Formation Services

C-Corp and S-Corp Formation Services: Stripe Atlas, Clerky, LegalZoom, Northwest (2026)

The formation service you choose depends on whether you need VC-track infrastructure (Delaware C-Corp, equity documents, 83(b)) or a simple S-Corp or LLC for a profitable small business.

Updated 17 April 2026

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The Delaware Default: Honest Take

Formation services default to Delaware because they earn more from annual registered agent fees in Delaware than in your home state, and because the VC-tech community created a norm that formation services are happy to perpetuate.

Delaware is genuinely the right choice for a VC-track C-Corp. Investors have seen enough corporate disputes to prefer Delaware's Court of Chancery. QSBS (IRC Section 1202) does not care where you form, but investors do.

Delaware is not the right choice for most S-Corps and small businesses. Forming in Delaware while operating in California means paying both California's $800 minimum franchise tax and Delaware's annual franchise tax (minimum $50, often $400-500 for a startup using the authorized shares method). That is $1,250-1,300/yr in duplicate state fees with no legal or tax benefit.

Entity Type	Recommended State	Reason
VC-backed C-Corp	Delaware	Investors expect it. Court of Chancery. Well-developed case law. QSBS clock starts from formation.
S-Corp, home state operation	Your home state	Forming in Delaware adds duplicate filing and franchise tax with no benefit. S-Corp rules are federal, not state-specific.
S-Corp, California resident	California	You pay CA taxes regardless of where you form. Forming in DE adds DE franchise tax on top of CA's $800 minimum.
S-Corp, multi-state operation	Primary operation state	You must register as a foreign entity in every state you operate in anyway. Home state simplifies compliance.
LLC electing S-Corp tax status	Home state	S-Corp election (Form 2553) does not require a corporate structure. An LLC in your home state works fine.

Formation Service Comparison

Five services dominate the formation market. The split is clear: Stripe Atlas and Clerky serve the VC-track C-Corp segment. LegalZoom, Northwest, and Bizee serve the small business and S-Corp segment.

Stripe Atlas

Tech startups planning to raise VC

$500 flat

Default: Delaware C-Corp

Turnaround2-5 business days

83(b) electionIncluded

Cap tableVia Stripe Equity (basic cap table tool)

Reg. agentIncluded (1 year)

Notable

Banking + payment setup bundled. Stripe ecosystem integration. Founder-centric. Limited for non-tech or non-VC companies.

Clerky

YC-accepted and VC-track startups

$149 formation + annual plans from $99

Default: Delaware C-Corp

Turnaround24-48 hours

83(b) electionIncluded

Cap tableEquity documents included (SAFE, option pool)

Reg. agentVia annual plan

Notable

Used by many YC companies. Lawyer-reviewed templates. Full equity document suite. Not designed for S-Corps.

LegalZoom

Non-tech businesses needing registered agent

$0 state fee + $299 formation package (Business Advantage)

Default: Your choice

Turnaround5-10 business days

83(b) electionNot included

Cap tableNot included

Reg. agentIncluded with annual plans

Notable

Covers S-Corp and LLC formation. Large support team. Upsells heavily. Less startup-native than Clerky or Atlas.

Northwest Registered Agent

Cost-sensitive small businesses, S-Corp formation

$39 state fee + $100 formation service

Default: Your choice

Turnaround5-10 business days

83(b) electionNot included

Cap tableNot included

Reg. agentIncluded first year ($125/yr after)

Notable

Best price-to-value ratio for S-Corp and LLC formation. Privacy-focused (uses their address). Strong registered agent reputation.

Bizee (formerly Incfile)

Absolute lowest cost formation

$0 state fee + $0 (Silver), $149 (Gold)

Default: Your choice

Turnaround7-14 business days

83(b) electionNot included

Cap tableNot included

Reg. agentFree first year ($119/yr after)

Notable

Free tier is genuinely useful for simple formations. Slower than premium services. No VC-track features.

The 83(b) Election: 30-Day Window, No Exceptions

IRC Section 83(b) allows you to elect to be taxed on restricted property at the time of grant rather than vesting. For a startup founder receiving shares subject to a vesting schedule, this is one of the highest-value tax elections available.

With 83(b) filed

Taxed on day-one FMV (near zero for a new startup). All future appreciation is capital gain when you sell. If QSBS-qualified, that gain may be tax-free.

Tax on grant: ~$0. Tax at exit: $0-20% depending on QSBS.

Without 83(b) filed

Taxed at ordinary income rates on the FMV of each tranche as it vests. If the company has grown, you owe ordinary income tax on significant appreciation before you have cash to pay it.

Tax at vesting: ordinary income on spread. Cannot be undone.

30-day window is absolute

You must file the 83(b) election with the IRS within 30 days of the grant date. There is no late relief, no Rev Proc equivalent, no extension. Missing this window is a permanent and sometimes costly mistake. Stripe Atlas and Clerky both generate the 83(b) election document as part of the formation package.

Frequently Asked Questions

Should I form a C-Corp or S-Corp in Delaware?

Delaware is the default for VC-backed C-Corps because investors expect it, courts are experienced with corporate law, and the Court of Chancery resolves disputes predictably. S-Corps typically form in their home state instead. Forming in Delaware while operating in California or New York means paying both Delaware annual franchise taxes and your home state's registration and tax requirements, adding $500-2,000/yr in overhead with no benefit for a non-VC S-Corp.

What is an 83(b) election and do I need one?

An 83(b) election under IRC Section 83(b) tells the IRS you want to be taxed on restricted stock at its current (low) fair market value rather than when it vests. For a C-Corp startup founder receiving stock subject to vesting, filing an 83(b) within 30 days of the grant is critical. If the company grows, your tax is based on the day-one value, not the vested (higher) value. Failure to file within 30 days cannot be corrected. S-Corp shareholders receiving shares with restrictions should also consider this, but it is most urgent for VC-track founders.

Can I convert from LLC to S-Corp without a formation service?

Yes. An existing LLC can elect S-Corp tax treatment by filing Form 2553 with the IRS. This does not change your state legal structure (you remain an LLC), it only changes your federal tax classification. No formation service is needed for this. If you want to convert from an LLC to a corporation (change legal form, not just tax classification), you need a state-level conversion filing, which formation services can handle but a business attorney typically does more reliably for complex situations.

For general educational purposes only. Not legal, tax, or financial advice. Consult a qualified attorney before forming a business entity. Last reviewed April 2026.

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