How to Form a C Corporation

Step 1: Choose Your State of Incorporation

Most small businesses incorporate in the state where they actually operate, since incorporating elsewhere, Delaware is the most common example, usually means also registering as a foreign corporation (and paying fees) in your home state anyway. See our guide on whether to incorporate in your home state for the tradeoffs.

Step 2: Choose and Check Your Name

Most states require a corporate name to include a designator word, such as Corporation, Incorporated, Company, or Limited, though California is a notable exception for general stock corporations. Every state also requires the name to be distinguishable from other registered entities on file. See our guides on corporate naming rules by state and how to check corporate name availability before you file.

Step 3: Appoint a Registered Agent

Every state requires a corporation to designate a registered agent, a person or company with a physical street address in the state who's available during business hours to receive legal notices and official state mail on the corporation's behalf. You can serve as your own agent if you meet the state's residency and availability requirements, or use a professional registered agent service. LLC Register's $99-a-year registered agent service includes LLC formation in year one and annual report filing, with state fees passed through at cost, and also covers a corporation's registered agent needs.

Step 4: File Articles of Incorporation

Articles of incorporation (sometimes called a certificate of incorporation) are the document that legally creates the corporation. They typically include the corporation's name, its registered agent and office address, the number of shares it's authorized to issue, and the name of its incorporator. File this document with your state's Secretary of State or equivalent filing office, along with the required fee, which varies significantly by state.

Step 5: Hold an Organizational Meeting

Shortly after the state accepts your articles of incorporation, the initial directors (or the incorporator, if directors haven't been named yet) typically hold an organizational meeting to adopt bylaws, elect officers, authorize the corporation to open a bank account, and approve issuing stock to the founders in exchange for cash, property, or services. Document this meeting with written minutes or a signed written consent; it's one of the first items a bank or investor will ask to see.

Step 6: Issue Stock

Once the board authorizes it, the corporation issues shares to its founders and any other initial shareholders, recording each issuance in a stock ledger. See our guide on authorized shares vs. issued shares for how the number of shares you issue relates to the number you authorized in your articles.

Step 7: Apply for an EIN

An EIN, or Employer Identification Number, is the federal tax ID your corporation needs to open a bank account, hire employees, and file tax returns. Per the IRS, you apply for an EIN using Form SS-4 or the IRS's online application, and it's free directly from the IRS. Apply only after your corporation legally exists, since the application requires your formation date and state.

Step 8: Register for State and Local Taxes and Licenses

Depending on your state and industry, you may need to register for state income tax withholding, sales tax, unemployment insurance, and any required local business license before you start operating. These registrations are separate from your formation filing and from your EIN application.

Step 9: Decide Whether to Elect S Corporation Status

A newly formed corporation is taxed as a C corporation by default, but an eligible corporation can elect S corporation status by filing Form 2553 within the IRS's two-months-and-15-days deadline. See our guide on whether a C corporation can elect S corporation status if pass-through taxation fits your situation better than remaining a C corporation.

Budget for More Than Just the Filing Fee

Beyond the state filing fee for articles of incorporation, budget for a registered agent fee, any annual report or franchise tax your state requires, and, if you use one, an attorney's time to draft bylaws and run the organizational meeting correctly.

Keep the Organizational Meeting Documented

A corporation that skips documenting its organizational meeting, or never formally issues stock, can run into trouble later when a bank, investor, or court looks for the paper trail establishing who owns the company and who's authorized to act for it. Don't treat this step as optional paperwork.

Think About Your State's Franchise Tax or Minimum Tax Upfront

Some states apply a minimum franchise tax or fee to every corporation regardless of profitability, such as California's $800 minimum. Factor this into your state choice and your first-year budget rather than discovering it after you've already filed.

This Is Not Legal or Tax Advice

How you structure your initial stock issuance, what par value to use, and whether to elect S corporation status all depend on your specific plans. Talk to a business attorney and a tax professional before you file.