Purpose

This recipe produces a fully registered legal entity — certificate of incorporation, tax ID, business bank account, founder equity agreements, and compliance calendar — ready to accept revenue and sign contracts. Covers US (Delaware C-Corp, LLC), EU (Estonian OU, German GmbH/UG), and UK (Ltd) with exact costs, tool paths, and hard deadlines including the critical 83(b) election window. [src1]

Prerequisites

Business idea validated — do not form entity for untested concept → Idea Validation Playbook
Funding path decided — VC-track vs bootstrapped determines entity type
Co-founder equity split agreed — resolve before incorporation, not after
Primary operating jurisdiction identified — where customers and founders are located
Government-issued ID for all founders — required for filings and EIN

Constraints

Delaware C-Corp mandatory for US VC-track — LLCs cannot issue preferred stock. [src1]
83(b) election: hard 30-calendar-day deadline from stock grant — no extensions. [src5]
Founder agreements must be at or before incorporation — not retroactively. [src1]
State filing fees non-negotiable: DE $89; UK GBP 100; Estonia EUR 265. [src6] [src7]
Annual compliance begins immediately — DE franchise tax min $175-$400/year. [src2]

Tool Selection Decision

Which path?
├── VC-track AND want speed + simplicity
│   └── PATH A: Stripe Atlas — $500 all-in, 1-2 business days
├── VC-track AND want maximum legal quality
│   └── PATH B: Clerky — $427-$819, VC-grade docs
├── Bootstrapped AND want lowest cost
│   └── PATH C: DIY State Filing — $89-$200, 3-5 days
└── Complex (regulated, multi-jurisdiction, non-US)
    └── PATH D: Attorney — $2K-$5K, customized

Path	Tools	Cost	Speed	Output Quality
A: Stripe Atlas	Atlas + Mercury	$500 + $0/mo	1-2 days	High — Cooley docs, EIN, bank
B: Clerky	Clerky + separate bank	$427-$819	2-3 days	Excellent — most comprehensive docs
C: DIY Filing	State portal + templates	$89-$200 + agent	3-5 days	Basic — separate legal docs needed
D: Attorney	Law firm + filing	$2K-$5K	1-3 weeks	Custom — complex cap tables

[src3] [src4]

Execution Flow

Step 1: Choose Entity Type and Jurisdiction

Duration: 1-2 days · Tool: Decision matrix

VC-track (US): Delaware C-Corp — no exceptions. Bootstrapped (US): LLC or S-Corp. VC-track (EU): Dutch BV, Estonian OU, or Delaware + EU qualification. Bootstrapped (EU): Estonian OU, German UG, or UK Ltd. [src1]

Factor	DE C-Corp	US LLC	Estonian OU	German GmbH	UK Ltd
VC fundable	Yes — required	No	Yes	Yes	Yes
Formation cost	$89-$500	$90-$500	EUR 265-500	EUR 1K-3K	GBP 100
Min capital	$0	$0	EUR 0.01	EUR 25,000	GBP 1
Annual tax	$175-$400	$300 (DE)	0% retained	~30%	19-25%
Remote formation	Yes	Yes	Yes (e-Residency)	No (notary)	Yes
Timeline	1-5 days	1-5 days	1-2 days	2-6 weeks	1-2 days

[src2] [src6] [src7] [src8]

Verify: Entity type and jurisdiction selected; rationale documented; all founders agree · If failed: If founders disagree, resolve before filing

Step 2: File Formation Documents

Duration: 1-5 business days (US); 1-6 weeks (EU) · Tool: Per path selected

Path A — Stripe Atlas ($500): Complete application at stripe.com/atlas (15 min). Entity active in 1-2 days. Includes Certificate of Incorporation, EIN, bylaws, restricted stock agreements, 83(b) forms, and $2,500 Stripe credits. [src4]

Path B — Clerky ($427-$819): Select Delaware C-Corp formation. Expedited filing included. Certificate in 2-3 days. Add Post-Incorporation Setup ($299) for bylaws, board consent, stock agreements, 83(b) forms, IP assignment. [src3]

Path C — DIY ($89-$200): Check name at corp.delaware.gov. File Certificate of Incorporation ($89). Appoint registered agent ($50-$300/yr). Standard 3-5 days; 24-hour +$100; same-day +$1,000. [src6]

Path D — Attorney ($2K-$5K): Engage startup-experienced firm. Best for regulated industries, international founders, complex structures. [src1]

Verify: Stamped certificate received; entity in state database · If failed: Name conflict — add distinguishing word and refile

Step 3: Post-Formation Setup (EIN, Banking, Payments)

Duration: 1-5 days · Tool: IRS.gov, Mercury, Stripe

EIN: Apply online at irs.gov — free, immediate (US). International: fax Form SS-4 (4-6 weeks). [src1]
Bank account: Mercury (recommended, no minimums, free), Relay, or Brex
Payments: Stripe — Atlas users get $2,500 in credits [src4]
Accounting: QuickBooks or Xero ($0-$30/mo) — track expenses from day zero [src2]

Verify: EIN received; bank active; Stripe processing test payment · If failed: Bank rejected — try Mercury or Relay

Step 4: Founder Agreements and 83(b) Elections

Duration: 3-7 days · Tool: Clerky/Atlas templates or attorney

Restricted stock: Issue to all founders with 4-year vesting, 1-year cliff [src1]
83(b) election — 30-DAY HARD DEADLINE: File IRS Form 15620 electronically (available since June 2025) or via certified mail. Give copy to company. [src5]
IP assignment (IIPR): All founder-created IP belongs to the company [src1]
Option pool: Reserve 10-15% for future employees; 409A valuation before first grant

Verify: Cap table correct; 83(b) filed with proof; IP assignment signed · If failed: 83(b) deadline approaching — file immediately, this is the most critical action

Step 5: Compliance Calendar Setup

Duration: 2-4 hours · Tool: Google Calendar or Notion

DE C-Corp: Franchise tax + annual report (March 1) — min $175-$400; $125 late penalty [src6]
DE LLC: Franchise tax (June 1) — $300 flat [src2]
Estonian OU: Annual report 6 months after fiscal year end [src8]
UK Ltd: Confirmation statement (annual, GBP 50); corp tax return 12 months after accounting period [src7]

Verify: Calendar entries created; reminders set 30 days before · If failed: Engage startup CPA within 60 days

Output Schema

{
  "output_type": "legal_entity_formation_package",
  "format": "document collection",
  "columns": [
    {"name": "entity_type", "type": "string", "required": true},
    {"name": "jurisdiction", "type": "string", "required": true},
    {"name": "certificate_number", "type": "string", "required": true},
    {"name": "ein_or_tax_id", "type": "string", "required": true},
    {"name": "bank_account_status", "type": "string", "required": true},
    {"name": "eighty_three_b_filed", "type": "boolean", "required": false},
    {"name": "formation_date", "type": "date", "required": true},
    {"name": "formation_cost_total", "type": "number", "required": true}
  ]
}

Quality Benchmarks

Quality Metric	Minimum Acceptable	Good	Excellent
Decision to entity active	< 4 weeks	< 2 weeks	< 1 week
83(b) filed before deadline	Filed (any method)	Filed with 10+ days left	Electronic within 7 days
Founder agreement completeness	Stock + vesting	+ IP assignment + 83(b)	+ option pool + board consent
Bank account operational	Within 3 weeks	Within 2 weeks	Within 1 week
Compliance calendar set	Dates identified	Reminders set	CPA engaged

If below minimum: If formation exceeds 4 weeks (US), check for filing errors. If 83(b) deadline passed, consult tax attorney immediately.

Error Handling

Error	Likely Cause	Recovery Action
Filing rejected by state	Name conflict with existing entity	Search state database, add distinguishing word, refile
EIN application denied online	International applicant or multiple EINs/day	Fax Form SS-4 to IRS; allow 4-6 weeks
83(b) deadline approaching (<5 days)	Delayed stock issuance	File Form 15620 electronically immediately or overnight certified mail
Bank application rejected	Missing documents or entity too new	Try Mercury or Relay; ensure Certificate + EIN + founder ID provided
Registered agent lapses	Failed to renew annual payment	Appoint new agent immediately — state may dissolve entity
Franchise tax penalty	Missed March 1 or June 1 deadline	Pay with penalty ($125 + 1.5%/mo interest); set auto-pay

Cost Breakdown

Component	DIY (Lowest Cost)	Formation Service	Attorney (Full Service)
State filing fee	$89 (DE C-Corp)	Included	Included
Service / legal fee	$0	$427-$819 (Clerky) / $500 (Atlas)	$2,000-$5,000
Registered agent (yr 1)	$50-$150	Included	$100-$300
Post-inc docs	$0 (templates)	Included	Included
EIN + bank	$0	$0	$0
Year 1 franchise tax	$175-$400	$175-$400	$175-$400
Total formation	$300-$950	$600-$1,700	$2,500-$6,000
Annual ongoing	$400-$800/yr	$400-$800/yr	$400-$800/yr

EU: Estonian OU EUR 385-620; German UG EUR 700-1,500; German GmbH EUR 1K-3K + EUR 12.5K capital; UK Ltd GBP 100-300. [src8] [src7]

Anti-Patterns

Wrong: Forming LLC when planning to raise VC

LLCs cannot issue preferred stock. Converting to C-Corp later costs $5K-$15K in legal fees. [src1]

Correct: Match entity type to funding path from day one

VC-track: Delaware C-Corp. Bootstrapped: LLC. Cost difference at formation is $0-$400, trivial vs $5K-$15K conversion.

Wrong: Skipping 83(b) election for restricted stock

Without 83(b), founders pay income tax at increasing valuations as stock vests. A $0.001/share grant worth $10/share later means tax on $9.999/share “income.” [src5]

Correct: File 83(b) within 30 days — no exceptions

Use IRS Form 15620 electronically (since June 2025) or certified mail. Tax at near-zero formation value. Savings can be six figures. [src1]

Wrong: 50/50 equity split without vesting

A co-founder who leaves after 3 months keeps 50% forever with no vesting protection.

Correct: All founders vest over 4 years with 1-year cliff

Even solo founders should vest (VCs expect it). Agree on split based on contribution, then vest it. [src1]

When This Matters

Use when a founder or agent needs to actually form a legal entity — not evaluate options or plan strategy, but execute the incorporation. Requires a funding path decision as input; produces a registered entity with tax ID, bank account, and founder agreements as output.

Legal Entity Formation: Startup Incorporation Recipe