How To Start a Corporation: Costs and Timeline (2026)

A corporation is a legal entity separate from its owners. Forming one can help protect your personal assets from business debts and allow you to raise money by selling shares.

To start a corporation, you’ll also need to pay filing fees, keep corporate records, and follow state reporting rules. Depending on the corporation’s tax status, profits can be taxed at both the business and shareholder levels.

This guide covers how to start a corporation in the US, from selecting a business name to filing formation documents with your state.

What is a corporation?

A corporation is a legal entity owned by one or more individuals or institutions. These owners are known as shareholders. The corporation is distinct from its owners and has its own legal rights and obligations.

One defining characteristic of a corporation is limited liability, meaning shareholders’ personal assets are generally protected from the corporation’s debts and legal liabilities. A corporation typically has an indefinite lifespan, which ends only when it’s formally dissolved.

Corporation vs. LLC, sole proprietorship, and partnership

Corporations and limited liability companies (LLCs) both offer limited liability protection, but corporations have more formal management and record-keeping. 

Sole proprietorships and general partnerships have fewer formation requirements, and owners are personally responsible for business debts. The table below shows the differences between these business structures. 

The above federal tax rules follow IRS guidance on business structures. State taxes and filing requirements vary. Limited partnerships (LPs) and limited liability partnerships (LLPs) offer liability protections that general partnerships don’t.

Types of corporations

C corp and S corp describe how a business is taxed at the federal level. Benefit corporation status sets legal obligations under state law. Certified B Corporation status is a separate certification awarded by the nonprofit B Lab.

C corporation

A C corporation pays income tax on its profits. Shareholders also pay tax when those profits are distributed as dividends, creating what’s known as double taxation.

C corp treatment is for businesses seeking venture capital or needing multiple stock classes. According to law firm DLA Piper, professional investors typically prefer C corporations because they can receive preferred shares and avoid having the company’s income passed through to their own tax returns.

S corporation

S corporation status is a federal tax election available to eligible corporations and LLCs. The election changes how the business is taxed, rather than its underlying legal structure. Income and losses pass through to shareholders’ tax returns and avoids the regular federal corporate income tax.

Eligibility requires no more than 100 shareholders and one class of stock. Permitted shareholders include US citizens and resident individuals, certain trusts, and estates. Partnerships, corporations, and nonresident individuals generally cannot be shareholders.

DLA Piper identifies S corp treatment as an option for businesses funded by founders, friends, or family. Shareholders report their share of profits even if the business keeps the money instead of distributing it.

B corporation

A benefit corporation is a for-profit corporation formed under state law with legal obligations to pursue public benefit and consider the interests of people affected by its decisions. Its directors consider social and environmental effects and shareholders’ financial interests.

Certified B Corporation status comes from B Lab, which verifies that a company meets its standards for social and environmental performance, transparency, and accountability. 

However, forming a benefit corporation doesn’t make the business a Certified B Corporation. A company can hold both designations.

How to start a corporation

To start a corporation, confirm your business name and registered agent, then file formation documents with your state. Next, establish the board and bylaws, issue shares, and arrange the tax registrations, banking, and licenses your business needs.

1. Choose a corporate name
2. Appoint a registered agent
3. Draft and file articles of incorporation
4. Appoint an initial board of directors
5. Write corporate bylaws
6. Hold an initial directors’ meeting
7. Issue stock certificates
8. Obtain an employer identification number (EIN)
9. Open a business bank account
10. Comply with business permitting and licensing rules

1. Choose a corporate name

Select a name that complies with your state’s naming rules. Check its availability through the state’s filing office and search for conflicting trademarks.

For example, New York requires corporate names to contain “Corporation,” “Incorporated,” or “Limited,” or an accepted abbreviation. The name must also be distinguishable from business names already on file.

The name on your incorporation documents is your corporation’s legal name. A DBA, or “doing business as” name, lets that same corporation trade under another name. Using a DBA may require a separate state or local registration.

2. Appoint a registered agent

Designate a registered agent to receive official documents on your corporation’s behalf. The agent must have a physical address in the state of incorporation and be available there during normal business hours.

You can serve personally if you meet your state’s requirements. This saves the cost of hiring a service, but using your home address can put it on the public record. A paid service provides its address for the registered-agent listing and can receive documents while you’re away. Other filings can still require your personal or business address.

New York follows a different process. For example, corporations must designate the Secretary of State as their agent for service of process. You provide a mailing address where the state can forward legal papers and must keep that address current.

3. Draft and file articles of incorporation

Prepare articles of incorporation, sometimes called a certificate of incorporation or certificate of formation. This document records details such as the corporation’s name, purpose, authorized shares, and registered agent.

File it with the appropriate state agency—usually the Secretary of State’s office—and pay the required filing fee. Keep the accepted document and filing confirmation with your corporate records.

4. Appoint an initial board of directors

Identify and appoint directors to your corporation’s board as required by state law. These individuals oversee corporate governance and appoint officers to manage day-to-day operations.

Some states require you to name the initial directors in your formation documents, so check this requirement before filing. If they aren’t named there, the incorporator generally appoints them afterward.

5. Write corporate bylaws

Develop corporate bylaws that set the internal rules for running your corporation. Address meeting procedures, voting requirements, and the responsibilities of directors and officers.

Involve your initial directors in drafting these rules, and follow state law when formally adopting them. The bylaws must be consistent with your formation documents.

6. Hold an initial directors’ meeting

Conduct the first board meeting to adopt the bylaws, appoint officers, and authorize the initial share issuance. Record the decisions in meeting minutes and retain them with your corporate records.

Where state law permits, directors can approve organizational actions through written consent instead of holding a meeting.

7. Issue stock certificates

Issue the shares approved by the board and record each shareholder’s ownership. Provide stock certificates or document uncertificated shares where state law and the corporation’s governing documents permit them. For example, Delaware allows a board to authorize uncertificated shares by resolution.

Issuing shares also triggers securities-law requirements. Each offer and sale must be registered with the SEC or qualify for an exemption. State securities rules and notice filings can apply even when federal registration isn’t required.

Get legal guidance before offering shares if you’re unsure which exemption applies, particularly when raising money from outside investors or offering equity to employees. If you plan to elect S corp taxation, confirm that the shareholders and stock rights meet IRS eligibility rules.

8. Obtain an employer identification number (EIN)

After forming the corporation, apply for an employer identification number (EIN) directly from the IRS. EINs are free. Your corporation uses this federal tax identifier for tax filings and business banking. Save the IRS confirmation letter.

For a US store, review the Shopify Payments setup requirements. Enter the corporation’s legal name and EIN exactly as they appear on IRS records. Shopify can request documentation confirming your EIN to verify the business.

If you want S corp taxation, file Form 2553, generally within two months and 15 days after the beginning of the tax year the election will cover. An existing corporation can also file during the preceding tax year. All required shareholders must consent to the election.

9. Open a business bank account

Open an account in the corporation’s legal name to receive revenue and pay business expenses. Keeping corporate money separate from personal funds creates a clear accounting record and helps preserve the separation between the company and its owners. Banks usually request:

• An EIN
• Formation documents
• Identification for authorized signers

Eligible businesses can also use Shopify Balance with their corporate bank account to receive Shopify Payments payouts, pay business expenses, and set money aside. Balance is a money management account available to merchants who meet Shopify’s eligibility requirements.

10. Comply with business permitting and licensing rules

Obtain the permits and business licenses required for your business activities at the federal, state, county, and municipal levels. Requirements depend on what you sell and where you operate.

Sales tax registration is separate from incorporation. If your business must collect sales tax, register with the relevant state tax agency before collecting it. 

States have different names for these permits. For example, California issues a seller’s permit and New York gives out a sales tax Certificate of Authority. 

Incorporation costs and time frames

State filing fees and document-preparation charges are generally one-time formation costs. Registered agent services, annual reports, and franchise taxes are recurring expenses. 

Budget for both, including additional registration costs if your corporation does business outside its state of incorporation.

State filing fees comparison

These are the base filing fees for forming a domestic, for-profit corporation in select states:

Nevada also charges $150 for the initial list of officers and directors and $500 for the state business license, bringing its minimum initial state charges to $725. California requires a $25 initial Statement of Information in addition to its incorporation fee.

For a first-year example, consider a Delaware corporation that files directly, qualifies for the minimum filing charge, and authorizes no more than 5,000 shares:

The franchise tax and annual report payment are due by March 1 of the following year. This example excludes expedited processing, legal services, operating permits, income taxes, and registration in another state. A different share structure can increase the filing fee and franchise tax.

Service provider fees

You can prepare the filing yourself, pay an online formation service, or hire an attorney. Compare the work included in each quote:

Check whether registered-agent service renews separately and whether legal advice is included. Document filing services and attorney representation are different purchases.

Typical incorporation timelines

Processing depends on the state, filing method, workload, and accuracy of your documents. Online submissions often move faster than mailed forms. California publishes current processing dates separately for online, in-person, and mailed filings.

Some states offer expedited processing for an additional fee. Delaware, for example, offers one-hour processing for an extra $1,000, subject to submission deadlines. That accelerates the state filing, but opening accounts and securing permits still take additional time.

Advantages of a corporate business structure

Incorporation is appropriate for businesses seeking equity investors, offering employee stock, or planning for ownership changes. Owners who want liability protection can also consider an LLC, which requires fewer formalities.

Limited liability

A corporation generally protects shareholders’ personal assets if the business defaults on debt or receives a court judgment. Shareholders risk the amount they invested in the company.

This protection has exceptions. For example, signing a personal guarantee can make an owner responsible for repaying a business loan.

Ability to raise capital

Corporations can raise capital by issuing shares to investors. 

C corporations are generally preferable for businesses seeking venture capital because they can issue multiple classes of stock and accept institutional investors. S corporations have shareholder and stock restrictions that limit these options.

Separate legal entity

A corporation can enter into contracts, own assets, and incur debts in its own name. Its existence continues when shareholders leave or sell their shares, allowing the business to operate through ownership changes. This can benefit owners planning a succession or sale.

Credibility and prestige

Customers, suppliers, and lenders can verify a corporation’s registration and status through state records. For businesses pursuing contracts that require proof of registration or good standing, incorporation provides the documentation buyers request.

Disadvantages of a corporate business structure

Running a corporation means paying recurring fees, maintaining corporate records, and following formal decision-making procedures. Consider these costs and responsibilities before incorporating.

Taxes

A drawback of a corporate structure is the potential for double taxation, where business profits are taxed at the corporate level, and once more when dividends are distributed to shareholders and reported on personal income tax returns.

If you choose to register your business as an S corp, however, you can avoid double taxation by passing all earnings, losses, deductions, and credits through to shareholders for taxation at the personal level.

Depending on where you incorporate your business, your corporation may also be subject to certain state or local corporate income taxes and fees, such as those associated with filing a required annual report. The federal corporate tax rate remains at a flat 21% for C corporations in 2026.

Complexity and formality

The process of starting and maintaining a corporation involves significant paperwork, adherence to regulations, and formalities such as regular board and annual shareholder meetings. This complexity can pose a disadvantage to small businesses or those with otherwise limited resources.

Costs and fees

Forming a corporation (and running one) can result in higher costs than other business structures. Filing fees, legal expenses, and regular compliance requirements contribute to the financial burden, especially for small business owners.

Increased regulatory requirements

Corporations face stricter regulatory oversight than other business structures, including:

• Mandatory annual reports
• Formal record-keeping requirements for all major decisions
• Required board and shareholder meetings with formal minutes
• Complex tax filing requirements
• Potential SEC regulations for larger corporations

These requirements create ongoing administrative overhead that smaller businesses may find burdensome.

State-specific incorporation considerations

Incorporating outside the state where you operate can create two sets of filing fees, taxes, and reporting obligations. Compare the initial filing fee with the recurring costs in both your state of incorporation and the states where you do business.

Popular incorporation states

Delaware, Nevada, and Wyoming attract businesses incorporated outside their home states, but their fees and tax rules differ:

• Delaware. Incorporation fees start at $109. Annual costs include a $50 report fee and franchise tax starting at $175 under the authorized-shares method. The number and value of authorized shares can increase these costs.
• Nevada. Basic state formation charges start at $725: a $75 incorporation fee, $150 initial list fee, and $500 business license fee. Annual list and business license fees start at $650. These charges are separate from applicable taxes, including Nevada’s Commerce Tax on Nevada gross revenue exceeding $4 million.
• Wyoming. The incorporation filing fee is $100. The annual report license tax is the greater of $60 or 0.0002 times the value of assets located and employed in Wyoming. The state has no corporate or personal income tax.

Businesses operating in California, New York, or Texas account for their home state requirements:

• California. Incorporation costs $100, plus a $25 Statement of Information due within 90 days and annually thereafter. Corporations generally owe an $800 minimum franchise tax after their first taxable year. Newly incorporated C corporations still owe tax on first-year income.
• New York. The incorporation filing fee is $125, with a $9 biennial statement every two years. Corporation taxes are separate from these filing fees.
• Texas. The formation filing fee is $300. Corporations generally must file an annual Public Information Report, including those whose revenue falls below the franchise tax payment threshold.

Processing times depend on the state, filing method, and workload. Some states offer expedited service for an additional fee; New York, for example, offers 24-hour, same-day, and two-hour processing options.

Home state vs. foreign state incorporation

For a business operating primarily in one state, incorporating there can avoid the expense of registering an out-of-state corporation. 

If you incorporate elsewhere, check whether your operating state requires foreign qualification—permission for a corporation formed in another state to do business there. This can mean additional registration fees, registered agent arrangements, and recurring filings.

For startups seeking outside investment, Delaware’s established corporate law and specialized Court of Chancery offer legal predictability. Its corporate law is widely understood, giving investors and their lawyers a familiar framework for ownership and governance. Weigh that benefit against the added cost of maintaining registrations in multiple states.

Post-incorporation compliance requirements

After formation, your corporation must keep records, file required reports, and pay applicable taxes. Exact requirements and deadlines depend on your state, tax treatment, and business activities. 

Build the following tasks into your compliance calendar:

• Follow the corporation’s governance structure. Shareholders elect the board of directors, and the board oversees the business and appoints officers to manage daily operations. Document elections, appointments, and approvals in accordance with state law and your bylaws.
• Hold meetings or use permitted written consents. Schedule shareholder and board meetings, record minutes, and retain approvals. Where state law and your governing documents permit, written consents can authorize actions without a meeting. Follow the applicable voting, signature, and notice requirements.
• Maintain corporate records. Keep your articles of incorporation, bylaws, meeting minutes, written consents, and shareholder records together. Record stock issuances and transfers, and retain financial statements and tax returns.
• File recurring reports and keep state records current. Submit annual or biennial reports as required. Update the corporation’s address, directors, officers, and registered agent through the appropriate filings.
• Pay recurring fees and taxes, and renew licenses. Account for franchise taxes, report fees, registered agent charges, and applicable income, payroll, and sales taxes. Track business license and permit renewals separately from corporate filings.
• Track deadlines and penalties. Assign responsibility for each filing and retain proof of submission and payment. For example, Delaware’s annual report and franchise tax are due March 1. Late filing results in a $200 penalty, plus monthly interest of 1.5% on the unpaid tax and penalty.

If you’re incorporating an existing business, also review the registrations and accounts tied to its previous legal structure:

• Update tax registrations and business accounts. A sole proprietor who incorporates needs a new EIN. Check each state’s sales tax rules before continuing to use an existing registration, as a change in ownership type can require closing the old account and registering the corporation. Review banking, insurance, licenses, and contracts for corresponding changes.
• Update sales tax information in Shopify. Once the corporation’s state registrations are confirmed, add or update the sales tax IDs under Settings > Taxes and duties. 
• Update your Shopify business entity and payment details. When changing from a sole proprietorship to a corporation, follow Shopify’s instructions to add a new business entity and assign it to your store. Review the Shopify Payments configuration before switching. Stores using Shopify financial services must follow additional steps, and some changes require Shopify Support.