How Much Does It Cost to Incorporate?

Picture of antique cash register - representative of the post's topic, the cost to incorporate a business

This post about the cost to incorporate in the U.S. is an Advertisement under Rule of Professional Conduct 1-400, Standard 5.

Recently I have seen a huge increase in the number of inquiries from prospective clients – especially foreign companies – interested in forming a corporation. One of their first questions usually is, “How much does it cost to incorporate?” This post answers that question.

First, though, I need to make a couple of points:

  • The following is merely illustrative. While the services described below suffice for many clients, we can know whether they are right for you? only after we discuss your specific requirements in detail.
  • The only way we can agree that I will provide incorporation services is via an engagement letter signed by both of us. (The engagement process is discussed below).

My incorporation services typically include the following for a fixed fee of $2,000:

  • Preparing Articles of Incorporation / Certificate of Incorporation / Certificate of Formation (title varies among the states) for a corporation having one class of common stock
  • Filing with the Secretary of State requesting standard turnaround time (need and cost for accelerated turnaround varies among the states)
  • Secretary of State filing fee and, in states where a registered agent is required, first-year registered agent fee
  • Preparing action of incorporator (as appropriate), bylaws, secretary’s certificate, and written consent in lieu of organizational board meeting
  • Corporate records book, seal, and share certificates
  • Printing share certificate (for signature by corporate officers) for initial shareholder
  • Obtaining an Employer Identification Number (assuming a principal officer has a social security number)
  • All associated counseling

For foreign clients who lack a U.S. social security number, I can obtain an Employer Identification Number for a fixed fee of $500. There is no need for foreign clients to come to the U.S. for the incorporation process.

Timing: If the client is prompt in providing information and signing documents, the process typically can be completed in about a week (but see the note below concerning forming entities in California).

Note concerning limited liability companies (LLCs): Although the documents are different (Articles of Organization / Certificate of Formation, Operating Agreement), the process, fee and timing are similar to those for a corporation described above.

Note concerning forming entities in California: Turnaround time in California often? is close to two weeks. If you want 24-hour turnaround, add $500, which covers the Secretary of State’s additional fee and other associated costs.

Note concerning international shipment of corporate records: I usually keep clients’ corporate records books in my office or ship them to a principal place of business in the US. If you are located outside the US and you want me to send those records to you, add $500, which covers FedEx shipping charges and preparing required international shipping documents.

Engagement process: I need to know the name of the client that will be forming the new entity; the name and title of the individual who will be signing on behalf of the client (assuming that the client is an entity); and the client’s physical address, telephone number and e-mail address. I will prepare a short engagement letter and will send it by e-mail with wire instructions. Once I receive the signed engagement letter (typically by fax or scan and e-mail) and the fee (typically by wire or direct deposit), I will begin preparing the required documents.

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Photo credit: Thiago Felipe Festa via stock.xchng

Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

10 comments

  1. Kalyan says:

    How much time does it typically take for this process to complete ??

    Cheers,
    Deepu.

  2. Dana says:

    @Kalyan
    A major factor is turnaround time at the Secretary of State’s office, which depends on the state of incorporation. Delaware is fast, with routine next-day turnaround.

    Other states have standard processing (the turnaround time for which varies from state to state and depends on the number of transactions being processed) and expedited processing for an extra fee. The slowest may be California, which currently is is taking about four weeks; however, 24-hour expedited turnaround is available for an additional fee of $350. (Please note that four weeks applies to Articles of Incorporation that are submitted in person at the Secretary of State’s office, which is part of the service that I offer; if the Articles are submitted by mail, turnaround time is twice as long.)

    Some additional time is required for my services and client review of documents. Everything considered, it is reasonably easy to complete the process in several days if a client needs to move that quickly and reviews and signs documents promptly.

  3. VPS says:

    Thank you for the very informative blog! I am wondering it is still possible for you to obtain an EIN for a foreign client? You have other posts which suggest that IRS doesn’t permit that anymore. Or do you just facilitate the whole process of obtaining an ITIN and then an EIN and fee listed above is for that?

  4. Dana says:

    @VPS
    You can obtain an EIN on your own – the process is described in Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S..

    The specified fee is for my obtaining an EIN (no ITIN is required) in connection with forming a corporation (or LLC). I do not obtain EINs as a stand-alone service.

  5. nike sental says:

    Can I open Bank Account in Delaware without having to go there in person after receiving EIN ?

  6. Dana says:

    @nike sental
    (1) You do not necessarily need to open a bank account in Delaware.
    (2) If there is no bank in your home country that has branches in the U.S., then someone in the U.S. will need to open an account for you. Please see paragraph 2 in Three Important Issues for Foreign Companies Coming to the U.S.

  7. Guy says:

    One thing is still not clear to me-
    As a non US citizen, going through the above described process of Incorporation- Once starting to do business in the US: will I be able to get a salary paid (to myself) / profits sent abroad?

    Thanks!

  8. Dana says:

    @Guy

    Salary is pay for work done. Whether you can work for your U.S. corporation is addressed in Visa Basics for Foreign Entrepreneurs Coming to the U.S.

    Profits can be sent abroad, though you should retain an accountant with expertise in international tax issues.

  9. Guy says:

    Thank you for your swift reply!

    From what I read in the linked article I understand that in order for me to get a salary paid to my non-us bank account i will need to file for an E-2 Visa-
    Is that correct? would a possible workaround be having a bank account in a US branch office of my bank? (I do not plan to relocate to the US)

    Thanks again, this is a great help for me.

  10. Dana says:

    @Guy
    I’m sorry, but your questions have gotten to a level of detail that is not appropriate to answer here. I recommend that you retain an immigration lawyer who specializes in work visas if you wish to pursue this matter further.