How to Create a US C-Corporation in 16 Steps

The process for creating a C Corporation could be explained in just a few steps. Basically, search for a company name, choose directors, authorize shares and pay. 

However, such a fairy-tale version of the process misses the most important questions, like what legal documents to prepare, where to incorporate, and how to breathe life into the company once it's created. 

The purpose of this post is to give a more realistic version of the process, including the main decisions that need to be made. 

Disclaimer: I'm no legal professional, so nothing of what I write here constitutes legal advice.

The process is the following:

  1. Decide what company type you want to create. Most probably you'll be interested in C Corporations or LLCs because both offer limited liability to their shareholders.
  2. Decide where to incorporate. Delaware is a great choice because of it's tax advantages, administrative and legal efficiency, and because it's investor-friendly and offers good legal protection to founders. More on this here.
  3. Find a professional business service to help you establish your company. I always recommend using Harvard Business Services, since they have the lowest registered agent fees in the market, which are the highest recurring costs business services will charge you after setting up your company. A professional business service will help you with steps 4, 5, 6, 7 and 8 below.
  4. Chose an available company name. You can do this for free using some professional business services, like Harvard Business Services.
  5. [Corporations] Decide how many shares to authorize and their par value. The rule of thumb here is to authorize 10 million shares with a par value of $0,0001 or $0,00001 if you think your business is going to scale (e.g., a startup). If you have a small business (e.g., consulting company, web page creation service) you may think of authorizing 5000 shares or less, with a par value around $0.02 or $0.2 per share
  6. File the certificate of incorporation, in case of a corporation, or the certificate of formation in case you want to set up an LLC. Don’t forget to apply also for an Employer Identification Number, since you’ll need it in order to open a bank account
  7. Prepare the bylaws of your corporation or the operating agreement of your LLC. Use legal templates, like the ones provided in  Orrick Practice Group: Start-Up Forms Library
  8. When you get the company papers back from the professional business service, make the incorporator from this business service adopt those bylaws or operating agreement and make sure he’s handed in a written paper the control of the company over to you. This paper is usually called a Statement of Incorporator

Once your company is created you have to follow some formalities, especially in the case of a C Corporation. Failing to do so can get you into trouble, since a court may then decide to pierce your corporate veilmeaning that creditors of your company could go against your personal assets (e.g, your money, house, car, etc.). 

To avoid this in the case of a C Corporation, you have to follow the following steps. Whenever I write [Template] it means that you can do this with a template from Orrick Practice Group: Start-Up Forms Library  (or from another source).
  1. Prepare an Offer to Purchase Stock [Template] and send it to each shareholder in the company
  2. Prepare a Common Stock Purchase Agreement [Template] and offer it to each shareholder in the company.
  3. If the common stock purchase agreement contemplates vesting, then it’s very convenient from the tax standpoint that every shareholder files a document that’s called Section 83(b) Election with the Internal Revenue Service before 30 days after getting the shares.
  4. Prepare a Stock Ledger [Template] that tells how many shares each shareholder gets
And then, you can celebrate the Organizational Meeting, which will define the moment when the corporation starts operating as such. 
  1. Send a Waiver of Notice [Template] for the Organizational Meeting to all the participants
  2. Prepare a Banking Resolution [Template] to be approved at the meeting that authorizes one or more people to open a bank account for the corporation
  3. (Optional) Prepare a Shareholder Agreement that regulates how shareholders interact with each other
  4. Celebrate Organizational Meeting and write down its minutes using a [Template]

The process might look a bit scary, but it's really not that much and it's not so complicated. If you are thinking about creating your own US company, just go for it!

If you are a Foreigner

If you don't live in the US or are not a US citizen, then you have to be careful about some things which are mentioned in this post

The Online Course

Due to the large number of people interested about this subject, I have created an online course that teaches you how to easily create (and dissolve) a US business from the comfort of your home, be it in the US or elsewhere, avoiding expensive legal fees.

The course contains 37 lectures with videos, instructions, quizzes and checklists to help you navigate through the process of setting up your US company, avoiding common pitfalls inexperienced entrepreneurs usually fall into. You will also find templates for all the necessary legal documents, which you can freely download and use right away.

As a special thank to my blog readers, I've created 100 coupons to access this course with a 50% discount. Click on the link below to redeem your discount code before I run out of invitations!

For an in-depth understanding of how to form your business in the US I recommend you this book by Constance E. Bagley.

Enjoy creating your US company!

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