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How to Start a Corporation (For Raising Money)
If you plan to raise capital from investors, you need a corporation—not an LLC.
Over 500 entrepreneurs choose Surge.
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A corporation offers limited liability and a structure investors can buy into. If you're building a business that will raise money, here's how to set up a corporation correctly.
What Does a Corporation Do?
Like an LLC, a corporation gives you limited liability protection—your personal assets stay separate from business debts and lawsuits. But corporations add a critical feature: they're built for raising capital.
Corporations issue stock. Investors buy stock. Stock has clear ownership percentages, voting rights, and liquidation preferences. This structure makes it easy for VCs, angels, and employees (via stock options) to own pieces of your company.
Bottom line: If you plan to raise money from passive investors or issue stock options to employees, you need a corporation. If not, an LLC is simpler.
Why Choose a Corporation?
Corporations are designed for businesses that plan to raise capital from passive investors:
Built for Fundraising
VCs and angel investors expect C-corps. Issuing stock is straightforward, cap tables are clear, and investment terms are standard.
Stock Options for Employees
Attract top talent with equity compensation. Corporations can issue stock options; LLCs require complex profit interests.
Clear Governance Structure
Board of directors, shareholder voting, officer roles. Investors want formal governance and decision-making processes.
Investor-Ready from Day One
VCs won't invest in LLCs due to tax complications. If you plan to raise serious money, start as a C-corp and save the conversion headache.
Exit-Friendly Structure
Acquisitions and IPOs require corporate structure. Public companies and many acquirers won't buy LLCs.
Limited Liability Protection
Just like LLCs, corporations protect your personal assets from business debts and lawsuits.
Corporation vs LLC: Which Do You Need?
Choose an LLC if:
Choose a Corporation if:
Good fit for: Tech startups, investor-backed businesses, companies planning to scale rapidly
Not sure? Book a free consultation. We'll help you decide in 15 minutes.
How to Start a Corporation: The 3 Required Steps
Corporations require more formality than LLCs, but that structure is exactly what investors need to feel confident.
Step 1
Step 1: File with the State
What it is: Submit your Articles of Incorporation to register your corporation with the state. This creates the legal entity.
Can you do it yourself? Technically yes, but corporations have more complexity than LLCs. Filing fees are $50 in Iowa, $300 in Texas.
What's involved: Choose a business name, define your stock structure (number of shares, classes), appoint initial directors and officers, file the articles, get your EIN.
Why work with us: We help you choose C-corp vs S-corp, set up the right stock structure for fundraising, and avoid mistakes that kill investor deals later.
Step 2
Step 2: Draft Bylaws and Issue Stock
What bylaws are: Your corporation's rulebook. They define how directors are elected, how voting works, what happens at meetings, and who has decision-making authority. Investors review your bylaws during due diligence.
Can you do it yourself? Not if you plan to raise money. Generic templates won't pass investor scrutiny and create problems during fundraising.
What's involved: Governance structure, voting procedures, stock issuance process, shareholder rights, officer roles, amendment procedures. Plus: issuing initial stock to founders with proper vesting schedules.
Why you need a lawyer: VCs have seen thousands of corporate structures. If your bylaws are wrong or your stock isn't issued correctly, they'll walk away or demand expensive fixes. We set you up investor-ready from day one.
Step 3
Step 3: Follow Corporate Formalities
What it is: Corporations have stricter formality requirements than LLCs. You need board meetings, shareholder meetings, proper minutes, board resolutions for major decisions, and clear separation of personal and corporate finances.
Can you do it yourself? Yes, but you need to know what's required. We give you templates and a compliance calendar.
What's involved: Annual board meetings, shareholder meetings, keeping minutes, board resolutions for contracts/hiring/fundraising, separate bank account, proper contract signatures, maintaining stock ledger and cap table.
Why it matters: Like LLCs, ignoring formalities lets courts 'pierce the corporate veil' and take your personal assets. Plus, investors won't fund companies with sloppy governance. We teach you the minimum required to stay compliant without drowning in paperwork.
Why Investors Require Corporations
VCs and professional investors won’t invest in LLCs because of how partnership taxation works. LLCs are ‘pass-through entities’—profits and losses flow to owners’ personal tax returns. That creates tax headaches for investors.
Corporations solve this with stock ownership. Investors buy preferred stock, founders hold common stock, employees get stock options. Clean, simple, standardized.
If you're planning to raise money: Start as a C-corporation from day one. Converting an LLC to a C-corp later costs $3,000-5,000 and creates tax complications.
C-Corp vs S-Corp: What’s the Difference?
Both are corporations, but they’re taxed differently:
C-Corporation (C-Corp)
Best for: Startups raising venture capital
- ✓ Can have unlimited shareholders
- ✓ Can issue different stock classes (preferred, common)
- ✓ VCs and angels can invest easily
- ✓ Reinvest profits without tax consequences
- ✗ “Double taxation” on profits (corporate + personal)
→ If you plan to raise serious money, choose C-corp
S-Corporation (S-Corp)
Best for: Profitable small businesses avoiding self-employment tax
- ✓ Pass-through taxation (no double tax)
- ✓ Save on self-employment taxes
- ✗ Max 100 shareholders (all US citizens)
- ✗ Only one class of stock allowed
- ✗ VCs won’t invest in S-corps
→ Good for profitable service businesses, not for raising capital
💡 Note: You can also elect S-corp status for an LLC. We'll help you understand the tax trade-offs during your consultation or Launch Plan.
Corporation Formation Pricing
All plans include proper registration, bylaws, initial stock issuance, and compliance guidance.
Launch Basic
Solo founder corporations
- C-corp or S-corp formation + bylaws
- 5 months of unlimited email support
- 5 monthly 1-on-1 strategy calls
- Stock structure setup, contract templates
- Total: $1,975 (plus $50-300 filing fees)
$395/mo x 5
Book Free Consultation Launch Advanced
Investor-ready corporations, partnerships
- Everything in Launch Basic
- Enhanced bylaws, founder stock agreements
- Vesting schedules, cap table setup
- Fundraising prep, term sheet guidance
- Total: $2,450 (plus $50-300 filing fees)
$490/mo x 5
Book Free Consultation Corporate Formation Only
Experienced founders, simple structures
- C-corp or S-corp registration
- Custom bylaws and governance docs
- Stock structure and initial issuance
- Compliance roadmap, EIN setup
- No ongoing support (formation only)
$950 one-time + filing fees
Get Started 💡 Launch Plan vs One-Time: If you plan to raise money, the Launch Plan is essential. We'll help you prep for investors, understand term sheets, structure equity splits, and navigate fundraising questions. Five months of guidance for less than one lawyer meeting.
Frequently Asked Questions
Should I start as an LLC or corporation?
If you plan to raise money from VCs or angels, start as a C-corporation. Investors won't invest in LLCs due to tax complications. If you're a solo founder or small partnership with no fundraising plans, an LLC is simpler. Not sure? We'll help you decide in a free consultation.
Can I convert my LLC to a corporation later?
Yes, but it's more expensive and complex than starting as a corporation. Conversion involves filing new formation docs, transferring assets, potential tax consequences, and reissuing ownership as stock. If you know you'll raise money eventually, start as a C-corp and save the headache.
What's the difference between C-corp and S-corp?
C-corps can have unlimited shareholders, multiple stock classes, and are investor-friendly (required for VC funding). They have 'double taxation' (corporate + personal income tax). S-corps have pass-through taxation (no double tax) but max 100 US citizen shareholders and only one stock class. VCs won't invest in S-corps. Choose C-corp if raising money, S-corp for profitable service businesses.
Do I need a board of directors?
Yes, all corporations must have a board of directors—even if it's just you as the sole director. As you grow and raise money, investors will typically get board seats. We'll help you structure governance correctly from the start.
What are bylaws and why do I need them?
Bylaws are your corporation's rulebook. They define how directors are elected, how voting works, what happens at shareholder meetings, officer roles, and decision-making authority. Investors will review your bylaws during due diligence. Generic templates won't cut it—we customize yours for your situation.
How do I issue stock to founders and employees?
Founders get common stock at formation (with vesting schedules to prevent someone leaving early with equity). Employees typically get stock options. We'll help you set up your cap table, determine equity splits, implement vesting, and create an option pool for future hires.
What are corporate formalities and do I really need to follow them?
Yes. Corporate formalities include: board meetings, annual shareholder meetings, proper stock issuance, board resolutions for major decisions, keeping minutes. If you ignore these, you can lose liability protection (piercing the corporate veil). More formal than LLCs, but required for investor confidence and legal protection.
Can I form a corporation myself?
You can file the registration yourself, but corporations are complex. You need proper bylaws, stock structure, equity splits, vesting schedules, board setup, and compliance systems. Mistakes cost thousands to fix later and can kill fundraising deals. Most founders who form corporations themselves end up paying lawyers to redo everything before raising money.
What's included in the Launch Plan that's not in the flat-fee option?
Launch Plan = Formation + 5 months of unlimited support. You get help with: fundraising prep, term sheet review, equity negotiations, hiring and contracts, compliance questions, growth strategy. It's like having a startup lawyer on retainer for 5 months. Critical if you plan to raise money.
Building Something Big? Start Right.
Most founders who plan to raise money make one of these mistakes:
- → Start as an LLC, then pay $3,000-5,000 to convert to C-corp
- → Use generic bylaws that investors won’t accept
- → Set up equity splits wrong and can’t fix them later
- → Skip vesting schedules and lose leverage with co-founders
- → Issue stock incorrectly and create tax problems
The Launch Plan helps you avoid these mistakes and sets you up for fundraising success from day one.
Get your corporation built right + 5 months of startup attorney support for $1,975 total.
Book Your Free ConsultationWhat Founders Say
Google Reviews
Cassie Serrata
1755617793
G
Rated 5 out of 5 stars
Matt and his team are knowledgable, friendly and efficient. They helped me get my LLC up and running. Highly recommend his legal services for any small business owner.
Mo Yang
1754073513
G
Rated 5 out of 5 stars
He wasn’t trying to sell me something I didn’t need, but instead gave advice that was truly in my best interest.
Ready to Build an Investor-Ready Corporation?
Book a free consultation. We’ll discuss your growth plans, fundraising timeline, and help you determine if a corporation is the right choice. No pressure, no sales pitch—just expert guidance.