Starting a business in 2025 feels both exciting and overwhelming.
I’ve been through this process myself, and I know how confusing all the legal jargon can get.
Let me break down exactly what you need to know about incorporating your startup without all the fancy lawyer speak.
Table of Contents
Why You Should Incorporate Your Startup
Before diving into the how, let’s talk about the why.
Incorporation isn’t just some fancy business move – it’s your shield.
When you incorporate, you create a separate legal entity. This means your personal assets stay safe if your business faces lawsuits or debt.
Plus, investors take incorporated businesses more seriously. Banks are more willing to work with you. And you can take advantage of tax benefits that sole proprietorships miss out on.
Choosing the Right Business Structure for Your Startup
Not all business structures are created equal.
Here’s what you need to know about the most popular options for startups:
Limited Liability Company (LLC)
- Simple to set up and maintain
- Flexible tax options
- Great for single founders or small teams
- Less paperwork than corporations
C-Corporation
- Best for startups planning to raise venture capital
- Can issue different types of stock
- More complex tax structure
- Required board meetings and corporate formalities
S-Corporation
- Pass-through taxation benefits
- Limited to 100 shareholders
- All shareholders must be US citizens or residents
- Good middle ground option
Most tech startups go with C-Corp if they plan to raise money. Service-based businesses often choose LLC for simplicity.
Step-by-Step Guide: How to Incorporate a Startup in 2025
Step 1: Pick Your Business Name
Your business name needs to be unique in your state.
Check your state’s business database first. Most states have online search tools that make this easy.
Pro tip: Secure the domain name and social media handles before you file anything.
Step 2: Choose Your State of Incorporation
Delaware remains the gold standard for startups. About 65% of Fortune 500 companies incorporate there.
Why Delaware?
- Business-friendly laws
- Specialized court system for business disputes
- Well-established legal precedents
- Investor familiarity
Nevada and Wyoming also offer business-friendly environments. But if you’re planning to raise venture capital, stick with Delaware.
Step 3: File Your Articles of Incorporation
This is the official document that creates your corporation.
You’ll need to include:
- Company name
- Registered agent information
- Number of authorized shares
- Directors’ names and addresses
- Purpose of the corporation
Filing fees range from $50 to $500 depending on your state.
Step 4: Appoint a Registered Agent
Every corporation needs a registered agent.
This person or company receives legal documents on behalf of your business.
You can be your own registered agent if:
- You have a physical address in the state of incorporation
- You’re available during business hours
- You don’t mind your name being public record
Many startups use professional registered agent services for privacy and convenience.
Step 5: Create Corporate Bylaws
Bylaws are your company’s internal rulebook.
They cover:
- How directors are elected
- Meeting procedures
- Officer responsibilities
- Stock issuance rules
Don’t skip this step. Bylaws protect you legally and help prevent disputes later.
Step 6: Hold Your First Board Meeting
Even if you’re the only director, you need to document this meeting.
Key items to address:
- Adopt corporate bylaws
- Issue initial stock certificates
- Elect officers
- Set up banking relationships
- Choose accounting methods
Step 7: Get Your Federal Tax ID Number (EIN)
Apply for an Employer Identification Number through the IRS website.
It’s free and takes about 15 minutes. You’ll need this for everything – bank accounts, taxes, hiring employees.
Step 8: Open a Business Bank Account
Keep your personal and business finances completely separate.
Bring these documents to the bank:
- Articles of incorporation
- Corporate bylaws
- EIN letter
- Board resolution authorizing the account
Essential Legal Documents for New Corporations
Stock Purchase Agreements
Define who owns what percentage of your company.
Shareholder Agreements
Set rules for how shareholders can transfer their shares.
Employment Agreements
Protect your intellectual property and define compensation.
Non-Disclosure Agreements (NDAs)
Keep your business secrets safe when talking to potential partners or investors.
Common Mistakes to Avoid When Incorporating
Mixing Personal and Business Expenses This is the fastest way to lose your liability protection.
Skipping the Corporate Formalities Hold those board meetings and keep detailed records.
Not Getting Professional Help When Needed Some things are worth paying a lawyer for, especially if you’re raising money.
Choosing the Wrong Business Structure Take time to understand the implications of each option.
Forgetting About Ongoing Compliance Incorporation isn’t a one-time thing – you’ll have annual filings and fees.
Technology Tools That Make Incorporation Easier in 2025
Several online platforms have simplified the incorporation process:
LegalZoom and Incfile handle the paperwork for you. Clerky specializes in startup equity management. DocuSign makes getting signatures painless. Delaware’s Division of Corporations offers online filing.
These tools can save time, but don’t replace good legal advice for complex situations.
Tax Considerations for New Corporations
Incorporation changes your tax situation completely.
C-Corporations face double taxation – the company pays corporate taxes, and shareholders pay taxes on dividends.
S-Corporations avoid double taxation through pass-through taxation.
LLCs offer the most flexibility in how you’re taxed.
Consider making an 83(b) election if you’re receiving restricted stock. This can save you thousands in taxes later.
Talk to a CPA early in the process.
Frequently Asked Questions
Q: How much does it cost to incorporate a startup? A: Filing fees range from $50-$500, but total costs including legal help can reach $2,000-$5,000.
Q: How long does incorporation take? A: Most states process filings within 1-2 weeks, though expedited options are available.
Q: Can I incorporate online? A: Yes, most states offer online filing options that speed up the process.
Q: Do I need a lawyer to incorporate? A: Not required, but recommended if you have multiple founders or plan to raise investment.
Q: What’s the difference between incorporation and forming an LLC? A: Incorporation creates a corporation; forming an LLC creates a limited liability company. Different structures, different rules.
Q: Can I change my business structure later? A: Yes, but it can be complex and may have tax implications.
Final Thoughts on Startup Incorporation
Learning how to incorporate a startup in 2025 doesn’t have to be overwhelming.
The key is understanding your options and taking it step by step.
Start with choosing the right business structure for your goals. File your paperwork carefully. Keep good records from day one.
Remember, incorporation is just the beginning of your business journey.
The most important thing is to start. You can always make adjustments as your startup grows and evolves.