How to Start a Corporation in the US 2025 Choose State Structure Taxes EIN Compliance

Choosing the Right State to Register Your Corporation in the U.S.

Starting a corporation in the United States involves a critical initial decision that can shape the financial, legal, and operational future of your business: selecting the state in which to register your corporation. Different states offer various benefits, tax structures, and filing requirements that can impact your company’s growth, profitability, and compliance obligations. Among the most popular choices are Delaware, Texas, Nevada, and California, each with unique advantages and considerations.

Delaware has long been recognized as a favorable jurisdiction for business incorporation due to its well-developed corporate law, specialized Court of Chancery, and business-friendly statutes. The state provides flexibility in management structures, strong protections for directors and officers, and a streamlined process for incorporating and maintaining corporations. Delaware does not impose a state corporate income tax on companies that do not conduct business within the state, which can offer tax efficiencies for certain businesses. Moreover, Delaware's filing costs and franchise taxes are competitive, and its legal precedence is extensive, making outcomes more predictable.

On the other hand, Texas has gained popularity for incorporating businesses thanks to its robust economy, no state income tax, and favorable regulatory environment. Texas offers a large consumer base and access to a variety of industries including energy, technology, and manufacturing. The cost of doing business there can be lower than other states, and it boasts a straightforward filing process. However, Texas corporations are subject to a franchise tax based on a margin calculation, which functions similarly to a gross receipts tax, so understanding the tax implications is crucial.

Nevada is another state often considered due to its lack of corporate income tax, franchise tax, and personal income tax. It has strong privacy protections for business owners and no disclosure requirements for shareholders. The filing fees are somewhat higher than in other states, and annual fees apply, but Nevada’s regulatory environment appeals to businesses focused on asset protection and anonymity.

California, while known for its significant tax rates and regulatory requirements, remains a popular state to incorporate for companies that intend to operate primarily within the state market. It offers access to a large customer base and a highly skilled workforce, which may outweigh the costs and compliance efforts for many businesses. California levies a minimum franchise tax on corporations and has comprehensive filing and reporting obligations, making early compliance planning essential.

Choosing Your Business Structure: LLC, C-Corp, or S-Corp

Once you have chosen the state of incorporation, the next critical decision involves determining the business structure that best suits your company's goals. The most common forms for corporations in the U.S. are Limited Liability Companies (LLCs), C Corporations (C-Corps), and S Corporations (S-Corps). Each structure has distinct legal, tax, and operational implications that should align with your growth plans, ownership, and capital needs.

An LLC offers flexibility, simpler tax treatment, and limited liability protection for its owners, known as members. It is often preferred by small to medium-sized businesses that want to avoid double taxation and reduce formalities. LLCs can choose to be taxed as sole proprietorships, partnerships, or corporations, providing versatility in tax planning.

C-Corps are traditional corporations that allow for multiple classes of stock and an unlimited number of shareholders, making them ideal for venture capital financing, going public, or attracting institutional investors. C-Corps face double taxation, where profits are taxed at the corporate level and dividends taxed at the shareholder level. However, they can retain earnings within the company for growth and expansion.

S-Corps are a special tax designation that allows corporations to avoid double taxation by passing income, losses, deductions, and credits through shareholders to be reported on their individual tax returns. To qualify, corporations must meet certain eligibility criteria, including having no more than 100 shareholders and only one class of stock. S-Corps combine the benefits of limited liability with pass-through taxation but involve restrictions that might limit the ability to raise capital compared to C-Corps.

Filing Articles of Incorporation and Obtaining an EIN

After deciding on the state and structure, the next step to establish your corporation legally is filing the Articles of Incorporation (sometimes called Certificate of Incorporation or Corporate Charter) with the relevant state agency, typically the Secretary of State's office. This document officially creates your corporation and should include essential information such as the corporate name, purpose, registered agent, authorized shares, and incorporator details.

The filing process and fees vary by state. For example, Delaware’s fees are relatively low, and filings can be completed quickly online or by mail. It is crucial to choose a unique and compliant company name that does not infringe on existing trademarks or business names to avoid rejection.

Once your corporation is officially formed, obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is the next foundational step. The EIN serves as your business’s federal tax identification number and is required to open bank accounts, hire employees, file tax returns, and conduct many other business activities. You can apply for an EIN online through the IRS website free of charge, and typically receive it immediately upon application.

Open a Business Bank Account and Maintain Compliance

With formal incorporation and a federal EIN in place, opening a business bank account is essential to separate business finances from personal accounts, maintain accurate records, and facilitate transparent financial management. Banks usually require the Articles of Incorporation, EIN, corporate bylaws or operating agreement, and resolution to open an account. Choosing a bank that meets your business needs, such as offering merchant services, credit lines, or online banking, can enhance operational efficiency.

Compliance is not a one-time task but a continuous responsibility starting from day one of your corporation's existence. This includes:

• Holding and documenting annual meetings of directors and shareholders;
• Maintaining corporate records and minutes accurately;
• Filing annual or biennial reports and paying franchise or other state taxes;
• Adhering to tax filing obligations at federal, state, and local levels;
• Complying with licenses, permits, and industry regulations required by your business sector;
• Monitoring changes in laws and regulations that affect your corporation.

Failure to comply with these requirements can lead to penalties, loss of good standing, or even administrative dissolution of your corporation.

Seeking Professional Assistance for Your Corporation

Navigating the complexities of incorporating a business in the U.S. can be daunting, particularly for entrepreneurs and companies unfamiliar with American corporate law and tax codes. It is highly advisable to seek assistance from experienced professionals who can guide you through the selection of the appropriate state and business structure, prepare and file all necessary documentation, and establish ongoing compliance mechanisms.

Our company, Legal Marketplace CONSULTANT, is dedicated to providing comprehensive legal and consulting support for entrepreneurs looking to start corporations in the U.S. We ensure your business foundation is solid, compliant, and optimized for success. If you require personalized advice, meticulous preparation of incorporation documents, or help managing compliance, feel free to contact us through the communication methods provided in our bio or send a private message directly.

Legal Marketplace CONSULTANT – a trusted partner in helping you legally establish, manage, and grow your corporation with expert advice tailored to your unique business needs in the United States.