How to Incorporate Your Startup in Delaware: Step-by-Step Guide

When it comes to incorporating a startup in the United States, Delaware is the clear leader. More than 1.8 million companies—including over 65% of the Fortune 500—are incorporated there. But why Delaware, and how does the process actually work?

This guide will walk you through what incorporation means, why Delaware is preferred, and the step-by-step process to launch your company properly.

What Does It Mean to Incorporate?

Incorporation is the legal process of forming a company that is recognized as a separate entity from its founders.

• Why it matters: It creates limited liability, meaning your personal assets (house, savings, car) are protected if the company faces lawsuits or debts.
• It also enables your startup to open bank accounts, hire employees, raise investment, and sign contracts as an independent entity.

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Why Delaware?

Delaware has earned its reputation as the “corporate capital” of the U.S. thanks to several unique advantages:

• Specialized court system: The Delaware Court of Chancery only handles corporate law cases, making decisions faster and more predictable.
  
• Business-friendly statutes: The Delaware General Corporation Law (DGCL) is considered the most flexible and founder-friendly in the U.S.
  
• Investor preference: Most venture capital firms expect startups to be Delaware entities, especially C-Corps.
  
• Privacy: Delaware does not require the names of LLC members or managers to be listed in the formation documents.
  
  

Scalability: Easy to add shareholders, transfer shares, or restructure as your startup grows.

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Step-by-Step Incorporation Process in Delaware

Step 1: Choose Your Entity Type

The first decision is whether to form an LLC or a C-Corporation:

• LLC (Limited Liability Company):
  
  • Simple, flexible, fewer compliance requirements.
    
  • Often preferred by international founders or small teams.
    
  • “Pass-through taxation”: profits and losses flow directly to the owners’ tax returns.
    
    
• C-Corporation (C-Corp):
  
  • The standard structure for venture-backed startups.
    
  • Allows issuance of preferred stock, stock options, and equity incentives.
    
  • Subject to “double taxation”: the corporation pays taxes on profits, and shareholders pay taxes on dividends.
    
    

Rule of thumb: If you plan to raise venture capital → C-Corp. If you’re testing an idea, bootstrapping, or international → LLC.

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Step 2: Select a Company Name

Your name must be:

• Unique within Delaware.
  
• Contain a proper identifier: “LLC” for a limited liability company, “Inc.” or “Corporation” for a corporation.
  
• Not infringe on trademarks.
  
  

Pro tip: Run a trademark search as well—owning your name legally is just as important as incorporating it.

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Step 3: Designate a Registered Agent

• Delaware law requires every company to have a Registered Agent with a physical address in the state.
  
• This agent receives official mail (legal notices, tax documents, lawsuits).
  
• Many startups use professional services for this—Grow, for example, provides this service as part of our incorporation package.
  
  

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Step 4: File the Formation Documents

This is where your company legally comes into existence.

• LLCs: File a Certificate of Formation with the Delaware Division of Corporations.
  
• C-Corps: File a Certificate of Incorporation (includes company name, registered agent, share structure, and incorporator info).
  
  

Filing fees are generally between $90–$200, depending on entity type and options.

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Step 5: Obtain an EIN (Employer Identification Number)

Think of the EIN as your company’s Social Security Number:

• Issued by the IRS.
  
• Required to open a bank account, hire employees, or file taxes.
  
• International founders without a Social Security Number can still apply (Grow helps streamline this).
  
  

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Step 6: Draft Internal Documents

Even if not always required, these are critical for governance and fundraising:

• LLCs: Operating Agreement → outlines ownership, roles, and decision-making.
  
• C-Corps: Bylaws + Shareholder Agreement → define how the corporation operates, rights of shareholders, and voting rules.
  
• Founder documents: Stock purchase agreements, vesting schedules, and IP assignment agreements to avoid future conflicts.
  
  

Investors will ask for these documents before wiring a single dollar.

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Step 7: Open a U.S. Bank Account

To run operations and receive payments, you’ll need a U.S. business bank account.

• Banks like Mercury, Brex, and traditional institutions (Chase, SVB) allow remote account opening for Delaware entities.
  
• Requirements: EIN, incorporation docs, and sometimes a U.S. address.
  
  

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Step 8: Stay Compliant

Incorporation is just the beginning—ongoing compliance is what keeps your company alive:

• Franchise Tax: Delaware requires annual franchise tax payments (as low as $300 for LLCs, higher for C-Corps depending on shares).
  
• Annual Report (C-Corps only): Must be filed each year with the state.
  
• IRS Filings: Depending on entity type, foreign ownership, and operations, you may need to file forms like 5472 or 1120.
  
• Bookkeeping: Maintain clean books from day one—investors will always check.
  
  

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Key Takeaways

• Delaware is the #1 choice for startups for legal, financial, and investor reasons.
  
• Choosing between LLC and C-Corp depends on your funding goals.
  
• The process requires careful steps: name → agent → filing → EIN → documents → compliance.
  
• Doing it wrong can cost you time, money, and credibility with investors.
  
  

Ready to incorporate? Let Grow handle the entire process for you.

Need help setting it up?

Grow makes vesting simple.


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We’ll help you structure fair, investor-friendly founder agreements—without the legal jargon.