Starting a corporation involves more than submitting paperwork to a state office. You need to choose the right corporate structure, file formation documents, set up tax accounts, and maintain ongoing compliance requirements after the business is created. This guide explains how to start a corporation, from choosing a state and filing Articles of Incorporation to handling taxes and corporate records.
Quick Answer: How Do You Start a Corporation?
To start a corporation, you generally need to:
- Choose a corporation type and formation state.
- Select and register your business name.
- File Articles of Incorporation with the appropriate state agency.
- Create corporate documents such as bylaws.
- Appoint directors, issue shares, and organize company records.
- Apply for an EIN and complete tax registrations.
- Maintain annual reports and other compliance requirements.
Note: The exact requirements vary by state, so always check your state’s official filing office before submitting documents.
What Is a Corporation?
A corporation is a legal entity that is separate from its owners. Instead of owning the business directly, owners hold shares in the corporation and are known as shareholders.
Because the corporation exists separately from its owners, it can enter contracts, own assets, generate income, and be responsible for its own obligations. This separation is one reason many growing businesses choose this structure.
You may also see corporations use abbreviations such as “Corp.” in their official business names. For example, a company may register a name ending in “Corp.” instead of spelling out “Corporation.” These abbreviations generally refer to the same corporate structure and must still follow the naming rules of the state where the business is formed.
The most common corporation types are C corporations and S corporations. While both use the corporation structure, they differ mainly in how they are taxed and who can qualify. The U.S. Small Business Administration’s guide to choosing a business structure explains how different entity types affect ownership, liability, and taxation.
C Corporation vs. S Corporation
C Corporation
A C corporation is the standard corporation structure and is often used by businesses that plan to raise outside investment or issue shares to multiple shareholders.
A C corporation pays corporate income tax on its profits. In some cases, shareholders may also pay taxes on dividends they receive, which is commonly referred to as double taxation.
S Corporation
An S corporation is a tax election available to eligible corporations that allows profits and losses to generally pass through to shareholders’ personal tax returns.
An S corporation is not a separate type of corporation. It is a tax status that a qualifying corporation elects with the IRS.
Because eligibility rules and state treatment can vary, business owners should review the requirements before choosing this option.
Benefits of Forming a Corporation
Limited Liability Protection
One of the main reasons owners choose a corporation is liability protection.
A properly maintained corporation separates the owners’ personal assets from the corporation’s obligations. However, this protection depends on maintaining the corporation as a separate legal entity and following required corporate formalities.
Credibility and Growth Opportunities
Corporations can be useful for businesses that want to attract investors, issue shares, or create a long-term ownership structure.
Unlike some other business structures, corporations can continue operating even when ownership changes, which can make them attractive for businesses planning future expansion.
For a deeper look at the advantages and disadvantages of this structure, see our guide on corporation advantages and disadvantages.
Corporation vs. Other Business Structures
Choosing a corporation is a major decision because different business structures affect taxes, liability, ownership, and administrative requirements.
Corporation vs. LLC
Both corporations and LLCs provide liability protection, but they operate differently.
A corporation usually has a more formal ownership structure with shareholders, directors, and officers. An LLC generally offers more flexibility in management and taxation.
You can learn more about the differences in our LLC vs corporation comparison.
Corporation vs. Sole Proprietorship and Partnership
A sole proprietorship does not create a separate legal entity from the owner, while a corporation does.
A partnership allows multiple owners to operate a business together, but ownership and liability rules depend on the partnership type.
For many businesses seeking investment, structured ownership, or long-term growth, a corporation may provide advantages over simpler structures.
Steps to Start a Corporation
1. Choose a State and Corporation Type
The first step is deciding where to form your corporation.
Most small businesses incorporate in the state where they operate. However, some companies choose other states because of specific legal, tax, or administrative considerations.
When choosing a state, consider:
- Formation costs
- Annual compliance requirements
- Corporate taxes
- Reporting obligations
- Where the business actually operates
A state that works well for an investor-backed company may not be the best option for a small owner-operated business.
2. Choose and Register Your Corporation Name
Your corporation name must meet your state’s naming requirements and cannot usually conflict with an existing registered business.
Many corporations use naming abbreviations such as Corp. or other approved variations depending on state rules. However, the name must still be properly registered and approved by the state filing office.
Before filing formation documents, check whether your preferred name is available through your state’s business database.
You can also review our guide on how to check if your business name is taken before choosing a final name.
3. File Articles of Incorporation
Articles of Incorporation are the official formation documents that create your corporation with the state.
The information required varies, but many states request details such as:
- Corporation name
- Registered agent information
- Number and type of shares
- Incorporator information
- Business purpose
You typically file these documents with the Secretary of State or another state agency responsible for business filings.
Filing fees vary by state, so check the official filing office for current requirements.
4. Create Corporate Governance Documents
After approval, the corporation should establish internal documents that explain how the company operates.
Common corporate documents include:
- Corporate bylaws
- Initial meeting records
- Director appointments
- Share issuance records
Corporate bylaws explain internal operating rules, including how decisions are made and how corporate responsibilities are handled.
Maintaining accurate records helps demonstrate that the corporation is operating as a separate legal entity.
5. Obtain an EIN and Handle Tax Requirements
Most corporations need an Employer Identification Number (EIN) from the IRS.
An EIN is used for federal tax purposes and may be required to open a business bank account, hire employees, and file certain tax returns. The IRS provides EIN applications directly at no cost.
You can read our guide on how to get an EIN for more details.
Corporations may also have state tax responsibilities depending on where they operate. These can include income taxes, employment taxes, sales taxes, or other state-specific obligations.
Because tax rules vary, corporations should review requirements with the IRS and relevant state tax agencies.
6. Obtain Licenses and Permits
Forming a corporation does not automatically give you permission to operate every type of business.
Depending on your industry and location, you may need:
- Local business licenses
- Professional licenses
- Industry permits
- Sales tax registrations
Requirements vary significantly by state and business activity, so check federal, state, and local requirements before starting operations.
Start Your Corporation With Northwest.
Northwest handles your Articles of Incorporation and includes registered agent coverage for the first year. You’ll also receive corporate bylaws to help organize your business. Formation starts at $39 plus state filing fees.
Ongoing Corporation Compliance Requirements
Annual Reports and Maintaining Good Standing
After formation, corporations must continue meeting compliance obligations.
Many states require corporations to submit annual reports or similar filings. These filings help the state maintain updated company information.
Missing required filings or fees can affect the corporation’s good standing.
Corporate Records and Board Responsibilities
Corporations generally have more formal requirements than some other business structures.
Owners should maintain records such as:
- Board and shareholder meeting documentation
- Corporate bylaws
- Share ownership records
- Important company decisions
Aaron Kra’s Experience: Formation Services Are Not the Whole Compliance Picture
How Much Does It Cost to Start a Corporation?
The cost depends on the state and the services you use.
Common expenses include:
- State filing fees
- Registered agent fees
- Business licenses
- Annual report fees
- Professional services
The state filing fee is usually the main required formation cost, but corporations should also consider ongoing expenses after formation.
Where to File Corporation Formation Documents
Corporation formation documents are generally filed through the Secretary of State or a similar state business agency.
Before filing, review:
- Your state’s official business filing website
- State corporation requirements
- IRS tax resources
- SBA business guidance
Official resources are useful because formation rules, filing fees, and compliance requirements differ by state.
Frequently Asked Questions
What are the first steps to legally start a corporation?
The first steps are choosing a corporation type, selecting a formation state, registering a business name, and filing Articles of Incorporation with the appropriate state agency.
What documents are required to form a corporation?
The main formation document is the Articles of Incorporation. After formation, corporations typically create internal documents such as bylaws and shareholder records.
How does forming a corporation benefit my business compared to other entities?
A corporation can provide liability protection, a structured ownership system, and the ability to issue shares, making it useful for businesses seeking growth or investment.
What are the tax responsibilities of a corporation?
Corporations may need to pay federal and state taxes, file required tax returns, and maintain tax registrations depending on their activities and location.
Where do I file my incorporation paperwork?
Most corporations file formation paperwork with the Secretary of State or another state business filing agency where they choose to incorporate.
What ongoing legal obligations must a corporation meet?
Corporations generally need to maintain records, file required reports, pay applicable fees, and follow corporate governance requirements to remain in good standing.
- U.S. Small Business Administration: Business Registration, Incorporation, and Licensing Requirements
- Internal Revenue Service: S Corporation Tax Status and Eligibility Requirements
- Internal Revenue Service: Form 2553 – Election by a Small Business Corporation
- Internal Revenue Service: Form 1120 – U.S. Corporation Income Tax Return
- U.S. Small Business Administration: Corporate Records, Annual Reports, and Ongoing Compliance
Start Your Corporation with Bizee
Bizee simplifies corporation formation with streamlined filing services and helpful tools to get your business up and running.
