The company itself · A term for founders abroad
What is a C-Corporation?
A US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 13 of 105 in the glossary, filed under C.IRS: instructions for Form 1120
C-Corporation, for a founder abroad.
A corporation is owned by shareholders, run by directors and officers, and taxed as a separate entity on Form 1120, at a flat federal rate of 21%. Profit paid out as dividends is taxed again when shareholders receive it, which is the double taxation people talk about. It can issue stock and options, which is why venture investors' paperwork assumes one.
A non-resident can own and run a C-Corporation. What a non-resident can't own is an S-Corporation.
What it means for a founder abroad
- Two layers of tax: 21% on the company's profit, then 30% withheld on dividends paid to you, or a lower tax treaty rate if your country has one.
- A return every year: Form 1120, with Form 5472 attached while a foreign person owns 25% or more.
- Delaware's yearly charge: a $50 annual report and franchise tax, usually $450 together for a new startup, due 1 March.
- Paperwork an LLC doesn't need: bylaws, a board, minutes of its decisions, and a stock ledger.
Those costs buy one thing an LLC can't offer: stock that US investors, SAFEs and option plans are built around. A founder who isn't raising usually pays less with an LLC.
Sources: IRS: instructions for Form 1120; IRS: Publication 515, withholding on foreign persons.
Read next · guide · 5 minLLC or C-Corporation for a founder outside the United StatesWhat founders ask next.
- Can a foreigner own a US C-Corporation?
- Yes, all of it, from anywhere, with no visa and no Social Security Number. The corporation gets an EIN like any other, and while a foreign person owns 25% or more, it attaches Form 5472 to its return for its dealings with that owner.
- What tax does a C-Corporation pay?
- Federal tax of 21% on its profit, on Form 1120, plus any state tax where it does business. A dividend paid to a foreign shareholder has 30% withheld, or a treaty's lower rate.
- Why do investors want a Delaware C-Corporation?
- Their documents, from SAFEs to preferred stock, assume Delaware corporate law, which courts and lawyers know well. An LLC has no stock to issue, so it usually converts before a round. The LLC or C-Corp guide compares the two.
03 · See also
- The company itselfLLCA US company whose owners aren't personally liable for its debts, and whose profit is taxed once, to the owners, unless it elects otherwise.Read the term
- The company itselfS-CorporationA tax election that lets a US corporation or LLC pass its profit through to its owners; not available if any owner is a non-resident alien.Read the term
- Keeping the company in good standingDelaware annual LLC taxThe flat $400 tax every Delaware LLC pays by 1 June each year, raised from $300 in 2026; Delaware LLCs file no annual report.Read the term
- Raising money83(b) electionA founder's choice to be taxed on restricted stock when it's granted rather than as it vests, filed with the IRS within 30 days, with no extension.Read the term
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