AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Founders who plan to raise venture capital generally use a Delaware C corporation because investors want preferred shares, which S corporations cannot issue, and a familiar body of law. The cost is a second layer of tax: the corporation pays a flat 21% federal rate on profit (26 U.S.C. 11), and shareholders are taxed again on dividends, offset for qualifying stock by the section 1202 exclusion of up to 100% of gain after five years.
Why venture-backed companies end up as C corporations
An LLC or S corporation suits a profitable family business. A company that wants to sell slices of itself to investors faces different needs:
- Different share classes. Investors usually buy preferred shares with rights ordinary shares lack. An S corporation is limited to one class of stock (IRS, June 2026); a C corporation can have several.
- Any kind of shareholder. Funds, foreign investors, your Nigerian holding company and co-founders in Lagos can all hold C corporation shares. S corporations exclude nonresident aliens and corporations.
- Clean tax for funds. Many investment funds avoid owning LLC interests because the profits flow through to them. A C corporation keeps tax inside the company.
- Option plans. Share option schemes for staff are built around corporate stock.
Delaware is the usual state because investors and their lawyers commonly work with Delaware corporate law and its courts. That is a market convention, not a legal requirement; read Delaware or your home state if you are not raising money.
What a Delaware corporation costs to keep
Delaware's franchise tax page (published 1 August 2026) sets these yearly charges:
| Item | Amount |
|---|---|
| Annual report fee (non-exempt domestic corporation) | $50 |
| Franchise tax, authorised shares method | Minimum $175 |
| Franchise tax, assumed par value capital method | Minimum $400 |
| Maximum franchise tax | $200,000 ($250,000 for large corporate filers) |
| Due date | On or before 1 March |
| Late filing or payment | $200 penalty plus 1.5% interest a month |
Startups commonly authorise millions of shares, and the authorised shares method can then produce a bill far above the minimum. Delaware lists the second method for this reason; check both calculations before paying. If the company does business in another state, it also registers and files there.
The "founder tax": two layers
A C corporation pays federal income tax at 21% of taxable income (26 U.S.C. 11(b)), plus any state corporate tax. When it pays a dividend, shareholders are taxed on it again. The IRS describes avoiding this double taxation as a main feature of S corporations; C corporations accept it. Most venture-backed startups pay no dividends for years, so the second layer bites mainly on exit, when founders sell shares.
Section 1202: the exclusion that changed in July 2025
Qualified small business stock (QSBS) lets holders exclude part or all of their gain on sale. Public Law 119-21, enacted 4 July 2025, changed the rules for stock acquired after that date. As the code now reads:
| Rule | Stock acquired on or before 4 Jul 2025 | Stock acquired after 4 Jul 2025 |
|---|---|---|
| Holding period and exclusion | More than 5 years (100% for stock acquired after 27 Sep 2010) | 3 years 50%; 4 years 75%; 5 years or more 100% |
| Per-company gain cap | Greater of $10m or 10 × basis | Greater of $15m (inflation-adjusted after 2026) or 10 × basis |
| Issuer gross assets | The test in force when the stock was issued | $75m or less before and immediately after issue |
Conditions apply throughout: the issuer must be a domestic C corporation, the stock acquired at original issue for money, property or services, and at least 80% of assets used in a qualified business. Excluded fields include health, law, accounting, consulting, financial services, banking, farming and running hotels or restaurants. A Nigerian founder building a consulting firm or a lending business will not qualify, however it is structured.
Example only: Obinna, a US resident, founds a Delaware C corporation in 2026 for a logistics software product and holds his founder shares for five years. He sells for a $4,000,000 gain. If every section 1202 condition is met, the full $4,000,000 can be excluded, since it is under the $15,000,000 cap. Had he sold after three years, 50% ($2,000,000) would be excluded.
For founders who will be US taxpayers at exit, that one rule can matter more than any other in the structure, so keep share issue records, board approvals and payment evidence from day one.
Points for founders with Nigerian operations
- Many founders "flip": a Delaware parent owns the Nigerian operating company. The Nigerian subsidiary then has foreign participation and registers with NIPC; see setting up a Nigerian subsidiary.
- A US parent that owns more than 50% of a Nigerian company makes it a controlled foreign corporation, with Form 5471 and GILTI consequences; see is my Nigerian company a CFC.
- Founder shares usually vest. Ask your lawyer about a section 83(b) election when the shares are issued; the deadline is short.
Where Pryme fits
Once money is raised in dollars and spent partly in naira, the Nigerian subsidiary needs to hold both. A Pryme Business Account holds NGN, USD, GBP and EUR with local details for each, and the Finance agent prepares reconciliations for a person to approve. See the Finance agent.
Questions people ask
Why do investors want a Delaware C corp?
C corporations can issue preferred shares and have any type of shareholder, and investors commonly work with Delaware corporate law. S corporations are limited to one class of stock and cannot have nonresident alien or corporate shareholders.
What is the US corporate tax rate?
The federal rate is a flat 21% of taxable income under 26 U.S.C. 11(b). State corporate taxes are extra, and shareholders pay tax again on dividends.
What is QSBS and did it change in 2025?
Section 1202 lets holders of qualified small business stock exclude gain on sale. For stock acquired after 4 July 2025, 50% is excluded after three years, 75% after four and 100% after five, up to $15 million per company or 10 times basis.
How much is Delaware franchise tax?
At least $175 under the authorised shares method or $400 under the assumed par value capital method, plus a $50 annual report fee, due by 1 March, with a $200,000 maximum for most companies (Delaware, August 2026).
Sources
- IRS: S corporations (reviewed 11 Jun 2026) · accessed Oct 2026
- Cornell LII: 26 U.S. Code 11, tax imposed on corporations · accessed Oct 2026
- Cornell LII: 26 U.S. Code 1202, partial exclusion for gain from qualified small business stock (as amended by Pub. L. 119-21) · accessed Oct 2026
- Delaware Division of Corporations: Franchise taxes (published 1 Aug 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.