What Are the Costs of Forming a Corporation?

While fees can vary from state to state, if you are planning to incorporate your business, it pays to know all the costs of forming a corporation.

Costs of forming a corporation

There are four types of costs involved in forming a simple corporation:

Filing fees with the Secretary of State;
First-year franchise tax payment;
Various governmental filings;
Attorney fees.

Here are a breakdown of costs:

Typical costs

Filing fees with the Secretary of State costs from $45 to $300. First-year franchise tax prepayment will run you from $800 to $1,000. Various additional governmental filings will be $50 to $200. And attorney fees will cost from $500 to $5,000.

Filing fees

Each state requires a fee to be included along with the incorporation papers. The filing fee may be set, based on the number of shares authorized, or be a combination of both. The highest filing fee of $300 is charged by Texas, with Alaska coming in at a close second at $250. Most filing fees range from $75 to $125.

Franchise tax payment

A franchise tax is a fee paid for the privilege of doing business in a state. Not all states charge a franchise tax as an incentive for businesses. Nevada, for example, does not charge an annual franchise tax payment.

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Government filings

Two factors will determine the types of governmental filings for your corporation: the type of business, and the state of incorporation.

Attorney fees

Attorney fees are the costs that can vary the most when you incorporate, and will depend on several factors: whether you're incorporating a simple corporation; whether you incorporate in the state in which your corporation conducts the majority of its business; whether the corporation can qualify for exemptions from federal and state securities laws; and whether your corporation is involved in a heavily regulated type of business.