A corporation may be formed within a business day in the State of Delaware and the entire formation process, including preparation of the documents described above, may be completed in a few days. If there are multiple founders of a startup, the process typically takes longer because the founders need to agree upon composition of the Board of Directors, identity of the officers and allocation of the Common Stock among the founders. Often these matters are not discussed by the founders until pushed to do so by their counsel.

The entire incorporation process might cost $1,000 through on-line formation services and $3,500 to $7,500 at top quality law firms. The on-line formation services are cheaper, but often do not include all the required formation documents for startups seeking angel and venture funding, such as restricted stock purchase agreements and security filings. Venture capital firms and angel investors will expect to see the customary formation documentation when conducting their due diligence. Law firms that quote formation services for less than $3,500 often do not have the appropriate expertise in formation matters.

Because most founders of startup companies dream about creating wealth in exchange of years of hard work, we recommend that founders not overlook the formation process. If the formation work is done incorrectly, the value the founders believed they had in their Common Stock may prove to be illusory.