Should I do a Delaware C-Corp as a non-US citizen?

Tax and legal
1

Hi there,

I’m a German citizen, and I’d like to found a software-company that can potentially grow fast in the future and receive investment by US-based VCs.

I’d like to stay nomad for at least a year, and keep options open where to move after (US is an option since my partner is American).

My potential co-founder is American too.

Delaware Inc. says it’s possible for non-US citizens to found a company there, see here.

But is that a good idea, and are there legal hurdles to cross or risks to consider? Any experience?

2

I just set one up with Stripe Atlas. Stripe handle all the paperwork needed for incorporation, issuing stock etc. Cost about $500, if I remember right. This amount is only collected when you receive your EIN.

The two biggest obstacles for setting up a U.S. company (Delaware or elsewhere) are:

  1. Getting an EIN for the company
  2. Opening a bank account without U.S residency

Stripe solved the first. They apply for it and it takes about 2 months to arrive.

I was knocked back for a bank account in half a dozen places. They don’t accept a non-US resident as a representative. I imagine there are probably representation services around. The best option looked to be the Silicon Valley Bank, but they say of themselves: “SVB overall works with technology companies from inception through late/public stage that have raised or are raising venture capital funding. Typically, these companies have proprietary IP in the sectors of software, hardware, life science/biotech, and clean tech, as well as some level of institutional backing.”

That doesn’t describe my business, so I couldn’t.

In the end, I opened an account with Wise. Took 5 minutes and approval in less than 24 hours.

Now I can start invoicing.

3

Thanks for sharing, I haven’t thought about Wise option!
I’m wondering, since I still have a personal bank account that I opened when lived in the US, can I use it as a bank account for the company? Can’t find information on that anywhere. Or is there a requirement of a “corporate” account somewhere I’m not aware of?
Thanks

4

It’s entirely possible to incorporate a Delaware Inc if you don’t reside in the United States. However, if you don’t want to start fundraising right away, you should first form a Delaware LLC and convert it to a corporation if needed. The reason for this is that a US LLC is very advantageous from a tax perspective for non-US citizens.