Corporation Formation

A corporation is a legal entity owned by shareholders, managed by a board of directors, and run day-to-day by officers. It exists separately from its owners, which gives it features an LLC does not have: stock that can be issued to investors or granted to employees, and a board structure outside investors already understand. Every corporation is taxed as a C corporation by default, and an eligible corporation can instead elect S corporation tax treatment with the IRS.

Fisher Stone forms corporations for New York founders and business owners for a flat fee, quoted up front before any work begins. A licensed New York attorney handles your incorporation from start to finish, reachable directly by call, email, or text. There is no call center and no handoff to junior staff: the same attorney prepares your Certificate of Incorporation, your bylaws, and your organizational records, and remains your point of contact afterward.

What Is a Corporation, and How Is It Different From an LLC?

A corporation and a limited liability company both shield their owners from personal liability for the business’s debts, but the similarities mostly end there. A corporation has a fixed structure: shareholders elect a board of directors, and the board appoints officers who handle daily operations. Ownership is represented by shares of stock that can be split, transferred, or issued as the company grows. An LLC, by comparison, is owned by members and managed however its operating agreement provides, with no required board, officers, or stock.

These differences are why a corporation tends to fit a business planning to raise investor money, grant equity to employees, or eventually sell to a larger company, while many small, closely held businesses find an LLC’s lighter formalities easier to live with. Our LLC formation page covers that entity in more detail.

Forming a Corporation in New York

Incorporating in New York involves several required steps, and skipping any of them can create problems later when an investor, a bank, or the IRS asks to see your records. If you have not yet decided between a corporation and another entity, our business formation service can help you choose before you file anything.

The Certificate of Incorporation

A corporation legally comes into existence when its Certificate of Incorporation is filed with the New York Department of State. The certificate sets out the corporation’s name, which must signal its corporate status with a word like “Incorporated” or “Corporation” or an accepted abbreviation, the county where it will be located, the shares it is authorized to issue, and its agent for service of process. We prepare and file it, confirming every detail with you first.

Bylaws, the initial board, and officers

Bylaws are the corporation’s internal rulebook: how directors are elected, how meetings are conducted, how officers are appointed, and how major decisions get approved. New York requires every corporation to adopt bylaws, and a generic template often misses provisions a particular ownership group actually needs. The incorporator names the initial board of directors, and that board appoints the corporation’s officers, typically a president, a secretary, and a treasurer, who carry out the decisions the bylaws assign them.

Issuing shares and the organizational meeting

Once the corporation exists, it issues shares of stock to its founders in exchange for cash, property, or services, which fixes each owner’s percentage of the company. If the corporation will have more than one shareholder, this is also the point to put a shareholder agreement in place, covering what happens if an owner wants to leave, sell their shares, or passes away. Our shareholder agreements page covers what that document typically includes. The bylaws, the board’s initial actions, the officer appointments, and the share issuance are all adopted at an organizational meeting, documented in minutes or a signed consent that becomes part of the corporation’s permanent records.

C Corporation vs. S Corporation: Tax Treatment

Every New York corporation is taxed as a C corporation unless it elects otherwise. A C corporation pays corporate income tax on its profits, and shareholders then pay personal income tax again on any dividends distributed, a result usually called double taxation. In exchange, a C corporation can retain earnings inside the business, issue multiple stock classes, and accept unlimited shareholders, including other companies and foreign investors, which is why institutional investors generally require it.

An eligible corporation can elect S corporation status, a federal tax treatment rather than a separate business entity, by filing Form 2553 with the IRS. The election lets the corporation’s profits and losses pass through to its shareholders’ personal tax returns instead of being taxed at the corporate level first. The trade-off is eligibility: no more than 100 shareholders, each generally an individual who is a US citizen or resident (with narrow exceptions for trusts and estates), and only one class of stock, though different voting rights within that class are allowed.

C Corporation, S Corporation, or LLC at a Glance

The right structure depends on your ownership, your plans for outside money, and how much administrative work you are prepared to take on. This comparison lays out the three side by side.

When a Corporation Is the Right Choice

A corporation tends to fit a business in one of a few situations:

• Raising money from outside investors, who typically expect stock in a corporation rather than LLC membership interests.
• Granting stock or stock options to employees as compensation, which a corporation’s share structure is built to handle.
• Building toward a sale to a larger company, since acquisitions are often structured as a stock purchase that moves more smoothly when the target is already a corporation.

If none of these apply and you plan to keep ownership within a small group without outside investment, an LLC’s lighter formalities may fit just as well. An attorney can review your plans and recommend a structure, including whether an S election makes sense once the corporation is formed. If a future sale is part of your thinking, our buying and selling a business page covers how that process typically works.

Ongoing Corporate Formalities and New York’s Biennial Statement

Compliance obligations continue after the corporation is formed. To preserve the liability protection it provides, the board and shareholders need to hold required meetings, keep minutes, keep the bylaws current, and keep finances separate from personal accounts. A business that treats these steps as a formality risks losing the protection incorporating was meant to provide.

New York also requires every corporation to file a biennial statement with the Department of State every two years, confirming its current address and chief executive. It is a simple filing but easy to overlook, and letting it lapse can create real complications with the state. A corporation that elected S status also needs to keep meeting the eligibility rules, since falling out of compliance, for example by adding a disqualifying shareholder, can end it.

Fisher Stone tracks these obligations for clients through our general corporate counsel service, so your filings and records stay current long after the incorporation is finished. Visit the Business Law hub for the full range of services we handle.