The general corporation, also known as a stock, open or C corporation, is one of the most common types of corporations formed in the State of Delaware. Many people choose to form a corporation based on their structure, ability to raise capital and transferability.
Delaware corporations are formed under the General Corporation Law of the Delaware state code. In fact, over 50% of publicly-traded companies in the U.S. and 65% of Fortune 500 companies are incorporated in Delaware.
The state legislature and the people of Delaware recognize the importance of keeping the state's business laws and corporate statute current, ensuring it will continue to be an attractive home for corporations, LLCs and all other types of corporate entities in the future.
There are three main types of corporations: general, close and non-profit. It’s important to fully understand the differences between these types of corporations before you form a corporation of your own.
In a general corporation, you can go public and/or raise capital as needed by selling stock; in a close corporation, you can run a small, tight business group; in a non-profit corporation, you can run a charitable organization.
It's important to note that while corporations can issue stock, they are not required to do so. Regardless of whether a corporation issues stock, the company is required to file an annual report with the State of Delaware by March 1, which provides basic internal details about the corporation, such as the physical address of the business location and the name and address of at least one officer and all Directors.
Before you incorporate your business, you'll need to decide which type of corporation is right for your company. Whether you have a large company, small family business or a not-for-profit organization, there are options for everyone when it comes to choosing which type of corporation is best for your business.
Delaware has been the premier state for incorporating businesses since the early 20th century, with nearly 1.5 million businesses incorporated in Delaware as of the state’s last annual report in 2019. Forming a Delaware corporation is the right choice for many businesses for the following reasons:
Ability to Raise Capital: General corporations may raise capital by selling shares of stock in the company, either by going public or by a private offering of stock. Typically, this money can then be used at the company's discretion to launch a new product, grow in size or a variety of other options. Companies planning to seek venture capital financing also tend to incorporate as general corporations.
Pass-Through Taxation Option: Unlike the other types of corporations, a general corporation can be taxed twice: once at the corporate level and again at the shareholder level if a dividend is declared. However, general corporations possess the ability to file to become a subchapter S corporation within 75 days of the company formation date. Once the IRS approves the application, the company typically does not have to pay federal income taxes. Instead, the tax liability will be passed through to individual shareholders.
The History of the Delaware Corporation
Since the early 1900s, Delaware has been the acclaimed home for companies looking to form a corporation. However, Delaware hasn't always been known as the premier location for corporations. The state's corporation history and the rise of its renowned Court of Chancery is owed in large part to actions taken by the state of New Jersey, once the leading state for incorporation, in the early 20th century.
With a newly-adopted General Corporation Law, Delaware's Court of Chancery, the nation's oldest business court, rose to prominence as the nation's leading forum for settling corporate disputes. Today, the Court of Chancery is one of the most important reasons Delaware is known as the most favorable environment for corporations and LLCs. The Court of Chancery consists of a chancellor and four vice-chancellors, all of whom oversee an average of up to 1,000 civil actions a year, the vast majority of which are business disputes.
The decisions of the court are considered to be more predictable than those of other state courts that decide business cases, for the following reasons:
There are no jury trials in the Court of Chancery;
The decisions of the court have historically respected the good faith decisions of a Board of Directors over the desires of its stockholders;
The decisions are based on more than 200 years of consistent case law and judicial procedure
Why Choose Harvard Business Services to Form Your Corporation?
Forming a Delaware corporation is easy whether you choose to form your corporation online or over the phone 800-345-2677. We’re also here to help by email, live chat, Skype or WhatsApp.
More than 50 percent of our business comes from repeat clients. Why? Our clients know they're in capable hands with Harvard Business Services, Inc. If you are still undecided, here are just a few reasons why you should choose Harvard Business Services, Inc. when you form a corporation:
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