Strategic Business Planning: Leveraging Delaware C Corps for Global Growth

Are you considering starting a business in the United States, but unsure about the best corporate structure to choose? Delaware is home to over 60% of the Fortune 500, or the largest United States corporations. This may be owing to some of the benefits that come with incorporating a C Corporation in this state.

C Corps, formed in the state of Delaware, are known for their flexible corporate laws and strong legal protections. As such, the Delaware C Corporation entity type has become increasingly viable especially among foreign investors seeking to penetrate the U.S. market. The entity structure also has great growth-driving potential for entrepreneurs and small to medium-sized businesses (SMBs), alike.

In this article, we explore the advantages of Delaware C Corporations and how best to leverage this corporate structure for global expansion.

Why Delaware?

Establishing a Delaware C Corporation offers numerous advantages, including possible tax perks. Our CPAs have helped many to incorporate many C Corps, and while we break down the possible benefits to them, it is always advisable to consult with a tax expert to understand the specific implications for your business.

• Limited liability protection: With this structure, shareholders are exempt from personal liability when it comes to covering the corporation’s debt.
• Ability to raise capital through issuance of stock: Delaware C Corporations can sell shares of the company’s stock to raise capital. This can be done publicly or privately.
• Seamless expansion into global markets: The entity structure is well-respected internationally, making it easier to do business globally.
• Potential tax perks: Corporations registered in Delaware that do not do business in the state typically aren’t liable to pay corporate income tax. The state also does not have a sales tax, investment income taxes, inheritance taxes or personal property taxes. Note that tax implications can vary depending on individual circumstances.

Establishing a Delaware C Corporation

Consulting with a CPA to develop a business plan including financial projections, and the best entity structure for your needs is a key first step in the incorporating process. Once you have established the Delaware C Corp as a viable entity structure for you then establishing a the business is straightforward to do as the state boasts an efficient business registration process.

Follow this step by step guide to get started.

1. Choose a corporate name

• Ensure the name includes terms like “corporation” or “incorporated” and is distinct from existing entities.
• Check availability through the Delaware Division of Corporations website.

2. File a certificate of incorporation

• Submit necessary incorporation documents, including the Certificate of Incorporation, to the Delaware Division of Corporations.
• Pay the required filing fee – this varies based on the type and value of stock issued.

3. Prepare corporate bylaws and appoint directors

• Although not legally required, internal operating rules provide guidance on governance and operations.
• Appoint initial corporate directors and meet to finalize decisions such as adopting bylaws.

4. Issue stock

• Issue stock to shareholders in exchange for their capital contributions and file necessary documentation and records of stock ownership.

5. Pay your franchise tax

• Submit an annual report and pay franchise taxes to the Delaware Division of Corporations by the designated deadlines.
• Ensure compliance with state requirements to avoid penalties and maintain good standing.

6. Obtain an Employer Identification Number (EIN)

• Obtain an EIN for the corporation through the IRS website, free of charge.
• Use the EIN for federal tax purposes and to establish the corporation’s identity for banking and financial transactions.

Leveraging U.S. markets for global expansion

Establishing a Delaware C Corporation not only provides access to the vast U.S. market but also serves as a strategic gateway for global expansion. Operating as a Delaware C Corp enhances credibility and trust with international partners and customers, making global expansion easier to achieve. Additionally, you can take advantage of U.S. money markets to raise and capitalize on favorable trade deals, which will allow you to compete better globally and ultimately business grow even more.

Strategic business planning for Delaware C Corp

The flexibility and scaling potential Delaware C Corps enables businesses to adapt their operations seamlessly to global markets. However, this means documenting a carefully considered business plan and growth strategy. You may be able to leverage the advantages of a Delaware C Corporation to enter new markets successfully, but without careful market investigations and forecasting, you may miss certain industry blind spots. Employing business intelligence tools and CFO advisory services can help you devise a plan to scale smartly and safely.

Managing international tax implications

While operating across multiple states and markets can provide a buffer against economic downturns in one market, navigating international tax implications can be challenging. This is particularly crucial for Delaware C Corporations. While Delaware itself might not impose certain taxes, such as sales tax, operating in states that do necessitates careful consideration in tax strategy.

Understanding U.S. taxation for Delaware C Corporations and its implications for foreign shareholders forms an essential part of effective tax planning for this entity structure. Strategic tax planning can help to minimize global tax liabilities and ensure compliance across jurisdictions. Additionally, businesses can leverage double taxation agreements and tax treaties to mitigate tax burdens, maximize profitability and maintain a competitive edge in the global marketplace.

How Fusion CPA can help you

At Fusion CPA, we have helped business across various sectors choose the right entity structure for them, and facilitated its incorporation. From developing a sound business strategy for market expansion to ensuring accurate and compliant tax submissions. Our team offers tailored solutions to meet your specific needs. We help with:

• Meticulous setup of your Delaware C Corporation.
• A growth-focused business strategy.
• Compliant tax submissions and audit support.
• Business accounting and forecasting for growth.
• Software implementation.

Contact us for assistance.