How to reduce the cost of incorporating a business in the US


Start your company in a few clicks and get ready to charge customers, hire your team, and fundraise.

Learn more 
  1. Introduction
  2. What is required to incorporate a business?
  3. Types of corporate structures—and how to choose one
    1. Sole proprietorship
    2. Partnership
    3. Corporation
    4. Limited liability company (LLC)
    5. Choosing the right structure
  4. What are the costs to incorporate?
  5. How to incorporate a business for a reduced cost

Incorporating a business typically incurs costs such as filing fees. But entrepreneurs can minimize or potentially offset these expenses by using available resources. Small business owners in the US spend an average of $40,000 USD in their first full year of business, so it’s important to reduce costs when possible.

Below is a practical guide on how to complete the incorporation process while minimizing expenses.

What’s in this article?

  • What is required to incorporate a business?
  • Types of corporate structures—and how to choose one
  • What are the costs to incorporate?
  • How to incorporate a business for a reduced cost

What is required to incorporate a business?

The specific requirements and fees for incorporating a business vary depending on your location and the type of business entity you choose. To incorporate a business, you will generally need to complete the following steps:

  • Create a business name: Ensure the name is available and complies with any naming regulations.

  • Select a location of incorporation: Determine where you want to incorporate your business in the US. This could be your home state or another state with favorable business laws.

  • Choose a corporate structure: Decide whether you want to form a C corporation, S corporation, benefit corporation (B corp), or a limited liability company (LLC). Each has different legal and tax implications.

  • Appoint a registered agent: A registered agent is an individual or business entity with a physical address in your place of incorporation that will receive legal documents and official correspondence on behalf of your business.

  • File the articles of incorporation: Prepare and file the necessary paperwork with the appropriate government agency. This typically includes information about your business name, purpose, registered agent, and the number of authorized shares (if applicable).

  • Write bylaws: These are the internal rules that govern your corporation’s operations, including how meetings are held, how officers are elected, and how decisions are made. LLCs are not required to have bylaws.

  • Obtain an employer identification number: An EIN is a federal tax ID number that you’ll need to open a business bank account, file taxes, and hire employees.

  • Acquire any necessary licenses and permits: Depending on your industry and location, you might need to obtain additional licenses or permits to legally operate.

Types of corporate structures—and how to choose one

Your corporate structure affects multiple areas of your business, from daily operations to taxes and personal liability. Here are the primary types of corporate structures and advice on how to choose the right one based on your business needs.

Sole proprietorship

This is the simplest form of business entity. With a sole proprietorship, one person is responsible for all the company’s profits and debts. These companies are easy to form and give owners complete managerial control, but they present some risk by making the owner personally liable for all business financial obligations. This structure is best for small, low-risk businesses and those testing their business idea before establishing a more formal business.


There are three types of partnerships: general partnerships (GPs), limited partnerships (LPs), and limited liability partnerships (LLPs). These businesses are easy to establish and typically come with more available capital than sole proprietorships since multiple owners are contributing. Partners are jointly responsible for the business and might be personally liable for business debts. This business structure is best for businesses where two or more individuals are involved, and for professional groups such as law firms or accounting firms.

  • General partnership (GP): The company has only general partners, who share equal responsibility for management and liabilities.

  • Limited partnership (LP): The company has both general and limited partners. Limited partners have minimal control over daily business decisions and liabilities.

  • Limited liability partnership (LLP): The partners have limited personal liability. This structure is typically used for professionals such as lawyers and accountants.


There are two main types of corporations: C corporations and S corporations. These businesses come with limited liability protection, which means the personal assets of the shareholders are not at risk for business liabilities. They’re more expensive to establish than other structures and are subject to more regulations as well as corporate tax rates. This business structure is best suited for larger companies with a vision to “go public,” or for smaller businesses that want liability protection but prefer to be taxed on a personal level (S corp).

  • C corporation: An independent legal entity owned by shareholders. The corporation itself is legally liable for the actions and debts incurred by the business, not the shareholders.

  • S corporation: Similar to a C corporation but with the benefit of passing corporate income, losses, deductions, and credits through to shareholders for federal tax purposes.

Limited liability company (LLC)

This is a hybrid business structure that allows owners, partners, or shareholders to limit personal liability while enjoying the tax and flexibility benefits of a partnership. This structure provides limited liability without the double taxation of C corporations, but it is more complicated to form than a sole proprietorship or partnership. This structure is best suited for medium-risk businesses that want flexibility and fewer formalities than a corporation.

Choosing the right structure

Consider the following factors when determining which business structure is best for your needs:

  • Liability: If your business involves major financial risks, consider structures with liability protection such as LLCs or corporations.

  • Tax implications: Sole proprietorships, partnerships, and S corps enjoy pass-through taxation; C corps are subject to double taxation.

  • Future goals: If you plan to raise substantial outside capital or eventually go public, a corporation is likely the best choice.

  • Cost and administrative burden: More complex structures such as corporations and LLCs require more paperwork and ongoing fees. If cost is a concern, simpler entities such as sole proprietorships or partnerships might be preferable.

What are the costs to incorporate?

At a minimum, the cost to incorporate a business includes filing fees and registered agent fees. The exact fees vary depending on the following factors:

  • Location of incorporation: Filing fees and requirements differ from state to state.

  • Type of business entity: The cost to form a C corp might differ from that of an S corp or LLC. Each entity type has different filing fees and ongoing costs.

  • Additional services: If you choose to use a lawyer or an online legal service to assist with the incorporation process, their fees will add to the overall cost.

  • Optional costs: You might incur additional costs by adding on certain services for incorporation. For example, one optional cost associated with incorporation includes reserving a business name.

How to incorporate a business for a reduced cost

While it’s not possible to incorporate a business for free, you can reduce costs by following these steps:

  • Do it yourself (DIY): Avoid attorney fees by handling the incorporation process yourself. Many local governments provide online resources and forms to guide you through the process. For example, you can find instructions and necessary documents on your state’s secretary of state website.

  • Act as your own registered agent: Instead of paying for a registered agent service, you can designate yourself (or another member of your company) as the registered agent. This person will be responsible for receiving legal documents and official correspondence on behalf of the business. They must also be available during regular business hours and have a physical address that is where you’re incorporated.

  • Use free resources and free trials: Several online platforms have free or low-cost resources for incorporating a business, and some even provide templates for articles of incorporation and other necessary documents. Some online legal services also have free trials for incorporation services, though you should carefully consult automatic renewal and cancellation policies.

  • Take advantage of free LLC formation offers: Certain companies might offer free LLC formation services, but they often come with conditions or upsells. Read the fine print carefully before opting for such services.

Even if you DIY and act as your own registered agent, you’ll still need to pay the relevant filing fee, which varies. You should also note that there are ongoing costs associated with maintaining a business (e.g., franchise taxes, annual reports). When considering whether to lower the cost of incorporation, weigh the cost savings against the time and effort required to DIY the process—and the potential risks of making errors.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.

Ready to get started?

Create an account and start accepting payments—no contracts or banking details required. Or, contact us to design a custom package for your business.