present at the designated location often enough to receive service of process and other communications.

• Be eligible to serve: Delaware permits an individual resident or qualifying domestic or foreign entity to serve as a registered agent.

• Maintain current information: Your corporation must keep its registered agent information up to date.

• Provide a communications contact: Delaware registered agents must maintain current contact information as required by the state.

If you do not live in Delaware or do not maintain a Delaware office, a professional registered agent service from Swyft Filings can satisfy this requirement.

Step 3: Establish Your Delaware C Corp Share Structure

Before filing your Certificate of Incorporation, determine how many shares your Delaware corporation will be authorized to issue and whether those shares will have par value or no par value. These decisions can affect your initial Delaware filing fee and future franchise tax calculations.

Consider the following:

• Total shares authorized: You don't have to issue every share you authorize. Keeping shares unissued gives you room to bring on employees or investors later without amending your Certificate.

• Par value vs. no par value: This is one of the biggest cost levers in Delaware. Authorizing shares with a small par value (commonly a fraction of a cent) keeps your filing fee low. Choosing no-par-value stock instead triggers a dramatically higher fee, a mistake that can turn a filing that should cost around \$109 into a much higher bill.

• Stock classes: A single class of common stock is usually sufficient for straightforward businesses. If you're planning to raise outside capital, you'll likely need to think through preferred stock down the line.

• Voting rights: Different share classes can carry different voting weight, so decide early how control will be distributed among founders and future investors.

• Dilution: Every future funding round dilutes existing shareholders, so keep your long-term ownership goals in mind when you're setting the initial structure.

• Future financing: Leave appropriate flexibility for future employees, investors, or financing rounds.

Because the par value decision directly affects your filing costs, this is one step where it pays to get it right the first time rather than amend later.

Step 4: File Your Delaware Certificate of Incorporation

You create a corporation by filing a Certificate of Incorporation with the Delaware Secretary of State. Delaware does not create separate entity types called "C Corporations" or "S Corporations." These terms describe how a corporation is taxed under federal law. A Delaware corporation is taxed as a C Corporation by default unless it elects a different tax treatment, such as S Corporation status with the IRS.

Your Delaware Certificate of Incorporation generally establishes details such as:

• Corporation name
• Authorized stock
• Registered office and registered agent
• Incorporator information
• Other provisions permitted under Delaware law

Delaware's minimum filing fee for a Certificate of Incorporation is \$109, which varies depending on the authorized stock and other filing factors. You can file a Delaware Certificate of Incorporation through online electronic submission or by postal mail.

1. Online Filing: Completed Certificate of Incorporation applications can be submitted on the Delaware eCorp Business Services website. This is the quickest filing option and allows you to pay the required fees by credit card.

2. Mail Filing: Complete the Certificate of Incorporation, sign it, and mail it along with a Filing Cover Memo and a check payable to the “Delaware Secretary of State” by mail.

Step 5: Create Corporate Bylaws For Your Delaware C Corp

Corporate bylaws are the internal rulebook that governs how your Delaware C Corp runs day-to-day. You do not file your bylaws with the state like the Certificate of Incorporation. You only form the bylaws and keep them safe with other internal records.

Your bylaws should cover the practical rules of running the company, including:

• Board of directors: This includes the number of directors you have, their terms, and how you fill a vacancy or replace someone.
• Shareholder meetings: It identifies where and how you'll hold shareholder meetings and how shareholders will receive notice.
• Board meetings: It includes information on how meetings are called, what notice is required, what constitutes a quorum, and how the board votes.
• Officers: It explains who your officers are, such as president, secretary, and treasurer, and what each one is responsible for.
• Voting procedures: It establishes how shareholders and directors vote and what it takes to approve a decision.
• Committees: It specifies rules for setting up and running board committees, if you plan to use them.
• Corporate records: It sets how you'll store meeting minutes and other important documents.
• Amendments: It states the process for updating your bylaws as the company changes.

Once your bylaws are drafted, your initial directors or incorporator should formally adopt them, usually at your organizational meeting, and keep the adopted copy with your corporate records. If you need help drafting your Corporate bylaws, Swyft Filings can prepare and draft customized Corporate Bylaws for your organization.

Step 6: Hold an Organizational Meeting

After Delaware approves your Certificate of Incorporation, hold an initial organizational meeting where your incorporator or initial directors formally get the corporation running. At this meeting, you'll typically:

• Adopt the corporate bylaws
• Elect your officers, such as a president, secretary, and treasurer
• Issue the initial shares of stock to founders and any early investors
• Set the corporation's fiscal year
• Authorize opening a corporate bank account

Keep formal minutes of this meeting and store them with your corporate records. Delaware doesn't file these minutes, but they're some of the clearest evidence that your corporation is following proper formalities if that protection is ever challenged in court.

Step 7: File for an EIN

An EIN is a federal tax ID that identifies your corporation for tax purposes, separate from your own Social Security number. You need to apply for an Employer Identification Number, or EIN, with the IRS once your corporation filing is approved by the state. You will need the following details to apply for an EIN:

• Business name or any DBA names
• SSN or ITIN of the business owner
• Mailing address
• Entity details
• Reason for applying

You can do it through the IRS website in about 15 minutes. Swyft Filings can also handle it as part of your Delaware C Corp formation package.

What Are the Post-Formation Requirements for a Delaware C Corp?

Filing your Certificate of Incorporation creates your Delaware corporation, but there are a few ongoing requirements to keep it in good standing.

File Your Delaware Annual Franchise Tax Report

Every Delaware corporation, regardless of whether it does business in the state, has to file an annual franchise tax report and pay franchise tax by March 1 each year. This isn't an income tax. It's the fee Delaware charges for the right to exist as a Delaware corporation.

You'll pay a \$50 filing fee plus the franchise tax itself. Delaware calculates your tax two ways, and you can pick whichever costs less:

Authorized Shares Method: This is the default way Delaware uses on your notice. The tax runs from a \$175 minimum up to a \$200,000 maximum, based on how many shares you've authorized. This method can result in a surprise bill if you authorized a large number of no-par-value shares.

Assumed Par Value Capital Method: This method factors in your total assets, authorized shares, and par value, and it often yields a lower figure for corporations with modest assets but a high share count.

Missing the March 1 deadline incurs penalties and interest, and letting it go unresolved for more than a year can eventually result in your charter being voided.

Register for Delaware Corporate Income Tax, If It Applies

If your corporation actually does business in Delaware, generating income there rather than just being incorporated there, you'll owe Delaware corporate income tax on the portion of your income apportioned to the state. Many corporations that incorporate in Delaware but operate elsewhere do not owe this tax, since it applies only to income earned within Delaware.

Obtain a Delaware Business License, If You Operate There

If your corporation actually conducts business in Delaware, you generally need a Delaware business license from the Division of Revenue, separate from your Certificate of Incorporation. Corporations incorporated only in Delaware but operating entirely in other states typically don't need this license, though they may need one in the state where they actually do business.

Open a Business Bank Account

Bring your Certificate of Incorporation, your adopted bylaws, and your EIN confirmation letter to the bank. Keeping business money separate from personal funds is one of the clearest ways to protect your liability shield.

Register as a Foreign Corporation If You Operate Outside Delaware

Many founders incorporate in Delaware but run their actual business from another state. If that's your situation, you'll likely need to register as a foreign corporation in the state you're physically operating in, in addition to staying current on your Delaware obligations.

How Much Does It Cost to Incorporate a C Corp in Delaware?

*Disclaimer: This guide provides general information about forming a C Corp in Delaware and is not a substitute for any kind of legal, tax, or financial advice*.