To form a legal entity, you file a short set of documents with your state’s business filing office — usually the Secretary of State — to create a business that exists separately from you. That separate existence lets the business sign contracts, own property, hire employees, and be sued in its own name instead of yours. Filing fees run from roughly $35 to over $500 depending on the state, and processing takes anywhere from a few hours on an online portal to several weeks by mail.
The work breaks into a handful of discrete steps. Each one has a decision or a deadline attached, and skipping any of them tends to show up later as a rejected filing, a tax surprise, or a lost liability shield.
Pick the Entity Type First
Your structure choice decides which state statutes govern the business, how it’s taxed, who carries personal liability, and how much ongoing paperwork you’ll live with.
An LLC is the most popular choice for new small businesses. It combines corporate-style liability protection with partnership-style flexibility, and it defaults to pass-through taxation, meaning profits land on the owners’ personal returns without a separate entity-level tax. Most state LLC statutes follow the Revised Uniform Limited Liability Company Act, which lets you choose between running the business directly as owners (member-managed) or delegating control to designated managers (manager-managed).1Uniform Law Commission. Limited Liability Company Act, Revised
A corporation carries more formality. You issue stock, appoint a board of directors, and follow governance rules that in most states track the Model Business Corporation Act. By default a corporation is a C-corporation, which pays its own income tax while shareholders pay again on dividends. S-corporation status is available by election with the IRS and has its own deadline, covered below.2Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined Corporations are the standard pick if you plan to raise venture capital or go public, because investors expect the stock structure.
A partnership works for two or more owners running a business together, but a general partnership gives every partner personal liability for business debts. If liability protection matters to you, an LLC or corporation is the better fit.
Clear and Lock the Name
Your entity name has to be distinguishable from every other business name on file with the state. Minor spelling variations usually don’t count as distinguishable. Most Secretaries of State run a free online database you can search before filing; if what you want looks close to something already taken, pick a different variation rather than hope for approval.
The name also needs an identifier that tells the public what kind of entity it is. LLCs typically require “LLC” or “L.L.C.” at the end. Corporations use “Inc.,” “Corp.,” or “Incorporated.” Exact options vary by state.
If you aren’t ready to file right away, most states let you reserve the name for a set period, often 60 to 120 days, for a small fee. One thing name approval does not do: protect you against trademark claims from a business using a similar name in your industry. Clearing the state database is a filing requirement, not a trademark search.
Name a Registered Agent
All 50 states require a registered agent, and the filing office will reject your formation documents if you leave this blank. The agent is the person or service authorized to accept legal documents on the entity’s behalf, including lawsuits, subpoenas, and government notices.
The agent must have a physical street address in the state of formation and be reachable there during normal business hours. A P.O. Box doesn’t qualify, because a process server needs an actual location for hand delivery. You can serve as your own agent if you meet those conditions, or you can hire a professional service, which typically runs $50 to $300 per year.
Fill Out the Formation Document
The core filing is called the Articles of Organization for an LLC or the Articles of Incorporation for a corporation. Most states offer a fill-in-the-blank form through an online portal or as a downloadable PDF. The fields are straightforward:
- Entity name with the required identifier
- Registered agent name and physical address
- Principal office address
- Management structure — for an LLC, member-managed or manager-managed; for a corporation, the names of initial directors
- Purpose, where most states accept something general like “any lawful business activity”
Corporations add one more item: the number and type of shares the entity is authorized to issue. For a simple one-class common-stock corporation, the total authorized share count is usually enough. Some states also ask for par value, though many now allow no-par-value stock.
A few states require initial members or officers on the formation document itself. Others collect that information through a separate initial report. The documents must be signed by the organizers or incorporators before submission. Check every field, especially the registered agent’s address; errors here can delay processing or trip you up when you go to open a bank account.
File It and Pay
You submit the completed documents to your state’s business filing office — in most states, the Secretary of State. Online filings typically process within a few business days and sometimes within hours. Paper filings sent by mail can take two to six weeks depending on the state’s backlog.
Fees vary widely. The low end sits around $35 to $50 for an LLC; the high end runs past $500. Corporation fees are sometimes flat and sometimes tied to the authorized share count. Many states offer expedited processing for an additional fee that can bring turnaround down to 24 hours or same-day. Online filings usually require a credit or debit card; paper filings usually require a check or money order payable to the Secretary of State.
If the filing office finds a problem, they’ll either reject the submission or contact you to fix it. Rejected filings generally don’t get refunded, so accuracy up front saves money.
What You Get Back
Once the state approves your filing, the entity legally exists. The state typically sends back a stamped or certified copy of your articles, and many states also issue a Certificate of Existence or Certificate of Incorporation confirming the entity is on record and in good standing.
Hold onto these. Banks require them to open a business account. Landlords ask for them before signing a commercial lease. Vendors and partners sometimes want them before entering into contracts. Additional certified copies can be ordered from the filing office later for roughly $5 to $50.
Confirm the returned documents match what you submitted. Fixing even a small discrepancy after the fact means filing an amendment with another fee attached.
Get an Employer Identification Number
An EIN is the nine-digit tax ID the IRS assigns to your entity. You need one to open a bank account, file tax returns, and hire employees. Even a single-member LLC with no employees usually needs an EIN because banks require it.3Internal Revenue Service. Get an Employer Identification Number
The fastest route is the free online application at IRS.gov/EIN, which issues the number immediately. Fax and mail applications using Form SS-4 take days to weeks.4Internal Revenue Service. Instructions for Form SS-4 Order matters here: form the entity with the state first, then apply for the EIN, because the IRS application asks whether the entity already legally exists.3Internal Revenue Service. Get an Employer Identification Number
Adopt an Operating Agreement or Bylaws
The formation filing creates the entity. It doesn’t set the internal rules for how the business runs. That’s the job of an operating agreement for an LLC or bylaws for a corporation: who decides what, how profits and losses are divided, what happens when an owner wants out, how disputes get resolved.
Several states require LLCs to have a written operating agreement, and even where it isn’t required, skipping this step is a common and costly mistake. Without one, the LLC runs on whatever default rules the state statute provides, and those defaults rarely match what the owners actually wanted. A court may also decide the LLC’s separate identity is thin enough that owners’ personal assets are reachable for business debts.5U.S. Small Business Administration. Basic Information About Operating Agreements
Corporations need bylaws in nearly every state. They’re typically adopted at the first board of directors meeting, which is also where the board issues stock to initial shareholders, appoints officers, and ratifies the formation documents. Keep minutes of that meeting. They become part of the corporate record showing the entity is being treated as a real, separate business.
Elect S-Corporation Status If You Want It
If you formed a corporation and want profits to pass through to shareholders’ personal tax returns instead of being taxed at the entity level, file IRS Form 2553. This is a federal tax classification, separate from the state filing.
The deadline is strict. Form 2553 must be filed no later than two months and 15 days after the beginning of the tax year in which you want the election to take effect.6Office of the Law Revision Counsel. 26 USC 1362 – Election, Revocation, Termination For a brand-new corporation, the clock starts on the earliest of the date you first had shareholders, first held assets, or began doing business.7Internal Revenue Service. Instructions for Form 2553 Miss the window and the election doesn’t apply until the following tax year. The IRS offers late-election relief for reasonable cause, but relying on it is a gamble. Every shareholder has to consent on the form, and the entity has to meet ongoing eligibility rules, including a cap of 100 shareholders and only one class of stock.2Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
LLCs can elect S-corp tax treatment too. The LLC first elects to be treated as a corporation for tax purposes using IRS Form 8832, then files Form 2553. The same two-month-and-15-day deadline applies.
Licenses, Permits, and Tax Registrations
A filed entity isn’t permission to operate. Most businesses need at least one additional license or permit, and often several, depending on industry, location, and whether they have employees.
At the local level, many cities and counties require a general business license or tax registration certificate. Professional services like accounting, engineering, or healthcare need state-issued professional licenses on top. Food businesses need health department permits. A commercial location may need zoning approval. Penalties for operating without required permits range from fines to a forced shutdown.
If you sell taxable goods or services, register for a sales tax permit with your state tax agency. These are typically free, but failing to collect and remit sales tax can bring significant penalties and personal liability for the entity’s officers or managers. If you have employees, register for state unemployment insurance and workers’ compensation coverage. Unemployment registration usually triggers as soon as you start paying wages; workers’ compensation thresholds depend on employee count and industry, with construction facing the strictest rules.
Check If Your State Requires Publication
A few states require newly formed LLCs or corporations to publish a notice of formation in local newspapers. New York is the best-known example, requiring publication in two newspapers within 120 days of formation, followed by filing a certificate of publication with the state. Costs depend on the county and the newspaper’s ad rates and can range from a few hundred dollars to over $1,000 in expensive markets. Arizona and Nebraska have similar but less costly requirements.
If your state has a publication requirement and you skip it, the entity may lose its authority to conduct business until it’s satisfied. The filing process itself usually doesn’t flag this obligation, so check your state’s rules right after formation.
Keep the Entity in Good Standing
Formation is one-time. Maintenance is ongoing. Nearly every state requires business entities to file a periodic report — usually called an annual report or statement of information — updating the state on the entity’s current address, registered agent, and officers or managers. Most are annual; a few states use a biennial schedule. Fees range from nothing to several hundred dollars.
Missing the deadline escalates fast. First a late fee. Then loss of good standing status, which means the state won’t issue certificates of good standing that lenders and partners often require. Continued failure can lead to administrative dissolution, which effectively kills the entity in state records. If people keep doing business under a dissolved entity, they may be personally liable for debts incurred during that period. The name can also become available for someone else to claim.
Reinstatement is usually possible but requires filing all overdue reports, paying back fees and penalties, and sometimes choosing a new name if the old one was taken. Put the due date on your calendar and treat it like a tax deadline. Filing a state income tax return does not satisfy the annual report requirement. They are separate obligations.
Register in Other States Where You Operate
If the entity does business in a state other than the one where it was formed, the other state likely requires registration as a “foreign” entity, meaning out-of-state. The process is called foreign qualification: file a certificate of authority with that state’s filing office, name a registered agent there, and pay another filing fee.
What counts as “doing business” varies, but common triggers include a physical office or warehouse, employees, or regularly soliciting customers in the state. Occasional sales into a state or attending a trade show usually don’t cross the line. Skipping foreign qualification where it’s required can bring fines, loss of the right to enforce contracts in that state’s courts, and back taxes. Check the registration rules before you start operating outside your home state.