If you’re planning to start an AI company in the U.S., Delaware should be at the top of your list. Known for its business-friendly laws and strong legal system, Delaware offers major advantages for tech founders. In 2025, most U.S. and global investors still prefer Delaware corporations-especially for startups in fast-growing fields like artificial intelligence (AI) and machine learning.
Tax Codes and Legal References
Under IRC §7701(a)(3), Delaware corporations are treated as U.S. domestic entities. C-Corps follow IRC §11 for federal tax rules. LLCs can elect to be taxed as corporations using Form 8832, or as S Corporations using Form 2553, governed by IRC §1361.
Common IRS and Delaware Forms
- Form SS-4 – To get your Employer Identification Number (EIN)
- Form 8832 – To elect corporate tax treatment for your LLC
- Form 2553 – To become an S-Corp if eligible
- Certificate of Incorporation – Filed with Delaware
- Annual Report & Franchise Tax – Due every year by March 1
Real-Life Example
Case Study:
In 2024, an AI startup named NeuralBay was launched by two engineers in California. They chose to register a C-Corp in Delaware. This helped them raise $2.5 million from investors who insisted on a Delaware structure. Delaware’s legal system supported fast issuance of stock options, and using IRS Form 83(b), the founders minimized future taxes by paying up front on equity.
How to Launch an AI Startup in Delaware – Step-by-Step
- Pick a Business Structure
C-Corp is best if you want to raise money from investors. - Hire a Registered Agent
You must list a Delaware-based agent for legal notices. - File Your Certificate of Incorporation
Submit your company name, number of shares, and agent info. - Apply for EIN
File Form SS-4 with the IRS to get your tax ID. - Open a Business Bank Account
Choose a U.S. bank that supports startups. Online banks are also an option. - Make Tax Elections
Use Form 8832 or Form 2553, depending on how you want your business taxed. - Stay Compliant
File Delaware’s Annual Report and Franchise Tax by March 1.
Federal taxes are due based on your chosen entity type (C-Corp: Form 1120, LLC: Form 1065 or 1120).
Conclusion
Delaware gives AI founders an edge-clear laws, strong legal protection, and startup credibility. That’s why the majority of U.S. tech startups, especially those seeking investment, choose Delaware in 2025.
Call to Action
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Disclaimer
This blog is for general education and should not be considered tax or legal advice.
Anshul Goyal is a Certified Public Accountant (U.S.), Enrolled Agent (IRS), and Fellow Chartered Accountant (India), specializing in U.S. business taxes, startup formation, and cross-border compliance for Indian founders in the U.S.
FAQs – Common Questions Founders Ask
1. Why is Delaware better than other states for startups?
Delaware has a trusted legal system, investor confidence, and easy company setup.
2. Can I form a Delaware company if I’m not in the U.S.?
Yes. You don’t need to live in the U.S. to start a Delaware company.
3. What taxes will I pay as a Delaware C-Corp?
Federal corporate tax (Form 1120) and Delaware Franchise Tax.
4. Do I need a lawyer to register a Delaware startup?
Not always. But having a CPA or advisor helps you stay compliant.
5. How much does it cost to keep a Delaware company active?
The annual Delaware Franchise Tax starts around $175 and increases with share volume.
About Our CPA
Anshul Goyal, CPA, EA, FCA is licensed in the U.S., authorized to represent clients before the IRS, and a Chartered Accountant in India. He helps tech founders and AI startups with company setup, tax planning, and compliance across borders.