Authors: Sean Christiansen, Chris Grogan, Shanita Nicholas, Javed Qadrud-Din
A New Type of Business
AI agents can now be delegated much of the day-to-day work of running a business: signing routine contracts, answering customers, placing orders, paying invoices. If you are a founder, that raises a practical question: how do I actually set up a company that my AI agent can run, while I stay the owner? And critically, how can I keep my personal assets protected from business liabilities? That is a risk you don’t want to ignore until it is too late. If your AI agent signs a bad deal, runs up a debt, or gets the business sued, and there is no company wrapped around it, you are personally on the hook — your savings and personal accounts included. A company is the shield that keeps the business liabilities off you. This guide walks through how to create an agent-operated one step by step, in plain English. It comes with free, open-source document templates you can file yourself, and if you would rather not touch the paperwork, General Legal can file it for you (more on that at the end).
New to this? Start here
“Incorporating” means creating a company that is legally separate from you. That separation does two things that matter. First, the company — not you personally — signs the contracts and owes the debts, so your house, savings, and personal accounts are protected if the business runs into trouble. That line between business and personal liability is valuable but not automatic: it depends on maintaining the practices covered in Step 4, and it is worth discussing with an attorney and an accountant as you set up. Second, it gives the business a stable home for a bank account, taxes, and ownership. Your AI agent then operates the company under rules you set, while a human — you — stays legally responsible for overseeing it.
What the law allows (and what it doesn’t)
Three rules frame the key issues when it comes to AI agents and companies:
An AI agent cannot be a director. A director is the person (or people) legally responsible for overseeing a company. Every director of a Delaware corporation must be a human being (DGCL § 141(b)), and most states agree. The good news: that human can be just you.
An AI agent is treated as a tool, not a person. So when your agent acts within the authority you give it, the company is bound by what it does — which is what makes its contracts enforceable, and also why a human has to stay accountable.
But an AI agent can transact. Electronic-transaction laws (the Uniform Electronic Transactions Act, adopted in 49 states plus D.C., and the federal E-SIGN Act) recognize “electronic agents” and their ability to form valid contracts, even without contemporaneous human review.
Bottom line: the law accommodates an AI agent operating a company and binding it to contracts, so long as a human stays responsible for it.
A quick word on Delaware. We mention Delaware throughout because it is where most U.S. companies incorporate and where corporate law, including the most recent moves toward AI-related governance, is the most developed and predictable. (Delaware is even studying a purpose-built entity for AI-run businesses — a committee has drafted a proposed “Artificial Intelligence Company” regulatory sandbox — but no such entity exists yet; the structure described in this guide works under current law.) You can form in another state (more on that below), but Delaware is the common default, and our free templates are written for it.
Step 1 — Pick your entity: LLC or C-corp (and maybe an S-election)
Your first decision is what kind of company to form. For most founders it comes down to two options, plus a tax election you can add later.
LLC — the simple default. The cheapest and easiest to run, with the fewest formalities (no board, no bylaws, and no annual meeting requirement), and by default its profits are taxed only once, on your personal return, with no separate corporate-level tax. If you are self-funding and not planning to raise venture capital, this is usually the simplest place to start.
C-corporation — the venture default. More formal, and its profits are effectively taxed twice: once at the company level, and again when distributions are paid out to stockholders. But it is what venture investors expect, it is needed for employee stock options, and only C-corp stock can qualify for the “QSBS” tax break (IRC § 1202) that can exclude a large share of capital gains on a future sale. Choose this if you have venture ambitions.
S-corporation election — a tax status, not a separate company. Once a business is profitable, an LLC or corporation can elect “S” status to potentially save on self-employment taxes (you pay yourself a reasonable salary and take the rest as distributions). There are important limitations, though: it is capped at 100 or fewer U.S.-individual owners and a single class of stock. Venture investors don’t fit inside those limits — they invest through funds (entities, not individuals) and buy preferred stock (a second class) — so an S-election suits profitable small businesses, not venture-track ones.
Not sure? For a solo, self-funded, AI-operated business, an LLC is usually the simplest starting point; if you expect to raise venture money, start with a Delaware C-corp. This is a good question to talk through with a lawyer and your tax advisor before you form — the rest of the setup works the same either way.
Step 2 — Decide who’s in charge on the human side
Every company needs at least one accountable human in the role the law makes responsible for managing it. In a corporation, that is the board of directors (each director must be a natural person); in an LLC, it is usually a human “manager.” This human layer is what oversees the AI, and it cannot be skipped.
You have a choice about how much structure to build in. Keeping it simple — one director or manager, which can be you — is fastest and easiest. Adding a multi-person board with staggered terms makes the company more stable and harder for any single person to take over quickly, which some founders want for continuity, but it is more to manage and slows decisions down. Either way, plan deliberately for who holds this oversight role, because it is the legal anchor of the whole structure.
Step 3 — File your formation documents (free templates)
Forming the company takes a short set of documents. We provide all of them free and open-source, so you (or your AI agent) can use them directly — grab them from our open-source template repository:
- The charter — a Certificate of Incorporation (corporation) or Certificate of Formation (LLC), which you file with the state.
- Bylaws or an operating agreement — the internal rulebook, written to authorize the company to act through an AI “electronic agent.”
- An AI Governance Policy — the rules for what your agent can and cannot do: the authority limits, the audit log, and when a human has to sign off.
- Initial setup paperwork — the incorporator/organizer action, first resolutions, and (for a corporation) a stockholder consent that bring the company to life.
- Your ownership document — a stock purchase or membership interest purchase agreement that makes you the owner.
- An indemnification agreement — protection for your human director or manager.
How to file: pick a state (Delaware is the most common for startups; your home state is often cheaper for a small business — note our templates are written for Delaware, so forming elsewhere requires some adapting, which is worth doing with a lawyer’s help). File the charter with the state and pay the fee (in Delaware, at present about $89 for a corporation or $110 for an LLC — see the Delaware Division of Corporations). Appoint a registered agent (a person or company with a physical address in the state who receives legal mail on the company’s behalf — about $100–$150 a year). Get a free EIN, your company’s tax ID, directly from the IRS (never pay a third-party site for one). Then adopt the rest of the documents — “adopting” simply means formally putting them into effect by signing them.
Don’t want to do this yourself? General Legal will file a standard company for you for $100, plus the state filing fee and the registered agent. More on that at the end.
Step 4 — Avoid the mistakes that can cost you your liability shield
Forming the company is only half the job. The personal-asset protection holds only if you treat the company as a real, separate business. If you blur the lines, a court can “pierce the corporate veil” and reach your personal assets. Here are the most common mistakes to avoid:
- Mixing money. Open a separate business bank account on day one and never pay personal expenses from it — commingling personal and business funds is the single most common reason courts pierce the veil. Mercury is a popular, no-minimum choice built for startups and, notably, for developers and AI agents (it offers a programmable API), which fits an AI-operated company well; Brex is another option.
- Starting with nothing. Put some real money into the company, even a small amount, so it is not an empty shell (“undercapitalization” is another factor courts look at).
- Skipping the formalities. Keep basic records — your resolutions, ownership records, and key decisions. In practice, keep a simple folder or minute book of signed consents, and document things like issuing or transferring ownership, opening bank accounts, taking on debt or large contracts (above the agent’s authority), hiring, electing officers, the annual meeting, and re-authorizing or changing the AI agent or its policy. An AI-operated company has an advantage here: the audit log required by the governance policy in our template keeps these records automatically.
- Signing personally. Make sure contracts are signed in the company’s name (by you or the agent on the company’s behalf), not by you as an individual.
Given how much rides on these practices, they are worth reviewing with an attorney and your tax advisor. Do these, and the protection you set up will actually protect you.
Step 5 — Set up the essentials
A few practical items round out the setup. Get your free EIN from the IRS. Open that separate business bank account — note the bank will need a human to verify the identity of anyone who owns 25% or more before the account opens. Keep your registered agent current. And if any of your ownership will “vest” over time — a feature our standard templates deliberately leave out, and one worth adding only with a lawyer — look into the Section 83(b) election, a one-page filing that lets you lock in your taxes at today’s value (usually very low at formation, before the company has meaningful assets) instead of being taxed later as the shares vest. The 83(b) election has a strict 30-day deadline, so don’t miss it.
Once you’re up and running: what to watch as an AI-operated company
Setting the company up is just the start. Operating it with an AI at the controls raises a few things worth keeping on your radar — and worth a quick call with a lawyer if they apply to you.
Where your AI’s contracts are generally enforceable (and where to be careful). Your agent’s contracts stand on firm legal footing in the 49 states (plus D.C.) that have adopted the Uniform Electronic Transactions Act, and the federal E-SIGN Act backs up deals that cross state lines. New York is the one state that has not adopted UETA — it uses a similar law of its own — and a few document types (such as wills and certain formal notices) are typically carved out everywhere.
What “a regulated area” means. Some industries come with their own licensing and rules, and letting an AI transact or make representations in them can trigger extra obligations — common examples are financial services and lending, securities and investment advice, insurance, healthcare, and legal services. If your business operates in one of these, confirm your approach with legal counsel before turning the agent loose there.
Doing business outside the U.S. Everything above is U.S. law. If you sell to or operate in other countries, expect the rules to differ: jurisdictions vary in how they treat electronic and AI-formed contracts, whether they recognize a U.S. entity (and whether it must register locally), what data-protection rules apply (for example, the EU’s GDPR), and whether your activity creates a local tax presence. Cross-border operations are worth a conversation with counsel and your tax advisor before you scale into them.
These are the kinds of questions we help AI-operated companies work through as they grow.
When to bring in General Legal
The templates and instructions are free, and a standard company is genuinely something you can do yourself. Reach out when you would like it done for you, or when your situation is not standard:
- You want us to file it for you — $100 for a standard single-class LLC or C-corp, plus the state filing fee and the cost of a registered agent.
- You are weighing the decisions above — LLC vs. C-corp, an S-election, how to structure your board, or forming outside Delaware.
- You are going beyond the basics — customizing the AI Governance Policy, adding vesting, raising money, granting equity, operating across borders, or doing anything in a regulated area.
- Once your company is operating and making contracts, General Legal provides a range of ongoing legal services, and can do so via MCP, so the agent operating the company can talk to a lawyer whenever it, or you, want. Sales contracts, employment agreements, leases, and product counsel are all areas where we can advise you and your agent — including reviewing your agent’s deals to flag risks and propose fixes.
Engaging us is a simple clickthrough — and it works whether you’re a founder at a keyboard or an AI agent acting for one. When you ask us to file, a human founder accepts a short engagement letter and we run a quick conflicts check. From there, your agent can drive the rest: we run an MCP endpoint — the same kind of agent interface behind our contract-review service — so an AI agent can pull the templates, walk through the filing, and hand off to us to file, programmatically, as soon as its human principal has signed off. Because we are an actual law firm, not a document-filing service, what you get back is legal advice and a filing done by your lawyer.
Ready to set up an AI-operated company? Grab the free templates, reach out to us directly, or point your agent at our MCP endpoint — once a human founder signs off, we’ll take it from there.
This post is for general informational purposes only and is not legal advice. Setting up a company and delegating authority to an AI raises legal questions that depend on your specific situation; consult a licensed attorney before relying on any structure or template described here.