Formed under the General Corporation Law of The State of Delaware, the corporation, known as a C Corporation, or stock or open corporation, is popular. Some 65% of Fortune 500 companies use this form as do more than 50% of all publicly traded companies. Delaware continues to be the foremost state for incorporating a business, as it has been since the early 1900s.

C corporations are taxed separately from their owners, under the U.S. federal income tax laws. In contrast, S corporations are not taxed separately. The C corporate form is beneficial to owners when the corporation wishes to lower taxes by reinvesting retained earnings. A disadvantage exists in those taxes can be assessed twice: at the corporate level and again at the shareholder level when a dividend is declared.

Advantages of incorporating in Delaware include the sophistication of the legislature and statutes governing corporations, the corresponding preference of investors for purposes of raising capital, the clear separation of rights and responsibilities between the parties involved, the absence of size limitation, and the judiciary that resolves disputes and interprets laws. Delaware’s Court of Chancery, consisting of a chancellor and four vice-chancellors, is thought to be more predictable than the courts of other states in that decisions are based on 200+ years of consistent case law and judicial procedure, the court has historically respected the good faith decisions of a Board of Directors over the desires of stockholders, and there are no jury trials in the Court of Chancery.