Delaware LLC vs single-member C-Corp for non-resident founders

Default tax math

Delaware single-member LLC owned by non-resident: pass-through, no entity-level tax, Form 5472 + pro forma Form 1120 information return only.

Delaware single-member C-Corp owned by non-resident: 21% federal corporate tax on profits, plus dividend withholding (typically 30% or treaty rate) when distributing to the non-resident owner.

When C-Corp wins

VC fundraising plans within 12-24 months: investors expect C-Corp.

Retained-earnings tax planning when home-country tax on pass-through is higher than 21%: C-Corp can hold profits at 21% without immediate home-country attribution.

Operational reasons: stock-option grants for US employees, complex investor structures.

When LLC wins (most cases)

Bootstrap and pre-VC operations.

Home-country tax treats LLC pass-through favorably.

Simplicity preferred: no double tax, simpler annual filings.