The standard corporate structure for venture-backed startups; allows unlimited shareholders, preferred stock, and stock option plans.
A C-Corporation (C-Corp) is the entity structure of choice for startups that plan to raise venture capital. It is a separate legal person that can own assets, sign contracts, sue and be sued, and issue stock. Shareholders own the corporation but are not personally liable for its debts. The corporation pays corporate income tax, and shareholders pay tax again on dividends they receive — this is called "double taxation," but it rarely matters for early-stage startups that aren't paying dividends.
C-Corps are required for most venture fundraising because institutional investors (VC funds) are legally restricted from holding LLC membership interests. Only a C-Corp can issue preferred stock (what VCs receive), run a qualified stock option plan (ISOs), and grant QSBS to early investors — a tax benefit worth potentially hundreds of thousands of dollars. Delaware C-Corps are the overwhelming standard because Delaware has the most mature corporate law, well-developed case law, and the Court of Chancery, a specialized business court.
Formation services like Stripe Atlas (~$500) and Clerky make Delaware C-Corp formation straightforward. After forming, you'll need to issue founder shares, adopt bylaws, hold organizational board meetings, and have founders sign PIIA agreements assigning their IP to the company.