The cost to incorporate your business (when you file paperwork with the state to form your corporation) will depend on the state where you file. That expense will likely be a small portion of the overall cost to start the business. Depending on your corporation's location and services, you might be responsible for taxes and fees relating to name reservations, licenses, permits, and annual renewals. You should also consider your start-up and operating costs, such as purchasing your inventory, and paying rent and utilities.
To create a corporation, you must file formation documents (articles of incorporation, also known as articles of organization or a certificate of formation) with your Secretary of State and pay the filing fee. Depending on the location and the needs of your business, you could be responsible for additional filings (and filing fees) to form your business, which might include:
Name reservation: If you are not ready to file your incorporating documents but want to save your business name (so no one else can register the name), you might be able to file a name reservation request, available in some states.
Foreign corporation registration: If you will do business in a state other than where you incorporated, the state where you provide your services might require you to register your business as a foreign corporation.
Fictitious business name: You must file for a fictitious business name if you will provide services under a name other than the one you listed on your articles of incorporation. Your state might refer to this as a tradename or a Doing Business As (DBA).
Trademark registration: You can register a trademark to protect your name, logo, slogan, or anything else that identifies your brand. You can file for state trademark registration or federal registration with the United States Trademark and Patent Office (USTPO). Click here to learn more about trademark registration.
Bylaws are the internal rules for your corporation that outline the board of director's procedures, policies, and the rights and responsibilities of shareholders and directors. Bylaws are an internal document that you do not file with the state but keep with your corporate records. You will not face state filing fees to create bylaws, but you might pay an attorney to draft the document or use a document creation service.
Your corporation must appoint a registered agent, which is the person or organization responsible for receiving legal notices on behalf of the company. You or another owner can serve as the registered agent, or you can pay for a registered agent service. Because the registered agent must be a resident of the incorporating state, a service is a good option if you are filing in a state other than where you and the other owners live. When you live in the state where you incorporate, you have the option to use a registered agent service to maintain your privacy (the registered agent's contact information is public record).
Depending on your location and services, you might need one or more licenses or permits. Some cities and counties require all businesses to obtain permits, and certain business types (such as restaurants and marijuana dispensaries) need a number of additional licenses (such as health and/or sign permits). You will likely face fees to apply for each license, and annual fees as long as your business is open.
All corporations that generate income pay tax. The amount your business will pay depends on your revenue and the laws of the state where your corporation operates. The types of taxes your corporation might be responsible for include:
In most states, to keep your corporation in good standing, you must file reports with your state. Most states require you to file the report annually, while other states require every other year, and a few states do not require annual reports. A few states do not charge a fee for the annual report, and in other states, the fee is over $300.
Corporations that issue stock to shareholders must register with the Securities and Exchange Commission (SEC) and state securities agencies, unless the company is exempt from the process. Most small corporations are exempt. However, your state might require you to file an exemption request and pay a fee.
When starting a corporation, you should budget for your start-up and operating costs, which are highly variable and depend on the type of business. Some of the costs you should consider include:
The following is a breakdown of the formation and annual report fees by state (as of September 2020). The numbers represent the minimum charges for incorporation, and you might pay more depending on the number of shares your corporation authorizes. Some states charge additional fees for online filing, in-person filing, rush service, or other administrative fees. Check with your Secretary of State to confirm.
|State||Corporation Filing Fees||Ongoing Fees|
|Alabama||100||No annual report; franchise tax based on revenue|
|Arkansas||50||minimum $150 annual franchise tax|
|California||100||$25 annual + minimum $800 franchise tax|
|Delaware||89||minimum $50 annual + franchise tax|
|District of Columbia||220||$300 biennial|
|Georgia||100||$50 annual + franchise tax|
|Idaho||100||No annual fee|
|Illinois||150||$75 + franchise tax|
|Louisiana||75||$30 annual + franchise tax based on income|
|Maryland||120||Annual report fee based on revenue (minimum $300)|
|Minnesota||135||No fee for annual report|
|Mississippi||50||$25 annual + franchise tax based on capital used and property value (minimum $25)|
|Missouri||50||$20 annual + franchise tax based on assets|
|Nebraska||$60 + $5/page||Biennial report - based on property value (minimum $52)|
|New Hampshire||100||$100 annual|
|New Jersey||125||$75 annual|
|New Mexico||100||$25 annual|
|New York||125||$9 biennial + franchise tax based in income and capital|
|North Carolina||125||$25 annual + franchise tax based on income (minimum $200)|
|North Dakota||100||$25 annual|
|Oklahoma||50||No annual report, Franchise tax based on revenue|
|Pennsylvania||125||$70 every ten years|
|Rhode Island||230||$50 annual|
|South Carolina||110||minimum $25 annual|
|South Dakota||150||$50 annual|
|Tennessee||100||$20 annual + franchise tax based on earnings|
|Texas||300||No annual report fee; franchise tax based on revenue|
|Virginia||75||Annual minimum $25 nonstock / $100 stock corporations|
|West Virginia||100||$25 annual|
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