Building a powerful AI startup? You need more than just a working model-you need legal foundations that protect your IP, equity, and compliance. Here’s your 2025 legal checklist to keep your Delaware startup safe, fundable, and IRS-compliant.
Tax Code and Legal Reference
- IRC §11 – Corporate taxation for C-Corps
- IRC §1202 – QSBS exemption on capital gains
- IRC §83(b) – Election for early stock grants
- Delaware General Corporation Law (DGCL) – Governs bylaws, board structure, and share issuance
- IRS Notice 2005-45 – Equity compensation guidance
Key Forms and Documents
- Certificate of Incorporation – Legal birth of your Delaware C-Corp
- Bylaws and Board Resolutions – Required for governance and equity approval
- Form SS-4 – EIN application for banking and tax
- Form 83(b) – To lock tax rate on founder stock
- IP Assignment Agreement – Transfer IP from founders to the company
- NDAs and Employment Agreements – Protect data and ownership
- Form 1120 – Annual corporate tax filing
Example: Startup with Solid Legal Setup
Example:
AxionAI formed a Delaware C-Corp in early 2024. They used standard Delaware bylaws, issued common and preferred stock, filed Form 83(b), and secured IP with formal assignments. This made their seed round go smoother-investors praised their clean legal setup and cap table.
Step-by-Step Legal Checklist
- Incorporate in Delaware
Use a C-Corp structure with a flexible charter for future investment. - Apply for EIN (Form SS-4)
Required for IRS, banking, and payroll. - Draft Bylaws and Resolutions
Cover board setup, officer roles, and share issuance. - Issue and Document Founder Equity
File Form 83(b) within 30 days of grant. - Transfer IP to Company
Use assignment agreements to protect ownership. - Set Up Employee and Advisor Agreements
Include NDAs, IP clauses, and equity terms. - Prepare for Annual Filings
Track IRS Form 1120, Delaware Franchise Tax, and Board meetings.
Conclusion
A legally sound AI startup earns investor trust and avoids IRS or Delaware penalties. If you want to raise funds, issue equity, or protect your code-don’t skip the legal checklist. Lock it down early.
Call to Action
Need help checking every legal box?
Schedule a session with Anshul Goyal, CPA, EA, FCA to make sure your Delaware AI startup is IRS and investor ready.
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Disclaimer
This article is general guidance, not legal or tax advice. Consult with a licensed professional for tailored help.
Anshul Goyal is a U.S. CPA, IRS Enrolled Agent, and Indian Chartered Accountant who helps AI startups build legal and tax-compliant businesses from day one.
FAQs – Legal Setup for Startups
1. Do I need bylaws for a C-Corp?
Yes. They’re required for legal governance and equity approvals.
2. Is Form 83(b) mandatory?
Not legally, but highly recommended to avoid future tax issues.
3. Can I use templates for agreements?
You can, but CPA or legal review is still smart.
4. Is Delaware Franchise Tax the only state filing?
Yes, unless you’re also operating in another state.
5. Can I delay issuing founder stock?
You can, but it’s risky and may trigger higher taxes later.
About Our CPA
Anshul Goyal, CPA, EA, FCA helps AI founders build strong legal and tax foundations. Licensed in the U.S. and India, he guides startups through equity, compliance, and funding readiness.