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C corporation formation

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Form a US C corporation ready for shareholders

A C corporation is a separate taxpayer that is owned through shares and run by a board and officers. It is the structure most often used by startups that plan to bring in investors or grant equity to a team. Firmlane prepares and processes your incorporation and shows the state filing fee before you pay.

  • $0 Firmlane service fee on eligible standard formations
  • State filing fee set by the state and shown before you pay
  • EIN assistance included on eligible orders
  • First year of registered agent service included on eligible orders
Start your corporation Compare with an LLC

What makes it different

A company that owns itself, owned through stock

A C corporation exists separately from the people who own it. It earns income, pays its own federal income tax and can keep profits in the business or distribute them to shareholders as dividends.

Ownership is divided into shares. That makes it straightforward to sell a slice of the company to an investor, set aside a pool for employee equity, or issue different classes of stock with different rights. The SBA notes that corporations can raise money through the sale of stock and that they suit businesses planning to go public or be sold.

The trade-off is structure. A corporation has a board of directors, officers, bylaws, stock records and more formal decision-making than an LLC. If you plan to stay small and owner-funded, an LLC may be simpler.

  • Separate taxpayer at a flat 21% federal corporate rate
  • Ownership through shares, including different classes of stock
  • A familiar structure for venture investors and equity plans
  • More formalities: board, officers, bylaws and records

Anatomy of a corporation

Who does what inside a C corporation

State law sets the framework. Your certificate or articles of incorporation and your bylaws fill in the details.

  • Shares

    Units of ownership. The charter sets how many shares are authorized; the board decides how many are issued, to whom and for what.

  • Shareholders

    The owners. They elect the board and vote on major matters such as mergers or charter amendments.

  • Board of directors

    Oversees the company, approves major decisions and appoints officers. A startup board can be a single founder.

  • Officers

    Run day-to-day operations. Typical titles are president or CEO, secretary and treasurer, and one person can often hold several.

  • Incorporator

    Signs and files the certificate or articles of incorporation. The incorporator's role usually ends once directors are in place.

  • Certificate of incorporation

    The public charter filed with the state. Delaware calls it a certificate of incorporation; many states say articles of incorporation.

  • Bylaws

    The internal rules: how directors are elected, how meetings work, officer duties. Not filed with the state.

  • Stock records

    A ledger of who holds which shares, when they were issued and for what consideration. Investors will ask for it.

Federal tax basics

How a C corporation is taxed

The IRS treats a C corporation as a separate taxpaying entity. It reports income on Form 1120, generally due by the 15th day of the 4th month after its tax year ends (April 15 for a calendar-year corporation; corporations with a June 30 fiscal year end follow a different rule).

The flat 21% federal rate

For tax years beginning after 2017, corporations figure federal income tax by multiplying taxable income by 21%. State corporate income or franchise taxes are separate and vary by state.

Double taxation, in one example

Corporate profits are taxed once at the corporate level. If the corporation then pays those profits out as dividends, shareholders are taxed again on what they receive, and the corporation cannot deduct the dividends it pays. This simplified example shows the shape of it:

StepAmount
Corporate taxable income$100,000
Federal corporate income tax at 21%$21,000
Left after federal corporate tax$79,000
Paid out as dividendsTaxed again to shareholders at their own rates

Many startups never pay dividends. They reinvest profits, so the second layer of tax may not arise until shareholders sell their stock. Losses also stay inside the corporation: shareholders cannot deduct them on their personal returns.

Non-US shareholders

A corporation can have shareholders anywhere in the world. Dividends paid to non-US shareholders are generally subject to US withholding tax, which a tax treaty may reduce. Getting this right is a job for a tax professional who works with cross-border companies.

Can a C corporation become an S corporation?

Only if it qualifies, including having no more than 100 shareholders, one class of stock and no nonresident alien shareholders. See S corporation election help for the rules and how Firmlane helps eligible corporations file Form 2553.

Side by side

C corporation compared with an LLC

Both limit owners' personal liability for business debts in most cases. The differences are in tax, ownership and governance.

  • Federal tax default

    C corporation
    Separate taxpayer at 21%, with a second layer of tax on dividends.
    LLC
    Pass-through: disregarded (one member) or partnership (two or more).

  • Main federal return

    C corporation
    Form 1120.
    LLC
    Owner's return (single member) or Form 1065 (multi-member). Foreign-owned single-member LLCs also file Form 5472 with a pro forma Form 1120.

  • Ownership units

    C corporation
    Shares of stock, including preferred and common classes.
    LLC
    Membership interests, set out in the operating agreement.

  • Governance

    C corporation
    Shareholders, board of directors, officers, bylaws.
    LLC
    Members, optionally managers, operating agreement.

  • Equity for a team

    C corporation
    Stock and stock option plans are the familiar tools.
    LLC
    Possible, but uses different instruments and tax treatment.

  • Venture investment

    C corporation
    The structure most venture investors are set up for.
    LLC
    Less common for venture rounds; some investors prefer not to hold LLC interests for tax reasons.

  • Ongoing formality

    C corporation
    Higher: board approvals, minutes, stock records.
    LLC
    Lower: decisions can follow the operating agreement.

This is a general comparison, not advice for your situation. Tax outcomes depend on your facts, your owners' tax residence and state law.

Choosing a state

Why Delaware comes up so often

Many venture-backed startups incorporate in Delaware. The usual reasons given are that Delaware corporate law is well developed and widely understood, it has a specialized business court (the Court of Chancery), and investors and their lawyers are used to working with Delaware documents. That is a common pattern, not a requirement and not a recommendation for your company.

Two practical points are worth knowing before you choose:

  • You may need to register in a second state. If your corporation actually operates somewhere else, such as where you have an office or employees, it usually has to register there as a foreign corporation. The SBA notes that foreign-qualified businesses generally pay taxes and annual report fees in both states.
  • Delaware has its own annual bill. Every Delaware corporation files an annual report and pays franchise tax, summarized below.

If you are not raising venture capital, forming in the state where you operate can be simpler. You can compare filing fees on our state fee table.

Delaware annual obligations

Delaware corporation annual report and franchise tax

As published by the Delaware Division of Corporations and reviewed on October 17, 2026. Amounts can change; check the Division's site before you file.

  • Due date

    On or before March 1 each year, for the prior year.

  • Annual report filing fee

    $50 for non-exempt domestic corporations.

  • Minimum tax, authorized shares method

    $175 for 5,000 authorized shares or fewer.

    5,001 to 10,000 shares is $250, plus $85 for each additional 10,000 shares or part of 10,000.

  • Minimum tax, assumed par value capital method

    $400.

    Calculated at $400 per $1,000,000 (or part) of assumed par value capital. Requires your issued shares and total gross assets.

  • Maximum tax

    $200,000, or $250,000 for corporations identified as Large Corporate Filers.

  • Late payment

    $200 penalty plus 1.5% interest per month on the tax and penalty.

Do not panic at a large franchise tax figure

Startups often authorize millions of shares. Under the authorized shares method that can produce a very large number, while the assumed par value capital method can produce a much lower one for a young company with few assets. Delaware lets you report under the method that gives the lower tax, so review both with your accountant before paying.

How it works

Incorporating with Firmlane

The same guided flow as every Firmlane formation, with questions specific to corporations.
  1. 01

    Choose C corporation and a state

    Pick the corporation type and your state of incorporation. The wizard shows the state filing fee for your choice before you continue.

  2. 02

    Tell us about the company

    Enter up to three name choices with a corporate ending such as Inc. or Corp., your business activity, and the share and director details your state asks for.

  3. 03

    Review and choose optional services

    Check every detail, see the $0 Firmlane service fee on eligible standard formations, and add optional services only if you want them.

  4. 04

    Pay the applicable charges

    You pay the state filing fee and any optional services you selected. All amounts appear before you confirm.

  5. 05

    Firmlane reviews and processes

    We review your information, reach out if anything is missing and process the filing with the state. State processing times are set by the state and vary.

    Track every status in your account

  6. 06

    Your EIN follows

    Once the state approves your corporation, EIN assistance on eligible orders takes over, backed by the EIN guarantee and its terms shown further down this page. The IRS issues the EIN.

    Guaranteed EIN

After the state approves

First housekeeping for a new corporation

The state filing creates the corporation. These steps make it usable. Several of them benefit from a lawyer or accountant.

Common next steps

  • Appoint initial directors and have them adopt bylaws
  • Elect officers and record the decisions in written consents or minutes
  • Issue founder shares and record them in a stock ledger or cap table
  • If founder shares vest, ask a tax professional about a Section 83(b) election, which has a strict deadline
  • Get an EIN from the IRS (Firmlane assists on eligible orders)
  • Apply for business bank and payment accounts, with free help from Firmlane; each provider sets its own eligibility rules
  • Put annual report and franchise tax dates in your calendar

What Firmlane does not do

  • Give legal, tax or securities advice, or draft custom investor documents
  • Guarantee name approval, state filing times, a bank account or payment processor approval
  • File annual reports or pay franchise taxes for you, unless you add a compliance service that includes it

What you pay

  • Firmlane service fee: $0 on eligible standard formations.
  • State filing fee: set by the state, paid by you and shown separately before payment. See the state fee table.
  • EIN assistance and first-year registered agent service: included on eligible orders. The registered agent renewal price is disclosed before you buy.
  • Optional services: priced upfront, never pre-selected, cancel per terms. Full details on pricing.

Guaranteed EIN within 4 weeks

The 4 weeks start once your company has been approved by the state and we have your complete EIN information.

How the EIN guarantee works

Related

General information, not advice

This page is general information about US C corporations and is not legal, tax or securities advice. Delaware figures are taken from the Delaware Division of Corporations as of the review date shown below and may change. Firmlane is not a law firm, does not provide legal or tax advice and is not affiliated with any government agency. State processing times are set by each state and vary. EIN timing is covered by our EIN guarantee: Guaranteed EIN within 4 weeks. The 4 weeks start once your company has been approved by the state and we have your complete EIN information. The clock pauses while we are waiting for information or a signature from you. Your information must be complete and accurate, and the responsible party must be able to sign the IRS application. If your EIN is not delivered within 4 weeks, we keep working on it at no cost and refund every Firmlane fee you paid on the order, or $100, whichever is more. EINs are issued by the IRS. Firmlane prepares and submits your application through its established process and follows it through until your EIN is issued. Firmlane is not affiliated with the IRS.

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$0 Firmlane service fee on eligible standard formations. You pay the state filing fee, shown before you pay.

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$0 Firmlane service fee on eligible formations. You pay the state filing fee, shown before you pay.