How to Incorporate a Startup: A 10-Step Guide for 2026

To incorporate a startup you plan to fund with venture capital, the common path is a Delaware C corporation: file a certificate of incorporation, appoint a registered agent, adopt bylaws, issue founder stock with vesting and IP assignments, file any 83(b) election within 30 days, get a free EIN from the IRS, and register in the state where you actually operate.

The filings usually take days, not weeks. Delaware's fee schedule lists a state fee starting at $109.

The paperwork is cheap. Getting it wrong isn't. The real cost tends to show up a year or two later, as a missed tax election or a messy cap table that slows your first round.

This guide is written for founders who want investors to say yes. If you're building a business you never plan to fund with outside capital, the broader guide to starting a corporation covers state-by-state options and S corps.

Definition: Incorporation is the legal act of forming a company as a separate entity under state law, so the business, not the founders personally, owns its assets, signs its contracts and carries its liabilities.

Why incorporate your startup early

An informal partnership is fine for a weekend project. Once you sign a customer, hire a contractor or talk to an investor, we think it starts to get risky. Forming an entity gives you:

• Liability protection. Company debts and lawsuits generally stay with the company, provided you keep company and personal finances separate and follow corporate formalities.
• Clean ownership. Founder shares, vesting and intellectual property assignments all need an entity to live in.
• Fundraising readiness. Angels and VCs invest in entities, and institutional investors generally expect a Delaware C corporation.
• Credibility. Banks, payment processors and enterprise customers usually prefer to contract with a registered business.

Step 1: Choose a C corp if you plan to raise venture capital

The image below summarizes the main options. For most founders the real decision comes down to two: a C corporation or an LLC.

A C corporation is the default for venture-backed startups because it supports preferred stock, stock option plans and the Section 1202 qualified small business stock (QSBS) exclusion, which applies only to stock originally issued by a domestic C corporation. The One Big Beautiful Bill Act, signed July 4, 2025, expanded QSBS for stock issued after that date: a 50 percent exclusion after three years, 75 percent after four years and 100 percent after five, a per-issuer cap raised from $10 million to $15 million, and a gross asset ceiling raised from $50 million to $75 million, according to The Tax Adviser's summary of the new rules. If you're weighing an LLC first, the LLC guide walks through LLC vs. C corp for founders who plan to raise.

"But an LLC is simpler and cheaper"

For a lot of businesses, it is: pass-through taxation and fewer formalities. If you'll fund the business yourself, an LLC may be the better fit.

But if venture capital is genuinely in the plan, our view is that the LLC usually just delays the C corp and adds a conversion bill in between. And since QSBS applies only to C corporation stock, time spent as an LLC doesn't count toward it.

Step 2: Pick Delaware as your state of incorporation

• Delaware is the common choice for venture-backed startups. Its corporate law is well developed, and its Court of Chancery, which decides business cases before a judge rather than a jury, has a long record on the disputes investors care about.
• Your home state can be simpler and cheaper for a local business that does not plan to raise institutional capital.

One catch founders often miss. If you incorporate in Delaware but operate elsewhere, you'll usually also need to register (qualify as a foreign corporation) in the state where you have employees or an office, and pay that state's fees too.

Steps 3 to 8: How to incorporate a startup, filing by filing

Step 3: Secure your business name

Search Delaware's entity database to confirm the name is available, then check the USPTO trademark database for conflicts. Grab the domain and social handles at the same time.

Step 4: Appoint a registered agent

Delaware law requires each entity to have a registered agent with a physical street address in the state to receive legal papers and official notices. Commercial registered agent services charge an annual fee, and incorporation services often include the first year.

Step 5: File your certificate of incorporation

The certificate of incorporation sets your company name, registered agent, number of authorized shares and their par value. Delaware's fee schedule (revised August 1, 2026) lists a $109 minimum filing fee for a stock corporation, with the fee rising with authorized shares, plus optional expedited service at extra cost.

Choose the share numbers on purpose, not by default. Stripe's founder equity guide, for example, notes that C corps formed through Stripe Atlas authorize 10 million shares at a par value of $0.00001, leaving part of them unissued for future employees and advisors. A low par value keeps the cash founders pay for their shares tiny.

Step 6: Adopt bylaws, issue founder stock and assign IP

The incorporator appoints the first board, which adopts bylaws, appoints officers and approves, in writing, the issuance of founder shares. Typical founder vesting is four years with a one-year cliff, as Stripe's guide describes, and it is common for each founder to sign a confidential information and invention assignment agreement that moves everything they built for the business into the company. Document these steps with board resolutions and a founder agreement. This is the paperwork investors read first in diligence, so it pays to get it right now (why we read the cap table before the deck).

Watch the 83(b) deadline. This is the one we'd put in your calendar today. If your founder stock is subject to vesting, the IRS gives you 30 days from the date the shares are transferred to you to file an 83(b) election. The IRS released Form 15620 for this election in November 2024 and now also accepts it online through an IRS account, according to Mintz. The IRS does not accept late elections, and without one you may owe tax on the value of shares as they vest. Our founder vesting and 83(b) election guide walks through the filing step by step.

Step 7: Get an EIN

Apply for an Employer Identification Number directly on IRS.gov. The IRS says the EIN is free and issued immediately online when approved, and warns against websites that charge for one. Companies whose principal place of business is outside the US apply by phone, fax or mail instead; international founders should also read the guide to cross-border legal issues.

Step 8: Open a business bank account

Keep company money separate from personal money from day one. Mixing funds can weaken your liability protection, and it hands you a mess to untangle right before diligence.

Step 9: Stay compliant after you incorporate

A Delaware corporation files an annual report (the fee is $50 for non-exempt domestic corporations) and pays franchise tax by March 1 each year. The Delaware Division of Corporations charges a $200 penalty for a late report plus 1.5 percent interest per month on unpaid tax.

The franchise tax trap. Delaware's default authorized shares method can produce a frightening bill for a startup with millions of authorized shares. Using Delaware's published rates ($250 for the first 10,000 shares plus $85 for each additional 10,000), 10 million authorized shares works out to $85,165. The assumed par value capital method, which requires you to report your gross assets and issued shares, has a $400 minimum and often produces a far smaller bill for an early startup. Don't pay the first number you see; recalculate first. The corporation guide linked above includes a full worked example.

Other items worth keeping up with: your cap table, board minutes, and federal and state tax returns. US startups do not need to file beneficial ownership (BOI) reports: FinCEN exempted US-created companies in March 2025 and made that exemption permanent with a final rule in August 2026. Only foreign companies registered to do business in the US still report.

Step 10: Use a service or a startup lawyer

Services such as Stripe Atlas and Clerky bundle Delaware incorporation and founder paperwork into a one-time package (at the time of writing, Atlas also lists EIN and 83(b) filing, while Clerky provides pre-filled 83(b) forms and EIN filing for founders outside the US), which can suit a standard setup with founders who have no complications. A startup lawyer usually costs more but can handle non-standard situations, like founders with IP from a prior employer, uneven contributions or international founders. Our rule of thumb: plain setup, use a service; anything unusual, pay for a lawyer. See how to choose a startup lawyer before you decide.

Common startup incorporation mistakes

1. Forming an LLC, then needing an expensive conversion when a VC wants a C corporation.
2. Issuing founder shares without vesting or IP assignments.
3. Missing the 30-day 83(b) deadline.
4. Paying the authorized shares franchise tax without recalculating.
5. Forgetting to register in the state where you actually operate.

Once you're set up, the next job for most founders is traction. 1752vc's Accelerate program is a remote program that invests $100K at a valuation cap of up to $3.5M in early-stage startups ready to grow, trains founders on founder-led sales, and opens access to a network of 850+ investors.

The bottom line

Incorporation is the least exciting week of your company's life, and one of the few whose mistakes compound quietly for years. Calendar the 83(b) and keep the receipts.

Nobody raises a round because the paperwork was clean.

Plenty of rounds slow down because it wasn't.

Key takeaways

• Startups that plan to raise venture capital typically incorporate as Delaware C corporations; LLCs can suit many bootstrapped businesses.
• QSBS applies only to C corporation stock, and for stock issued after July 4, 2025 it offers partial exclusions from year three and a $15 million cap.
• Founder stock commonly carries four-year vesting and IP assignments, and the IRS requires each 83(b) election within 30 days, on paper or online.
• EINs are free from the IRS, so there is little reason to pay a third party just for the number.
• Consider recalculating Delaware franchise tax with the assumed par value capital method before paying; Delaware's deadline is March 1.

Frequently asked questions

Should I incorporate my startup in Delaware or my home state?

If you plan to raise venture capital, Delaware is the usual choice because investors and their lawyers know its corporate law and courts well. If you are building a local business that will not raise institutional money, your home state is often simpler and cheaper. A Delaware company that operates elsewhere is usually required to register as a foreign corporation in its home state too.

How many shares should a startup authorize when it incorporates?

Many venture-track startups authorize around 10 million shares with a very low par value; Stripe Atlas, for example, uses 10 million shares at $0.00001 par. Founders are issued most of them, and the rest stay unissued for future employees and advisors. Large authorized share counts are normal, but they make it worth calculating Delaware franchise tax with the assumed par value capital method.

What happens if I miss the 83(b) election deadline?

The IRS does not accept late 83(b) elections, so in practice the 30-day window after your shares are transferred is final. Without the election, you may owe income tax each time a batch of shares vests, based on its value at that point, which can be costly if the company's value has grown. Many founders calendar the deadline the day their stock is issued.

When should I incorporate my startup?

In our view, it usually makes sense to incorporate before you sign customer contracts, hire anyone, accept investment, or build significant IP with co-founders. Forming early keeps ownership and IP clean and lets founders buy stock while it is worth very little. For stock that qualifies, it also starts your QSBS holding period sooner.

How do I lower my Delaware franchise tax bill?

A common approach is to file your annual report using the assumed par value capital method instead of the default authorized shares method. You will need to report your total gross assets and number of issued shares; the minimum tax under that method is $400. For many early startups this turns a bill in the tens of thousands of dollars into a few hundred.

Sources

• Delaware Division of Corporations: Annual Report and Tax Information
• Delaware Division of Corporations: How to Calculate Franchise Taxes
• Delaware Division of Corporations: Fee Schedule (Revised August 1, 2026)
• IRS: Get an Employer Identification Number
• Mintz: New Electronic Filing Option for Section 83(b) Elections
• Stripe: Equity for Founders (Stripe Atlas Guide)
• The Tax Adviser: QSBS Gets a Makeover, What Tax Pros Need to Know About Sec. 1202's New Look
• FinCEN: FinCEN Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners