ContractsCounsel Logo

How to Set Up a Corporation

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 7,473 reviews
Home Blog How to Set Up a Corporation

Jump to Section

Need help forming a corporation?

Create a free project posting

Setting up a corporation is the process of legally establishing a business entity called a corporation based on specific rules and regulations of certain areas. Setting up a corporation can be an honoring venture for budding entrepreneurs and business people, providing many benefits such as funding accessibility. Let us delve deeper and learn more about what goes into setting up incorporation below.

Steps to Set Up a Corporation

One must always know the associated steps of setting up a specific corporation. It will help equip individuals with the knowledge to build a strong foundation for the corporation's success.

  1. Choose the Right Business Structure. Having the proper knowledge can help individuals make informed decisions by determining the level of involvement required.
  2. Conduct Market Research and Feasibility Studies. Entrepreneurs consider separating their proprietary information from the corporation when developing and organizing a new business.
  3. Develop a Business Plan. Structuring a business can provide a more defined ground. Creating EINs and determining personal factors affecting the company will help decide the corporation's tax regulations.
  4. Identify Funding Sources. Even small businesses need funding through equity or debt. Having proper plans for future funding needs can help the corporation grow steadily.
  5. Draft Bylaws and Shareholder Agreements. Prepare corporate bylaws that outline how the corporation will be governed, including the roles of directors and officers. Suppose multiple shareholders draft shareholder agreements to define ownership rights and responsibilities.
  6. Issue Stock Certificates. If applicable, issue stock certificates to shareholders to reflect their ownership in the corporation.
  7. Obtain Necessary Business Insurance. Protect the corporation from potential risks by obtaining relevant business insurance, such as liability or property insurance.
  8. Hire Employees and Establish HR Policies. If the corporation will have employees, establish HR policies and procedures, including hiring practices, compensation packages, and employee benefits.
  9. Implement Best Practices. Set up efficient accounting and record-keeping systems to monitor the corporation's financial health. Implement best practices in all aspects of the business to ensure smooth operations.

Benefits When You Set Up a Corporation

Setting up a corporation offers numerous benefits, making it an attractive business structure for many entrepreneurs. Some key advantages include:

  • Limited Liability: Limited liability protection ensures that shareholders' personal assets are separate from the corporation's liabilities. It shields them from personal responsibility for the company's debts and legal obligations.
  • Credibility and Perpetual Existence: Corporations often have a more professional image. It can help enhance credibility with customers, suppliers, and investors. Moreover, the corporation can continue to operate even if shareholders change.
  • Access to Capital: Corporations can raise funds by issuing stocks to investors. The process makes it easier to attract capital for business expansion and growth.
  • Tax Benefits: Corporations may have access to certain tax deductions and credits. It helps reduce the overall tax burden for the business and its shareholders.
  • Employee Benefits: Corporations can offer various benefits to employees. They can access retirement plans, stock options, and health insurance. This entire process can help attract and retain top talent.
  • Transferability of Ownership: Shares in a corporation are easily transferable. This process allows for the smooth transfer of ownership or bringing in new investors.
  • Separate Legal Entity: A corporation is considered a separate legal entity. It provides additional protection to its owners and facilitates business dealings.
Meet some lawyers on our platform

Daniel R.

74 projects on CC
View Profile

James H.

2 projects on CC
View Profile

Sara S.

38 projects on CC
View Profile

Scott S.

40 projects on CC
View Profile

Considerations to Set Up a Corporation

Several factors must come into one’s mind before deciding to set up a United States corporation. Here are some important things that one must consider when doing the same:

  • Business Structure: Evaluate whether a corporation is the most suitable business structure for its goals. Consider factors like liability protection, tax implications, and the number of shareholders.
  • Market Research: Conduct thorough market research to understand the demand for all products or services. Try to identify potential competitors and assess market trends.
  • Feasibility Analysis: Perform a feasibility analysis to determine the business idea's viability. Consider factors such as financial projections, resources required, and potential risks.
  • Capital and Funding: Assess the financial situation and identify potential funding sources for starting and growing the corporation. Check everything about personal savings, loans, or investments from shareholders.
  • Legal and Regulatory Requirements: Understand the legal and regulatory obligations for setting up a corporation. Analyze the business registration, permits, licenses, and compliance with tax laws.
  • Corporate Governance: Define the roles and responsibilities of everyone in the corporation. Establish governance practices to ensure specific transparency and accountability practices.
  • Shareholder Agreements: Consider drafting shareholder agreements that outline ownership rights if there will be multiple shareholders. It must also include voting rights and dispute-resolution mechanisms.
  • Tax Implications: Consult with a tax advisor to understand the tax implications of setting up a corporation. The process must include corporate income taxes and potential tax benefits.
  • Intellectual Property Protection: Consider obtaining patents, trademarks, or copyrights to protect unique creations or innovations if the corporation involves intellectual property.
  • Business Plan: Develop a detailed business plan that outlines the corporation's objectives. It must also specify the target market, marketing strategies, and financial projections.

Why Hire a Lawyer to Set Up a Corporation

One must approach a professional lawyer to set up a corporation. It is a prudent step that can ensure a legally compliant process. Here are some important tips to consider when a person goes forward with legal assistance from an attorney:

  • Legal Expertise: An experienced lawyer can guide a person through setting up a corporation. The person also ensures that all legal requirements are met and the documentation is prepared accurately.
  • Business Structure: The lawyer can help the client determine whether a corporation is the most suitable business structure for all specific needs and goals. The professional can consider liability protection, tax implications, and long-term plans.
  • Registration and Compliance: The lawyer will assist in registering the corporation with the appropriate government authorities. The same professional will also ensure compliance with all necessary regulations. The client will further get assistance in drafting the Articles of Incorporation and other required documents.
  • Shareholder Agreements: The lawyer can help draft shareholder agreements that define ownership rights and responsibilities. They may also include procedures for resolving disputes in case of multiple shareholders.
  • Intellectual Property: If the corporation involves intellectual property, the lawyer can assist in protecting the trademarks, copyrights, or patents.
  • Contractual Matters: The lawyer can review and draft contracts and agreements related to the corporation's operations, partnerships, and commercial dealings.
  • Ongoing Legal Support: Beyond the initial setup, a lawyer can provide ongoing legal counsel to address any legal issues that may arise during the corporation's operations.

Key Terms for Setting Up a Corporation

  • Shareholders: Individuals who own stock in a corporation, corresponding to ownership and profit entitlement.
  • Liability Protection: A type of insurance that protects the client from claims resulting from injuries or damage to another individual or property.
  • Directors: Individuals chosen by stockholders to oversee the company's operations and make strategic decisions.
  • Corporate Governance: The rules, practices, and processes to guide and control a particular company.
  • Officers: Executives appointed by the board of directors to supervise daily operations. They must also carry out the corporation's strategic goals.

Final Thoughts on How to Set Up a Corporation

A corporation and its setup in the US may seem complicated and time-consuming. However, one can lay the groundwork for a company's long-term success with the proper guidance and support. A person will be fully equipped to navigate complex procedures by understanding the key terms, legal specifications, and best practices. Building a solid foundation for the company and complying with corporate governance, legal requirements, and financial management will ensure its smooth operation and growth. Seeking professional help, such as lawyers, accountants, and consultants, can provide valuable advice and ensure the company is set up for a lifetime of achievement.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

Need help forming a corporation?

Create a free project posting

Meet some of our Lawyers

Morgan S. on ContractsCounsel
View Morgan
5.0 (4)
Member Since:
July 31, 2023

Morgan S.

Free Consultation
Austin, Texas
2 Yrs Experience
Licensed in TX, WV
University of Pittsburgh Law School

Corporate Attorney that represents startups, businesses, investors, VC/PE doing business throughout the country. Representing in a range of matters from formation to regulatory compliance to financings to exit. Have a practice that represents both domestic and foreign startups, businesses, and entrepreneurs. Along with VC, Private Equity, and investors.

Michael B. on ContractsCounsel
View Michael
4.9 (12)
Member Since:
October 30, 2020

Michael B.

Free Consultation
13 Yrs Experience
Licensed in IL, MN, WI
University of the Pacific

Michael has extensive experience advising companies from start-ups to established publicly-traded companies . He has represented businesses in a wide array of fields IT consulting, software solutions, web design/ development, financial services, SaaS, data storage, and others. Areas of expertise include contract drafting and negotiation, terms of use, business structuring and funding, company and employee policies, general transactional issues as well as licensing and regulatory compliance. His prior experience before entering private practice includes negotiating sales contracts for a Fortune 500 healthcare company, as well as regulatory compliance contracts for a publicly traded dental manufacturer. Mr. Brennan firmly believes that every business deserves a lawyer that is both responsive and dependable, and he strives to provide that type of service to every client.

George O. on ContractsCounsel
View George
4.9 (4)
Member Since:
November 2, 2020

George O.

Managing Attorney
Free Consultation
Houston, Texas
16 Yrs Experience
Licensed in TX
South Texas College of Law

George Oggero is a down-to-earth lawyer who understands that his clients are human beings. He is a lifelong Houston resident. He graduated from St. Thomas High School and then Texas A&M University. He obtained his Doctor of Jurisprudence from South Texas College of Law in 2007. He is experienced in real estate, criminal defense, civil/commercial matters, personal, injury, business matters, general counsel on-demand, and litigation.

Ramsey T. on ContractsCounsel
View Ramsey
4.9 (5)
Member Since:
November 3, 2020

Ramsey T.

Founding Partner
Free Consultation
New York
26 Yrs Experience
Licensed in NY
William and Mary

My clients are often small and medium size technology companies, from the "idea" stage to clients who may have raised a round or three of capital and need to clean up a messy cap table. I help with all legal matters related to growth that keep founders up at night - hiring people, allocating equity, dealing with shareholders and investors, client negotiations and early litigation counseling (before you need a litigator). I've seen a lot, and because I run my own business, I understand the concerns that keep you up at night. I’ve been through, both on my own and through other clients, the “teething” pains that will inevitably arise as you scale-up – and I’m here to help you. I have over 20 years international experience devising and implementing robust corporate legal strategies and governance for large multinationals. I now focus on start-ups and early/medium stage technology companies to enable a sound legal foundation for your successful business operations. Many of my clients are international with US based holding companies or presences. My 17 years abroad helps me "translate" between different regimes and even enabling Civil and Common Law lawyers to come together. Regularly, I handle early stage financings including Convertible Notes, Seed and Series A/B financings; commercial and technology contracts; international transactions; tax; mergers and acquisitions.

John H. on ContractsCounsel
View John
Member Since:
November 11, 2020

John H.

Free Consultation
Mobile, AL
12 Yrs Experience
Licensed in AL
Thomas Goode Jones School of Law

John Daniel "J.D." Hawke is an experienced attorney with a law practice in Mobile, Alabama. He was born in Fairhope, Alabama and after earning his undergraduate degree at Auburn University, he received a law degree from Thomas Goode Jones School of Law in 2010. After law school, he formed the Law Office of J.D. Hawke LLC and over the last decade he has fought incredibly hard for each and everyone of his clients. His practice focuses on representing people facing criminal charges and clients dealing with family law matters. In addition to criminal defense and domestic relations cases, he also regularly handles contract disputes, personal injury cases, small business issues, landlord/tenant disputes, document drafting, and estate planning. He is licensed to practice law in the State of Alabama and the United States District Court for the Southern District of Alabama.

Thomas C. on ContractsCounsel
View Thomas
Member Since:
October 30, 2020

Thomas C.

Free Consultation
Denver, CO
10 Yrs Experience
Licensed in CO
University of Colorado Law School

Thomas Codevilla is Partner at SK&S Law Group where he focuses on Data Privacy, Security, Commercial Contracts, Corporate Finance, and Intellectual Property. Read more at Thomas’s clients range from startups to large enterprises. He specializes in working with businesses to build risk-based data privacy and security systems from the ground up. He has deep experience in GDPR, CCPA, COPPA, FERPA, CALOPPA, and other state privacy laws. He holds the CIPP/US and CIPP/E designations from the International Association of Privacy Professionals. Alongside his privacy practice he brings a decade of public and private transactional experience, including formations, financings, M&A, corporate governance, securities, intellectual property licensing, manufacturing, regulatory compliance, international distribution, China contracts, and software-as-a-service agreements.

Lyndsey G. on ContractsCounsel
View Lyndsey
Member Since:
October 30, 2020

Lyndsey G.

Free Consultation
Roseville, MN
9 Yrs Experience
Licensed in MN
Mitchell Hamline College of Law

Attorney of 6 years with experience evaluating and drafting contracts, formation document, and policies and procedures in multiple industries. Expanded to estate planning last year.

Find the best lawyer for your project

Browse Lawyers Now
Learn About Contracts
See More Contracts
other helpful articles

Need help forming a corporation?

Create a free project posting

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city