How to Incorporate Your Business
A corporation gives you the strongest liability protection, a clear ownership structure for investors, and the ability to issue stock. This guide covers C-Corps, S-Corps, and the full incorporation process — from filing to your first board meeting.
DELAWARE
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NEVADA
NEW YORK
WASHINGTONWhat Is a Corporation?
A corporation is a legal entity that’s completely separate from its owners. It can own property, enter contracts, sue, and be sued — all independently of the people who own it.
Strongest Liability Shield
Shareholders are not personally responsible for business debts. Your personal assets — house, car, savings — are protected even if the corporation is sued or goes bankrupt.
Raise Capital with Stock
Corporations can issue shares of stock to bring on investors, co-founders, and employees (via stock options). This is the structure venture capitalists and angel investors expect.
Perpetual Existence
A corporation continues to exist regardless of what happens to its owners. Shareholders can sell their stock, leave, or pass away — the business keeps operating.
C-Corp vs S-Corp: Which One?
Every corporation starts as a C-Corp by default. You can then elect S-Corp status with the IRS if you qualify. Here’s the difference.
C-Corporation
- Taxation: The corporation pays corporate income tax on profits. If you then pay yourself dividends, you pay personal income tax on those too — this is called “double taxation.”
- Ownership: Unlimited shareholders, multiple stock classes, no restrictions on who can own shares (foreign nationals, other corporations, trusts — all OK).
- Best for: Startups raising venture capital, businesses planning to go public, companies that want to retain and reinvest earnings, international founders.
- QSBS benefit: Qualifying C-Corp shareholders may exclude up to $10M in capital gains when they sell — a massive tax benefit for startup founders.
S-Corporation
- Taxation: No corporate-level tax. Profits and losses pass through to shareholders’ personal tax returns — avoiding double taxation.
- Ownership: Maximum 100 shareholders, one class of stock only, shareholders must be U.S. citizens or residents (no foreign nationals, no other corporations).
- Best for: Small to mid-size businesses where owners are actively involved and want to minimize self-employment taxes through the salary/distribution split.
- Payroll requirement: Shareholder-employees must pay themselves a “reasonable salary” and run actual payroll — this adds cost and complexity.
Quick decision guide: If you’re raising VC or have international shareholders → C-Corp. If you’re a profitable small business with U.S. owners who want to avoid double taxation → S-Corp. If you’re not sure yet, start as a C-Corp — you can always elect S-Corp status later (but going from S-Corp back to C-Corp has tax consequences). Full C-Corp vs S-Corp comparison.
How to Incorporate in 7 Steps
The formation process takes about 15 minutes. Here’s what you need to do.
Choose Your State
⏱ 2 minutesWhere you incorporate matters more for a corporation than it does for an LLC — especially if you’re planning to raise outside investment.
Delaware
The gold standard for corporations, especially startups. The Court of Chancery specializes in business law, the General Corporation Law is the most developed in the country, and investors expect it. Over 60% of Fortune 500 companies are incorporated here.
Your Home State
If you’re not raising outside capital and your customers are local, incorporating in your home state avoids the cost and complexity of foreign qualification. This is the right choice for most small businesses.
Wyoming / Nevada
No state corporate income tax, strong privacy protections, and lower annual costs than Delaware. Good for small corporations that don’t need Delaware’s investor credibility.
If you’re raising venture capital, incorporate in Delaware. This isn’t a suggestion — it’s practically a requirement. VCs and their lawyers are set up for Delaware law. Incorporating elsewhere creates legal friction that can delay or kill a funding round. See our Delaware incorporation guide.
Name Your Corporation
⏱ 2 minutesYour corporate name must be unique in your state and include a corporate designator — “Inc.,” “Corp.,” “Corporation,” or “Incorporated.” Check availability on your state’s Secretary of State website.
- Must include “Inc.,” “Corp.,” “Corporation,” or “Incorporated”
- Cannot be identical or deceptively similar to an existing entity in your state
- Cannot include restricted words (“Bank,” “Insurance,” “University”) without regulatory approval
- Search the USPTO trademark database — state approval doesn’t mean you’re clear of federal trademarks
Reserve your name first. Most states let you reserve a business name for 60–120 days for a small fee ($10–$50). This protects you while you get your other documents in order — especially useful if you’re still setting up funding or waiting on a co-founder.
Appoint a Registered Agent
⏱ 1 minuteSame requirement as an LLC — every corporation needs a registered agent with a physical address in the state of incorporation. The agent receives legal documents, tax notices, and official state correspondence on behalf of your corporation.
If you’re incorporating in Delaware but operating elsewhere (common for startups), you’ll need a Delaware registered agent. You’ll also need a registered agent in any other state where you register as a foreign corporation.
For Delaware corporations operated from other states: A professional registered agent service is essentially required — you need a physical Delaware address, and unless you have an office there, a service is the only practical option. BusinessFormations.com includes registered agent service with every incorporation.
File Your Articles of Incorporation
⏱ 5 minutesThe Articles of Incorporation (called “Certificate of Incorporation” in Delaware and some other states) is the document that legally creates your corporation. You file it with the Secretary of State.
What’s on the form:
- Corporation name — with corporate designator (Inc., Corp., etc.)
- Registered agent — name and address
- Incorporator — the person filing (doesn’t need to be an officer or director)
- Authorized shares — how many shares the corporation can issue, par value, and stock classes
- Corporate purpose — typically “any lawful business activity”
- Principal office address
- Initial directors — some states require listing them; others don’t
State filing fees for incorporation. Verify current fees on your state’s Secretary of State website.
Authorized shares matter. For Delaware startups, the standard setup is 10,000,000 shares of common stock at $0.00001 par value. This gives you room to issue equity to founders, employees, and investors without amending your certificate later. If you authorize too many shares above par value in Delaware, you’ll pay a higher franchise tax — your attorney or formation service should help you get this right.
Create Your Corporate Bylaws
⏱ VariesBylaws are the internal rulebook for how your corporation operates. They’re not filed with the state — they’re kept internally — but they’re legally important and banks will ask for them.
What bylaws typically cover:
- Board of directors — how many, how they’re elected, term lengths, removal process
- Officer roles — who serves as CEO, Secretary, Treasurer, and what each role does
- Meetings — how to call shareholder and board meetings, quorum requirements, voting procedures
- Stock — issuance procedures, transfer restrictions, stock certificates
- Fiscal year — when your financial year starts and ends
- Amendments — how to change the bylaws later
Don’t skip this. Bylaws prove your corporation is a real, functioning entity — not just a name on a filing. Without them, courts are more likely to “pierce the corporate veil” and hold shareholders personally liable. BusinessFormations.com generates customized bylaws as part of every incorporation. Learn more about corporate bylaws.
Get Your EIN & Issue Stock
⏱ 5 minutesEIN: Apply at IRS.gov — it’s free and you’ll receive your EIN immediately. You need this before you can open a bank account, run payroll, or file taxes. Non-U.S. residents submit Form SS-4 by fax (4–8 weeks).
Issue stock: After incorporation, you need to formally issue shares to the founders. This involves a board resolution authorizing the issuance, a stock purchase agreement, and recording the shares in a stock ledger. For a standard startup, founders typically pay a nominal amount ($0.001 per share) for their initial shares.
83(b) election for founders: If you’re receiving restricted stock that vests over time, you have 30 days from the stock purchase date to file an 83(b) election with the IRS. This lets you pay taxes on the stock’s value today (usually near zero at founding) instead of at vesting (when it could be worth much more). Miss this deadline and you could owe a massive tax bill later. Your attorney should handle this — it cannot be filed late.
Hold Your First Board Meeting
⏱ 30 minutesYour first organizational meeting is where the corporation officially “comes to life.” The initial directors adopt the bylaws, elect officers, authorize stock issuance, approve the registered agent, and adopt any other resolutions needed to begin operations.
Typical agenda for an organizational meeting:
- Adopt the bylaws
- Elect officers (CEO/President, Secretary, Treasurer)
- Authorize issuance of stock to founders
- Approve the registered agent appointment
- Select the fiscal year
- Authorize opening a corporate bank account
- File S-Corp election (Form 2553) if applicable
Document everything. Take formal minutes of this meeting and keep them in your corporate records. Corporations must maintain a paper trail — meeting minutes, resolutions, stock records — or risk losing their liability protection. This sounds tedious, but it’s what separates a real corporation from a paper entity. Guide to corporate minutes.
What to Do After Incorporating
Your corporation is official. Here’s the post-incorporation checklist — plan on 1–2 weeks to get everything set up.
🏦 Open a Corporate Bank Account
You need your Articles of Incorporation, EIN, bylaws, and board resolution authorizing the account. Keep corporate and personal finances completely separate — commingling funds is the fastest way to lose your liability protection.
📊 Set Up Bookkeeping & Payroll
If you’ve elected S-Corp status, you must run payroll for any shareholder-employees. Even C-Corps need proper books from day one. QuickBooks, Gusto (payroll), and a CPA relationship should be set up before you process your first transaction.
📋 File Your S-Corp Election (If Applicable)
If you want S-Corp tax treatment, file Form 2553 with the IRS. You must file within 75 days of incorporation (or by March 15 for the current tax year). Miss this window and you’ll wait until the next tax year — or file late with a reasonable cause statement.
🛡️ Get Business Insurance
Corporate status protects your personal assets, but the corporation itself still needs protection. General liability, directors and officers (D&O) insurance, and professional liability are common starting points. Some industries require specific coverage.
📑 Set Up Your Corporate Records
Create a corporate records book (physical or digital) containing: Articles of Incorporation, bylaws, meeting minutes, stock ledger, stock certificates, board resolutions, and any amendments. Keep this organized — you’ll need it for banking, tax filings, investor due diligence, and audits.
📅 Know Your Compliance Deadlines
Corporations have more compliance requirements than LLCs. Annual reports, franchise taxes, annual shareholder meetings, and board meetings all need to happen on schedule. Missing deadlines leads to penalties and can void your corporate status. Corporate compliance guide.
How Much Does It Cost to Incorporate?
Incorporation costs more than forming an LLC — both upfront and ongoing. Here’s what to budget.
DIY Filing
State filing fee only
- You prepare and file Articles of Incorporation yourself
- Draft your own bylaws and resolutions
- EIN from IRS.gov (free)
- Handle stock issuance documentation
Best for: Experienced founders who understand corporate formalities and want to save money.
Formation Service ✓
Service fee + state filing fee
- Service prepares and files everything
- Bylaws and organizational resolutions included
- EIN registration handled
- Registered agent included
- Compliance reminders and support
Best for: Most businesses. Covers the paperwork so you can focus on getting started.
Hire an Attorney
Attorney fee + state filing fee
- Full legal review and custom documents
- Complex stock structures and investor documents
- 83(b) elections and equity planning
- Founder agreements and IP assignment
Best for: Venture-backed startups, multi-founder companies with equity splits, or businesses with complex regulatory requirements.
Ongoing costs are higher than an LLC. Budget for: registered agent ($50–$300/year), franchise tax (Delaware charges $400+ annually), annual report fees, payroll service if you’re an S-Corp ($30–$50/month), and a CPA ($500–$2,000/year for a small corporation). Corporations cost more to maintain than LLCs — make sure the benefits justify it for your situation.
Corporation vs LLC: When to Incorporate
An LLC is right for most small businesses. Here’s when a corporation is the better choice.
Choose a Corporation When…
- You’re raising venture capital — VCs invest in C-Corps (usually Delaware). This is non-negotiable for institutional funding.
- You want to issue stock options — employee stock option plans (ESOPs) work cleanly in a corporate structure.
- You’re planning an IPO — you’ll need to be a corporation to go public.
- You want QSBS tax benefits — qualifying C-Corp shareholders can exclude up to $10M in capital gains on stock held for 5+ years.
- International founders with investors — C-Corps have no restrictions on foreign ownership, unlike S-Corps.
Stick with an LLC When…
- You want simplicity — LLCs have fewer formalities, less paperwork, and are cheaper to maintain.
- You want pass-through taxation — LLC profits go directly to your personal return. No double taxation risk.
- You’re a small team or solo — the corporate structure (board, officers, minutes) is overkill for a freelancer or small team.
- You want flexibility — LLC operating agreements can customize profit sharing, management, and distributions in ways corporate bylaws can’t.
- You can always convert later — starting as an LLC and converting to a C-Corp when you’re ready to raise is a common path.
6 Incorporation Mistakes That Cost You Money
These are the errors we see most often with new corporations.
1. Incorporating in Delaware When You Don’t Need To
Delaware incorporation makes sense for venture-backed startups. For a local landscaping business or a solo consulting firm, it just means paying filing fees, franchise taxes, and registered agent costs in Delaware PLUS foreign qualification in your home state. Unless investors require it, incorporate where you operate.
2. Getting the Share Structure Wrong
Authorizing too many shares at too high a par value in Delaware triggers a massive franchise tax bill. Authorizing too few shares means you’ll need to amend your certificate before you can bring on investors or employees. The standard startup setup — 10,000,000 shares at $0.00001 par value — avoids both problems. Get this right at formation.
3. Missing the 83(b) Election Deadline
If founders receive restricted stock that vests over time, the 83(b) election must be filed with the IRS within 30 days of the stock purchase. There is no extension. Miss it and you’ll owe taxes on the stock’s fair market value at each vesting date instead of at purchase (when it was worth nearly nothing). This has cost founders millions.
4. Ignoring Corporate Formalities
Corporations require more formal upkeep than LLCs — annual board meetings, shareholder meetings, meeting minutes, and proper documentation of major decisions. Skip these formalities and a court can “pierce the corporate veil” and hold shareholders personally liable. The liability protection only works if you actually run the corporation like a corporation.
5. Not Separating Corporate and Personal Finances
Same rule as LLCs, but even more critical for corporations. Every dollar must flow through the corporate bank account. Don’t pay personal bills with corporate funds. Don’t deposit corporate revenue into your personal account. Commingling funds is the #1 way courts justify piercing the corporate veil.
6. Missing the S-Corp Election Window
If you want S-Corp taxation, you need to file Form 2553 within 75 days of incorporation. Miss the deadline and you’re stuck with C-Corp taxation for the rest of the tax year (unless you file a late election with a reasonable cause statement, which the IRS may or may not accept). Put this at the top of your post-incorporation checklist. How to elect S-Corp status.
Incorporating as a Non-U.S. Resident
Non-U.S. citizens can incorporate in any state. Here’s what’s different.
International entrepreneurs can form a C-Corporation in any U.S. state without a visa, green card, or Social Security Number. In fact, a C-Corp is usually the better choice for non-residents because S-Corps require all shareholders to be U.S. citizens or residents.
Key differences for international founders:
The incorporation process is the same as for U.S. residents. You’ll need a registered agent with a U.S. address (we provide this). Your EIN application goes by fax using Form SS-4 — expect 4–8 weeks. Opening a U.S. bank account is the biggest challenge, but services like Mercury and Relay work with non-resident-owned corporations.
Why Delaware is popular with international founders: Delaware’s laws are well-understood by international investors and attorneys. If you’re building a tech company and plan to raise U.S. venture capital, a Delaware C-Corp is the standard. It’s also where most startup accelerators (Y Combinator, Techstars) expect you to incorporate.
Tax obligations: A C-Corp is a U.S. taxpaying entity regardless of where its shareholders live. You’ll need to file a corporate tax return (Form 1120) annually. International founders should absolutely work with a CPA who specializes in international tax — the intersection of U.S. corporate tax and your home country’s tax treaties is complex.
Best Structure for International Founders
- C-Corp in Delaware — if raising U.S. venture capital
- LLC in Wyoming — if you don’t need investors and want simplicity + privacy
- S-Corp — not available to non-residents
Incorporation by State
We handle incorporation in all 50 states. Here are the most popular — each guide covers requirements, fees, taxes, and timelines.
What Founders Say
“We incorporated a Delaware C-Corp before our seed round. BusinessFormations handled the filing, bylaws, and registered agent. Our attorney said the documents were exactly what he needed for the investor paperwork.”— Alex T., SaaS Startup (Delaware C-Corp)
“I converted my LLC to an S-Corp last year. The compliance reminders have saved me twice now — once for the annual report and once for the franchise tax. Worth every penny.”— Maria S., Marketing Consultant (S-Corp)
“I’m based in Singapore and needed a Delaware C-Corp for my fintech startup. The process was smoother than I expected — registered agent, EIN, and all the founding documents were handled.”— Wei L., Fintech Founder (Delaware C-Corp)
Frequently Asked Questions
How long does it take to incorporate?
The filing itself takes about 15 minutes online. State processing varies — Delaware approves within 1–2 business days (same-day with expedited), most states take 3–7 business days. After state approval, you’ll need another 1–2 weeks to get your EIN, set up banking, issue stock, and hold your organizational meeting.
How much does it cost to incorporate?
State filing fees range from $70 to $500. On top of that, budget for registered agent service ($50–$300/year), franchise taxes (Delaware charges $400+ annually), and CPA fees. First-year total cost for a basic incorporation: $300–$1,000 through a formation service, $2,000–$7,000+ with an attorney.
Should I incorporate or form an LLC?
For most small businesses, freelancers, and service companies — form an LLC. It’s simpler, cheaper, and provides the same liability protection. Choose a corporation if you’re raising venture capital, want to issue stock options to employees, or plan to eventually go public. Full LLC vs Corporation comparison.
What’s the difference between C-Corp and S-Corp?
A C-Corp pays corporate income tax and shareholders pay again on dividends (double taxation). An S-Corp avoids this — profits pass through to shareholders’ personal returns. S-Corps are limited to 100 U.S. shareholders and one class of stock. You start as a C-Corp and elect S-Corp by filing Form 2553. Full C-Corp vs S-Corp comparison.
Do I need a lawyer to incorporate?
For a straightforward single-founder or two-founder corporation, no — a formation service handles the filing and documents. You should use a lawyer if you have complex equity splits between multiple founders, are negotiating investor term sheets, need custom shareholder agreements, or have regulatory considerations specific to your industry.
Can a non-U.S. citizen incorporate in the United States?
Yes — no visa, residency, or citizenship required to form a C-Corporation. S-Corps require U.S. shareholders, so they’re not available to non-residents. You’ll need a U.S. registered agent and your EIN will be obtained by fax (4–8 weeks). Delaware is the most popular state for international founders. International incorporation guide.
What is a registered agent and do I need one?
A registered agent is a person or service that receives legal documents and official state mail for your corporation. Every state requires one. They must have a physical address in the state of incorporation and be available during business hours. If you incorporate in a state where you don’t have an office (common with Delaware), a professional service is required. Learn more about registered agents.
What ongoing compliance does a corporation require?
More than an LLC. You’ll need to: file an annual report with the state, pay franchise taxes (varies by state), hold an annual shareholder meeting and board meeting, keep meeting minutes, maintain a stock ledger, and file corporate tax returns. Missing these obligations can result in fines, administrative dissolution, or loss of liability protection.
Can I convert an LLC to a corporation later?
Yes. Most states allow statutory conversions from LLC to corporation, and the process typically takes a few weeks. This is a common path — start as an LLC for simplicity, then convert to a C-Corp when you’re ready to raise investment. There may be tax implications, so consult a CPA before converting. LLC to corporation conversion guide.
What is the 83(b) election?
When founders receive restricted stock that vests over time, the 83(b) election lets you pay taxes on the stock’s value at the time of purchase (usually near zero) rather than at each vesting date (when it could be worth significantly more). You must file within 30 days of receiving the stock — there is no extension. This is one of the most important early tax decisions for startup founders.
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