Corporation Formation

Incorporating a business involves more than filing paperwork with the state. Decisions regarding ownership structure, tax elections, payroll, compensation, and ongoing compliance can have significant financial and tax consequences. Whether you are forming a new corporation or evaluating whether a corporate structure is right for your existing business, understanding the fundamentals can help you avoid costly mistakes and position your business for future success.

What is a corporation?

A corporation is a legal entity formed under state law and generally exists separately from its owners. It is created by filing formation documents—commonly called articles or a certificate of incorporation—with the appropriate state authority and paying the required filing fee. State law governs the corporation’s formation and legal structure, while federal and state tax law determine how it is taxed.

What is the difference between an "S" corporation and a "C" corporation?

A corporation is taxed as a C corporation unless it elects S corporation status. A C corporation pays tax on its profits, and shareholders may also pay tax when those profits are distributed as dividends. An eligible corporation can elect S corporation status by filing Form 2553 with the IRS on time and obtaining the required shareholder approvals. With an S corporation, income, losses, deductions, and credits generally pass through to the shareholders’ individual tax returns, although certain entity-level taxes may still apply. To qualify, the corporation generally must be formed in the United States, have no more than 100 shareholders, have only eligible shareholders, and have one class of stock. Shareholders who work for the corporation may need to be treated as employees and paid reasonable compensation through payroll. Our team can help you compare the tax and payroll considerations of each option based on how your business operates and how its owners are paid.

Do I need an attorney to incorporate?

An attorney is not generally required to prepare and file articles of incorporation, although state-specific rules and filing requirements may apply. Business owners may prepare and file formation documents themselves, but an attorney can help evaluate ownership, governance, contracts, liability, and other legal issues. Professional legal assistance may be especially valuable when the ownership structure or business arrangements are complex. Our firm can assist with tax classification, elections, accounting setup, and related tax considerations, but we do not provide legal advice.

How do I know if my company name is available?

Before filing, we will request your two top name choices. We will check these requested names for availability with the appropriate state filing authority. A name must be distinguishable from names already on record and satisfy the state’s naming requirements. If a proposed name is unavailable or does not meet those requirements, another name will need to be selected..

How do I name my corporation?

First, we recommend that you spend some time coming up with a name for your corporation. Although each state has different rules concerning the naming of your corporation, the most common rule is that it must not be deceptively similar to another already formed company. The corporate name must include a suffix. Some examples are "Incorporated", "Inc.", "Company", and "Corp." However, your state may have different suffix requirements. . A state name filing also does not automatically provide trademark protection, so broader name and trademark considerations may need separate review.

What are the benefits of incorporating?

The primary advantage of incorporating is to limit your liability to the assets of the corporation only. Usually, shareholders are not liable for the debts or obligations of the corporation. So if your corporation defaults on a loan, unless you haven't personally signed for it, your personal assets won't be in jeopardy. This is not the case with a sole proprietorship or partnership. Corporations also offer many tax advantages that are not available to sole proprietors.

Some other advantages include:

• A corporation's life is unlimited and is not dependent upon its members. If an owner dies or wishes to sell their interest, the corporation will continue to exist and do business.
• Retirement funds and qualified retirement plans (like 401k) may be set up more easily with a corporation.
• Ownership of a corporation is easily transferable.
• Capital can be raised more easily through the sale of stock.
• A corporation possesses centralized management.

What is a Registered Agent?

Most every state requires that a corporation has a registered agent. That agent must have a physical location in the formation state. The registered agent can typically be any person (usually a resident of the state) or any properly registered company who is available during normal business hours to receive official state documents or service of process (lawsuit).

How many Directors/Shareholders do I need?

Most states allow for one person to act as shareholder, director, and all officer roles.

How many shares of stock should I choose, and at what par value?

We provide a default of 200 shares, although you can choose any amount you want on all orders. Your par value is not requested on all orders, and is usually expressed as "No Par Value" or some dollar amount per share such as "$1.00" or "$0.10." Some states require that you do not issue your stock for less than the par value. Some states also base their fees on the number of shares authorized, multiplied by the par value.

What is a Federal Tax Identification Number or EIN?

Your corporation is required to have an Employer Identification Number (EIN) also known as your Federal Tax Identification Number so that the IRS can track payroll and income taxes paid by the corporation. But, like a social security number, an EIN is used for most everything the business does. Your bank will require an EIN to open your corporate bank account.

We provide two EIN services:

• Basic EIN Service - We prepare and email your SS4 (EIN application) & easy one-page instructions for obtaining your EIN. You need only review, sign and fax or call in the information to the IRS to get your EIN.
• Assisted EIN application service: When appropriate, we can assist with obtaining the company’s EIN using the information and authorization you provide.
• Full EIN Service - We actually obtain your company's EIN for you.

What do I need to do AFTER I incorporate?

You must have your initial shareholder(s) meeting to elect your director(s), if your director(s) haven't been designated in the articles. Then, you must have your initial organizational meeting of your directors. At this meeting, you will need to elect your officers, adopt your company's bylaws, and issue your stock (among other actions). The corporation should also establish accounting and payroll systems, obtain required federal, state, and local registrations and licenses, maintain its records, and track recurring reports and taxes. Domestic U.S. companies are currently exempt from federal beneficial ownership information reporting to FinCEN under the final rule effective August 14, 2026; foreign entities registered to do business in the United States may still have reporting obligations. An attorney can advise on governance and other legal documents, while our firm can assist with tax elections, accounting setup, payroll, and tax compliance.

How do I get started?

Start by considering the owners, planned activities, financing needs, expected profits, payroll, state of formation, and long-term goals. After selecting a structure and name, the formation documents are filed with the appropriate state authority and the business completes its organizational, tax, banking, licensing, and recordkeeping steps. Our firm can compare federal and state tax treatment, prepare applicable tax elections, establish accounting and payroll processes, and coordinate with your attorney or formation provider. For 2026 planning and the 2027 filing season, we can also evaluate how current pass-through deduction rules and other federal tax provisions affect the choice between C corporation and S corporation taxation.