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Legal & Ops

Incorporation Cost Compare

DE C-corp vs LLC vs S-corp — fees & filings.

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Delaware C-Corp

VCs almost universally require Delaware C-Corp. You'll convert eventually — do it now and avoid a painful re-cap.

Delaware C-Corp

Raising VC, issuing equity, future M&A

Setup cost (est.)
$198
Annual cost (est.)
$225
Tax
Double taxation (corp + dividends)
Equity
Common + preferred + options + SAFEs
Investor-ready
●●●●●
Pros
  • + Investor standard
  • + QSBS-eligible if held 5+ yrs
  • + Stock-options friendly
Cons
  • − Most paperwork
  • − Double tax on dividends
  • − Annual franchise tax

DE LLC

Bootstrapped, profitable, single/few owners

Setup cost (est.)
$160
Annual cost (est.)
$300
Tax
Pass-through (no double tax)
Equity
Membership units — VCs typically won't invest
Investor-ready
●○○○○
Pros
  • + Simple
  • + Pass-through tax
  • + Flexible mgmt
Cons
  • − DE LLC fixed $300/yr franchise
  • − Investors will push to convert
  • − No traditional stock options

S-Corp election

Profitable services firm, salary + distribution split

Setup cost (est.)
$160
Annual cost (est.)
$1,100
Tax
Pass-through; reduce SE tax via reasonable salary
Equity
1 class of stock, ≤ 100 US-citizen owners
Investor-ready
●○○○○
Pros
  • + Save on self-employment tax
  • + Pass-through
Cons
  • − No foreign owners
  • − Inflexible cap table
  • − Not VC-investable
  • − Payroll admin required
Heads up — Estimate only — not legal advice. Filing fees, formation rules, and franchise tax tables change. Confirm with a startup attorney or your state of incorporation.
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About

Delaware C-Corp, LLC, or S-Corp? The right entity depends on whether you'll raise VC, how you take income, and where the owners live. This page compares the three across cost, taxes, and equity flexibility.

How it works

  1. 01C-Corp: standard for VC-backed startups. Double taxation but unlocks QSBS, stock options, and clean cap tables.
  2. 02LLC: pass-through tax, simple, but VCs won't fund. Best for bootstrapped/lifestyle companies.
  3. 03S-Corp: pass-through with self-employment tax savings. Restricted (US owners only, one class of stock, < 100 shareholders).

Examples

Plan to raise VC

Choose Delaware C-Corp. Convert from LLC later only if you must — the conversion is taxable and ugly.

Profitable consulting LLC making $400k

Electing S-corp status can save $10–20k/year in self-employment tax by paying yourself a reasonable salary + distributions.

FAQ

Why Delaware?+
Mature corporate case law, Chancery Court (no juries for biz disputes), and every VC's standard. Almost no reason for VC-backed startups to incorporate elsewhere.
What about Wyoming?+
Cheaper for holding companies and asset protection. Not VC-standard for operating companies.
Can I convert later?+
LLC → C-Corp is doable but taxable on appreciated assets. C-Corp → LLC is painful (deemed liquidation). Choose your entity for where you're going.

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