• December 2019
    M T W T F S S
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What is the best legal structure and place for a foreign startup aiming to incorporate in the US?

Because your plan is to raise money, I would recommend forming as a C Corporation in Delaware.

Why Delaware?

Well, the state has a well-developed corporate law and judges/former corporate lawyers in the Court of Chancery who understand business disputes really well. So investors really like that and have pretty much made that the standard state to incorporate in if you’re starting a high-growth tech startup. Also, Delaware does offer the greatest flexibility in terms of structuring boards of directors, stock issuance and preference, and voting rights. It also provides the broadest privacy protections. For instance, it doesn’t require director or officer names to be revealed on formation documents.

The Advantages of a C Corp

  1. Shields entrepreneurs from personal liability
  2. Venture capitalists don’t generally invest in “pass-through entities” such as LLCs or S-Corps for tax purposes
  3. Cheaper to set up than an LLC in states that require publication fees for LLC’s.
  4. Flexible stock structure/easy to issue different classes of stock, also easy for investors to use different financial documents (like convertible notes, SAFES, warrants, subordinated debt)
  5. Best structure to raise equity capital through crowdfunding sites like Kickstarter
  6. Maximize medical coverage tax deductions
  7. Easier to get foreign investors (S corporations, by definition, cannot have any nonresident alien shareholders.)
  8. Minimize employment taxes.- shareholder-employees of S and C corporations pay FICA (Social Security and Medicare) taxes only on wages they receive.

I invite you to visit LawTrades for any of your legal needs. The lawyers on our site have helped hundreds of foreign-based individuals set up shop in the US. We offer free consultations w/ top attorneys, no hassle price quotes, alternative pricing structures, and a money-back guarantee. Feel free to reach out if you have any questions!