Delaware compliance for global founders

Consolidated findings (what global founders must know and do): 1) Formation basics and registered agent - Delaware allows non-U.S. persons to serve as officers, directors, or members; there is no residency or citizenship requirement. You must appoint a registered agent with a physical Delaware address to accept official correspondence and service of process. 2) State annual compliance (deadlines & amounts) - Delaware corporations: must file an Annual Report and pay franchise tax by March 1 each year. - Delaware LLCs: required to pay an annual franchise tax of $300 (flat) due June 1 each year; LLCs generally do not file an annual report in Delaware. 3) Federal tax and reporting obligations for foreign owners (critical; often the most costly compliance) - Single-member foreign-owned U.S. LLCs (disregarded entities) typically must file a pro-forma Form 1120 and Form 5472 to disclose reportable transactions with foreign owners — even if there is no U.S. tax liability. Failure to file can carry substantial penalties. - Multi-member LLCs taxed as partnerships must file Form 1065, Schedule K-1s, and may have withholding obligations (e.g., Sec.1446 style withholding; Forms 8804/8805) if partners have effectively connected income (ECI). Corporations have corporate tax filing obligations (Form 1120) and may face withholding on dividends paid to foreign shareholders (Forms 1042/1042-S) unless reduced by treaty. 4) BOI / Corporate Transparency Act (FinCEN) status (important privacy/compliance change) - As of FinCEN’s March 2025 interim final rule, FinCEN exempted domestic U.S. companies (entities created in the U.S., e.g., Delaware LLCs/corps) from BOI reporting under the CTA and limited the scope of reporting companies to certain foreign entities that register to do business in the U.S. — foreign reporting companies still must report BOI under the revised schedule. This interim rule was published in March 2025 (check FinCEN for updates; the policy may be finalized or changed later). 5) Banking, KYC, and practical operations - Getting a U.S. bank account and payment processor acceptance is often the biggest hurdle for non-U.S. founders. Banks require robust KYC: Certificate of Formation, EIN, Operating Agreement, passports and proof of address for beneficial owners, and evidence of real business activity. Some fintechs/banks are more non-resident-friendly; others (traditional banks) require in-person visits. Using a registered agent and mail-forwarding or virtual office services is common to receive US mail and meet contact requirements. 6) Practical checklist (recommended steps for global founders forming or operating a Delaware entity) - Choose entity type deliberately (C-Corp vs LLC) based on scale, investors, tax consequences. - Appoint a Delaware registered agent and file Certificate of Formation/Articles with the Delaware Division of Corporations. - Obtain an EIN from the IRS (SS-4; non-residents may apply by mail/fax if no SSN/ITIN). - Set up an Operating Agreement (LLC) or Bylaws and stock records (Corp) — needed for banks and investors. - Register for BOI only if your entity is a “foreign reporting company” per FinCEN rules (monitor FinCEN for updates); domestic Delaware entities currently exempt under the March 2025 interim rule. - Prepare for federal filings: if single-member foreign-owned LLC, prepare Form 5472 (plus pro-forma 1120); if multi-member or partnership treatment, prepare Form 1065 and withholding compliance; if C-Corp, prepare Form 1120 and consider dividend withholding rules for foreign shareholders. - Pay Delaware state franchise tax on time (Corp: March 1 annual report & tax; LLC: $300 due June 1) and maintain registered agent fee and good standing. - Open U.S. bank account — prepare KYC documents and consider fintech/banks friendly to nonresident entities. - Engage a U.S. CPA and/or international tax attorney (especially if foreign owners or cross-border transactions are involved). 7) Consequences of non-compliance - Late or missing Delaware filings or tax payments can lead to penalties, interest, loss of good standing, and potentially administrative dissolution. Missing federal reporting (e.g., Form 5472) can trigger large IRS penalties.