| name | t1k:delaware-incorporation |
| description | Delaware C-Corp incorporation guide — DGCL essentials, Certificate of Incorporation drafting, two-class share structure, bylaws, franchise tax calculation (CRITICAL: Authorized Par Value Method saves ~$84K/yr vs Authorized Shares Method), annual reports, registered agent requirements. Written for foreign founders incorporating a Delaware C-Corp. |
| keywords | ["delaware","dgcl","incorporation","certificate of incorporation","cert of inc","bylaws","two-class shares","common preferred","par value","authorized shares","franchise tax","annual report","registered agent","delaware general corporation law","c-corp","foreign-owned delaware corp","firstbase","stripe atlas"] |
| argument-hint | [topic: cert-of-inc | bylaws | franchise-tax | annual-report] |
| effort | medium |
| version | 0.3.2 |
| origin | theonekit-core |
| repository | The1Studio/theonekit-core |
| module | t1k-legal |
| protected | true |
Delaware C-Corp Incorporation Guide
A knowledge-base skill for incorporating a Delaware C-Corporation — particularly for foreign founders with non-US shareholders. Covers DGCL essentials, drafting decisions, ongoing compliance, and the franchise-tax trap that catches most new entities.
Skill Scope
IS: Framework + methodology for incorporation choices (par value, share count, classes), DGCL section citations, fee schedules, deadline tracking, action plans for first-year setup.
IS NOT: A substitute for Delaware corporate counsel. Final filings (Certificate of Incorporation, bylaws, board resolutions) should be reviewed by a licensed attorney. This skill provides input + analysis, not legal sign-off.
When to activate
| User asks about… | Primary reference |
|---|
| "Delaware incorporation", "DE C-Corp", "Firstbase setup" | references/dgcl-essentials.md |
| "Certificate of Incorporation", "Cert of Inc drafting", "two-class shares" | references/dgcl-essentials.md (Cert of Inc section) |
| "Authorized shares", "par value", "common vs preferred" | references/dgcl-essentials.md (Share structure section) |
| "Delaware franchise tax", "franchise tax calculation", "APV method" | references/dgcl-essentials.md (Franchise Tax section) |
| "DE annual report", "Form 141", "March 1 deadline" | references/dgcl-essentials.md (Annual Compliance section) |
| "Registered agent", "DE Division of Corporations" | references/dgcl-essentials.md (Reg agent section) |
| "Foreign qualification", "doing business in California", "CA nexus" | references/dgcl-essentials.md (Foreign Qualification section) |
Critical decisions (read carefully)
1. Franchise tax — use Authorized Par Value Method (APV), NOT Authorized Shares (AS)
This is the single biggest cost-saver and most common mistake.
| Method | 10M authorized at $0.0001 par, $100K gross assets | Annual cost |
|---|
| Authorized Shares (AS) — default if you don't elect | Calculated on share count | ~$85,000 |
| Assumed Par Value (APV) — must elect | Calculated on assets × authorized/issued ratio | ~$400 (minimum) |
If your Cert of Inc doesn't specify low par value ($0.0001 is standard), you cannot elect APV and pay the full AS amount. Always specify par value in the Cert of Inc.
See: references/dgcl-essentials.md § Franchise Tax Calculation for the full math + worked example.
2. Two-class share structure — Common + Preferred
Standard for VC-backed startups. Founders + employees hold Common; investors hold Preferred with:
- 1x non-participating liquidation preference (standard)
- Anti-dilution (narrow-based weighted average — most common; broad-based weighted average — founder-friendlier; full ratchet — investor-friendliest, rare)
- Pro-rata rights for follow-on rounds
- Customary protective provisions (drag-along, tag-along, ROFR)
The exact terms go into the Certificate of Designations (filed with DE Division of Corporations) — separate from the base Certificate of Incorporation. Requires lawyer drafting (~$1.5K–3K).
3. Authorized share count — typical 10,000,000
Standard for Delaware C-Corp first incorporation:
- 10M authorized total
- ~7-8M issued to founders + initial shareholders
- 2-3M reserved for option pool (employee + advisor grants)
Higher authorized counts (50M+) only matter if you plan a 10-to-1 stock split later or anticipate massive option-pool expansion. Default to 10M.
Action items (first 30 days)
- Confirm par value in Cert of Inc — $0.0001 typical
- Authorized share count — default 10M unless reason to deviate
- Two-class structure — if mirroring an existing offshore cap table, file Cert of Designations alongside; if just founders + future SAFEs, file Common-only and amend later
- Registered agent — Firstbase / Stripe Atlas provides first year; switch to standalone RA (~$200–400/yr) for year 2+
- Initial board resolutions — draft alongside Cert of Inc filing: adopt bylaws, appoint officers, authorize bank account, issue founders' shares, adopt option plan
- Foreign qualification — register in any state where you have employees, physical presence, or significant sales (CA is the most common trigger)
Critical deadlines
| Item | When | Penalty for miss |
|---|
| DE Annual Report + Franchise Tax | March 1 every year | $200 + 1.5%/month interest |
| EIN application (for foreign-owned) | After incorporation | None per se, but blocks banking |
| Beneficial Ownership Information (FinCEN BOI) | Within 30 days of incorporation (2024+ rule) | $500/day, max $10K + criminal |
Companion skills
t1k-foreign-owned-tax — Form 5472, EIN application for foreign-owned, W-8BEN per shareholder, US-Vietnam no-treaty issuet1k-us-business-banking — Mercury, Brex, Stripe Atlas for foreign-owned DE corpst1k-cap-table-admin — Cap-table tools (Pulley, Carta), 83(b) elections, 409A valuations, SAFEst1k-hk-corp — if also operating a Hong Kong sister entity
See also
