In the United States, people will file more than six million applications for new businesses this year. Each of those will need a bank account, credit card, payroll, insurance, payment processor, and more. But first, each one must exist on paper.

Formation is a simple task. A founder provides a business name, address, and information on the owners, and the state creates the company. But formation services use that task as the start of a long sales process, with subscriptions, add-ons, and offers that follow the founder long after the task is done.

Then the founder waits for the government. Once the company exists, the founder applies for the financial products they need, and is asked to provide the same information again as part of onboarding. No one asked for this. No one likes it.

We believe that the moment a business forms is also the best moment to start a relationship with it. The founder has all of the information top of mind to open an account, their attention is on setting up the business instead of building the product or talking to customers, and they haven’t set up their initial financial stack.

But why focus on formation? Three things:

First, we believe that founders should form companies in the same place where they build them.

Today, founders can go from idea to revenue without leaving their terminal or assistant. Claude Code, Codex, ChatGPT, Lovable, Vercel and others will handle everything from planning, development, hosting, deployment, authentication, and payments.

But to formally transition from building for yourself to building on behalf of your company, the founder needs to leave the workspace, complete web forms, and wait on governments. Instead, formation should be a workflow that any platform or agent can call, at exactly the time it makes sense for the founder, without disrupting their work.

Second, we believe that the company that forms a business will keep it as a customer.

When a business forms, it will also make its first decisions about how to operate, like where to bank, which card to use, and how to run payroll. Once these tools are set up, the benefits of changing rarely outweigh the change management and opportunity cost of the transition. So, the first account a business opens is often the one it keeps for years. This is why many formation services monetize partners that pay for referrals.

Formation services also have looked to capitalize on offering full stack operations, which is why most rely on selling accounting, bookkeeping, and legal services to its customers. As a result, formation services compete with the same partners they refer business to.

Third, we believe that formation is best serviced by the platforms who know a business best. 

Each business starts with different needs. A restaurant might form an LLC in its home state, where a retailer needs a resale certificate before it places its first wholesale order, while venture backed startups need a DE, TX, or FL C Corp, stock, and 83(b) elections. 

The platforms that serve these businesses every day, like a point-of-sale system, wholesale marketplace, or vertical SaaS platform know these needs the best. We think that these platforms are the right places to tailor an experience and service offering that meets its users where they are, with the solution that they need. 

Platforms can form companies for their customers, inside their own product, with Middesk supporting behind the scenes. Today, our first partner is using this to allow customers to form a new company and open a business account on the same day, in the same flow. Join the waitlist here.

More than 1,000 financial service companies and platforms use Middesk to verify the businesses they serve. On average, 15% of the businesses applying for those accounts have not incorporated. Now, our customers can capture that part of the funnel, and provide same day onboarding for the newest businesses in the United States.

Over the coming weeks, we will share more about how formation connects to verification, onboarding and compliance across the life of a business. If your platform serves new businesses and you want to offer formation, we’d love to chat.

Here’s to building,

Team Middesk