In a startup with a globally-spread remote team, does it still make sense to incorporate in U.S./Delaware vs. somewhere overseas?

Delaware C-Corp
I usually Delaware is the best choice for any startup looking for fundraising with a US focus.

However, if you are a remote and global team, an overseas or foreign corporation or US tax purposes might make sense.

You'd have to talk to an advisor who can dive into your situation, but it would be more difficult for the US owner come tax time, as he'd likely have to file form 5471 to the IRS for any controlled foreign corporation, and form 90-22.1 for any foreign bank accounts.

There are a lot of other concerns I didn't hear you raise that entrepreneurs usually have and ask me about, namely banking and merchant accounts/ payment processors.

In terms of accepting online payments, any US corporation or LLC is far and away the best option for a company.

It's difficult to suggest without knowing more about the company but you might explore Delaware, Wyoming, Hong Kong and other offshore jurisdictions for your legal entity. Each tend to have positives and negatives and there is no one size fits all solution.

I do write about issues of incorporation quite regularly on my website FlagTheory.com - so you can read those articles for free, or we can schedule a call - Clarity.fm/incorporation when you have specific questions.

Thank you and hope this was helpful!

I mainly do business in Latin America and have found quite advantageous to be in Incorporated in Delaware as a "C" corp. As long as you are able to do "transactions" via credit cards for services (gets trickier w/ merchandise) you should be OK, except with countries like Venezuela and Argentina where tight controls are imposed on the dollar.

Happy to jump on a call and share our experience.

This is a complex topic because as you've so rightly mentioned it's very multi-dimensional so it matters a lot what your top priorities are. Let's start with the basics:

1. As a Canadian co-owner of a US corporation you're going to get screwed on taxes. First the US has the highest corporate taxes in the world so you'll be nailed with those, then you've got US dividend withholding taxes to deal with and finally Canadian taxation.

2. You don't have to choose between Canada or the US you could potentially choose somewhere else entirely. People tend only to think of the places where they are involved but as soon as you cross borders the whole world opens up to you.

All of this being said it is highly likely a portion of the income is going to be taxable in the US regardless and Canada regardless because you don't just get taxed based on where you're incorporated you also get taxed based on where you've got a "permanent establishment" and managers and sales people among others are considered "permanent establishments" under the terms of the tax treaty.

Usually, if you've got sufficient scale the best approach in these cases isn't to form just one company but multiple and if you do it well you could actually end up with an incredibly favorable tax position over being based in just one or the other. That being said this takes extra cost and administration so if you're just getting started and not making much money it doesn't make sense.

If you're raising money from Silicon Valley VCs you've essentially got just two choices that are worth considering, a Delaware or California company but this is where sometimes you can use a hybrid structure to get the best of both worlds.

Feel free to contact me if you'd like to discuss details.

My answer will:
1️⃣ Give you a clear summary up front
2️⃣ Walk through real-world trade-offs, not just theory
3️⃣ Point out where previous answers were vague, too technical, or missed what founders actually need to know

✅ TL;DR (Too Long; Didn’t Read)
If you plan to raise venture capital, sell to U.S. customers, or eventually exit via acquisition or IPO — incorporating in Delaware is still the best move, even with a global team.

Yes, there are tax and immigration headaches for Canadian founders, but these can be managed with the right structure.
Unless you’re staying bootstrapped or focused purely on Canadian/global customers, most investors will expect a Delaware C-Corp.

🧠 Full Answer
You’re in the gray zone where “it depends” becomes very real. But let’s make it practical:

⚖️ 1. If You Want U.S. Funding — Delaware Wins
Most serious U.S. investors (especially VCs) expect a Delaware C-Corp, full stop.
They know the legal landscape, prefer the predictability, and are usually structured to invest only in U.S. entities.

❗ A Canadian corporation may make them pause or walk.

🌍 2. If You're Bootstrapped or Non-U.S. Focused — Consider Canada or Offshore
If your revenue is coming from outside the U.S., and you’re not seeking venture funding, a Canadian corporation or an offshore jurisdiction (like BVI, Estonia, or even the UAE) may offer:
✅ Simpler compliance
✅ Lower effective tax rates
✅ Easier founder mobility
BUT: if you have U.S. customers, employees, or infrastructure, the U.S. will likely still claim a tax footprint (called a permanent establishment).

🧾 3. Canadian Founder in a U.S. Corp — Here’s What You Need to Know
You may face double taxation risk if not structured carefully
You’ll need to file IRS Form 5471 (foreign ownership of U.S. corp)
Withholding taxes may apply on dividends you receive from the U.S.
You can visit the U.S. as a Canadian under a B1/B2 visa for up to 6 months for business meetings — you just can’t work in the U.S. physically
A hybrid structure (Delaware C-Corp + Canadian management or subsidiary) can help optimize both taxes and founder flexibility

🛠️ 4. What Actually Works in Real Life (Startups Like Yours)
Goal Best Setup
Raise U.S. VC or Angel Funds ✅ Delaware C-Corp (even with global team)
Serve global clients, stay lean ✅ Canadian corp or offshore structure
Sell U.S. goods, process USD ✅ U.S. entity helps with banking, Stripe, etc.
Avoid U.S. tax complexity ❌ Not realistic if you have U.S. operations

Starting lean? You can always restructure later. But if funding or exit is your goal, start with what investors understand.

🔍 What Others Missed or Said Wrong
❌ “Just incorporate overseas” – Oversimplified. If you're hiring in or selling into the U.S., the IRS won’t care where you're registered. They’ll tax based on activity.

❌ “Form multiple companies” – Sounds smart, but adds cost, complexity, and admin most early-stage startups can’t afford. Better as a later-stage tax strategy.

❌ “You’ll get screwed on taxes as a Canadian” – That’s only true if you don’t plan around it. With the right CPA and structure, you can reduce or defer most pain points.

🧭 Final Word
✅ If you’re building for growth, funding, or exit — incorporate in Delaware.
✅ If you’re staying lean and bootstrapped, a Canadian or offshore structure could work — but only if you avoid U.S. hires, infrastructure, and revenue.

Was this breakdown helpful? If yes, I’d appreciate an upvote.
If you want to walk through your setup in detail and avoid costly mistakes — happy to schedule a call.