Incorporate a Business

Form a Corporation or Limited Liability Company

One of the most important decisions you can make when starting your business is deciding which entity to choose. Forming either a corporation or limited liability company has important advantages over operating as a sole proprietorship, such as limited liability, added credibility, and potential tax benefits. Read more below to better understand the differences between the various entity types, and to decide if incorporation is right for your business.

What are the benefits of incorporation?

Protect your personal assets

Forming a corporation or LLC establishes a clear separation between you and your business, protecting your personal assets by creating a separate legal entity.

Establish Credibility and Trust

Creating a formal entity for your business demonstrates to potential customers, vendors and suppliers that your business is legitimate.

Potential Tax Savings

Take advantage of tax advantages not available to businesses who choose to conduct business as a sole proprietorship

We'll handle the filings

We've helped over one million new business owners form a corporation or LLC, and we're ready to help you too.

Choose the entity type that's right for your business.

Form a Corporation

  • Creates a formal business structure
  • Attract investment by issuing shares of stock
  • Deduct medical premiums and fringe benefits
  • Asset protection for directors and shareholders
$89 + state fees
Form a Corporation

Form an LLC

  • Few formalities and legal requirements
  • Less paperwork; no annual meeting requirements
  • Take advantage of pass through taxation
  • Flexible management structure
$89 + state fees
Form an LLC

What kinds of businesses can benefit from incorporation?

Whether you run a small business with no employees, or a large sized business with multiple locations, choosing to incorporate maximizes your chances of success and helps you get the most out of your business. While setting up and operating as a sole proprietorship is simple, you'll miss out on the many important advantages that forming a corporation or LLC provides.

The most important benefit of incorporation is limited liability. Both corporations and LLCs allow you to separate and protect your personal assets from those of the business, meaning that you have limited liablitly for the debts and obligations of the business. Only money you directly invest in the business is subject to these obligations, not your home, vehicle, or other personal possessions.

Where should I incorporate my business?

It's important to consider all of your options when choosing where to form your business, and new business owners commonly seek the advice of an attorney or CPA to help them make the best financial choices. Most commonly, a business owner's best option is to form in their home state. While some states do offer certain advantages, such as the favorable tax laws of Nevada or Delaware, it's important to remember that no matter which state you choose, you will still need to file and pay taxes in each state where you conduct business. While this could be advantageous for some small businesses, it also means that forming your business in your home state is likely to simply your tax returns. It is important to weigh out these options with the help of a legal professional if you are unsure which is best for your busines.

When should I Incorporate?

Many small business owners may wonder when the best time to incorporate a business is. While incorporating too early may result in paying unnecessary filing fees, you would want to weigh that against the possible financial risks of operating a business without the protection of a legal entity. When you incorporate your business, you designate your business as a separate legal entity, responsible for its own debts and obligations. In a scenario where your business were to face a lawsuit before you incorporate, your home, vehicles, or other personal belongings could be used as collateral to repay the debts accrued by the business.

LLC vs Corporation: What are the main differences?

Watch our video see the difference between a corporation and a limited liability company.

Frequently asked questions

What sets a corporation apart from all other types of businesses is that a corporation is an independent legal and tax entity, separate from the people who own, control and manage it. Because of this separate status, the owners of a corporation don't use their personal tax returns to pay tax on corporate profits—the corporation itself pays these taxes. Owners pay personal income tax only on money they draw from the corporation in the form of salaries, bonuses, and the like.

If you would like to learn more, visit our Learning Center or Comparison Chart.

An S-Corporation is a regular corporation that has elected S-Corporation tax status. Forming an S-Corporation lets you enjoy the limited liability of a corporate shareholder but pay income taxes as if you were a sole proprietor or a partner. In an S-Corporation, all business profits "pass through" to the owners, who report them on their personal tax returns. The S-Corporation itself does not pay any income tax. Therefore, an S-Corporation elects not to be taxed as a corporation. After the corporation has been formed, it may elect S-Corporation status by submitting IRS form 2553 to the Internal Revenue Service (in some cases a state filing is required as well). Read more about electing S-Corporation status.

State laws distinguish between for-profit (stock) corporations and non-profit (non-stock) corporations. A non-profit corporation often involves an organization whose primary objective is to support some issue or matter of private interest or public concern for non-commercial purposes. Examples of non-profit types might relate to the arts, charities, education, politics, religion, research, sports or some other endeavor. Under the Federal Tax Code Section 501(c), a tax-exempt corporation cannot pay dividends and, upon dissolution, must distribute its remaining assets to another nonprofit group.
Read more about Non-Profit Corporations.

A benefit corporation is a corporation organized under a state's general corporation law that has elected to become subject to benefit corporation statutory provisions. Most benefit corporation statutes require that the entity "shall have the purpose of creating a general public benefit," meaning it must create a "material positive impact on society." In many states this general public benefit purpose is in addition to, and may be a limitation on, any specific purpose set forth in its articles. The benefit corporation was created to provide an option for entrepreneurs who want to voluntarily adopt higher standards of corporate purpose, transparency, and accountability. The entity provides a way to legally cement a social or environmental mission into a company's corporate and legal structure.

The provisions of general corporation law apply to benefit corporations except where those provisions are in conflict with or inconsistent with the benefit corporation provisions. Therefore, like a traditional for-profit corporation, a benefit corporation is an independent legal and tax entity, separate from the people who own, control and manage it. Because of this separate status, the owners of a benefit corporation don't use their personal tax returns to pay tax on corporate profits-the corporation itself pays these taxes. Owners pay personal income tax only on money they draw from the corporation in the form of salaries, bonuses, and the like.

If your corporation will be engaging in what your state might call "Professional Services," the Articles of Incorporation must bear special language and the corporation must be formed pursuant to certain statutory provisions.

"Professional Services" according to most states usually consists of the following activities:

  • Medical Services
  • Legal Services and Representation
  • Accounting and Financial Services
  • Architectural Services
  • Other services may be included in this list depending on your selected state of incorporation

It is important to note that most states vary in their requirements regarding licensing of professional activities, therefore, we encourage you to seek the advice of an attorney if you fall within the "Professional Services" statute of your state.

Read more about Professional Corporations.