Setting Up an Entity for a Precision Manufacturing Shop

Most shops file as an LLC, though some elect corporation status specifically because certain customers, particularly in aerospace or defense supply chains, prefer contracting with a corporation over an LLC for reasons tied to their own procurement policies. Confirm with your largest prospective customers whether they have a preference before you file, since converting entity types later is possible but adds cost and paperwork you can avoid by asking first.

Either Bizee or Doola can file either entity type; the choice of formation vendor doesn't determine which structure fits your customer base.

If any of your prospective work touches items or technical data covered by ITAR or the Export Administration Regulations, even indirectly through a customer's assembly, you may need to register with the Directorate of Defense Trade Controls before performing that work, and ITAR registration carries its own ownership and control requirements tied to your entity. This is a genuinely specialized compliance area; get an export control attorney or consultant to screen your actual product lines and customer contracts before you assume you're exempt, since the penalties for getting this wrong are severe and the determination is fact-specific to your parts and customers.

Do this screening before you sign your first contract in a defense-adjacent supply chain, not after, since some customers will ask directly during their own vendor qualification process whether you're registered, and an unprepared answer can cost you the contract before work even begins.

ITAR registration also carries ownership and control provisions of its own: if a meaningful share of the entity ends up owned or controlled by a foreign person, that alone can affect your eligibility or trigger additional disclosures to the State Department. Get your capitalization table reviewed as part of the same screening, not as a surprise you discover after you've already registered and taken on a defense-adjacent contract.

Before you ship your first part to a customer who'll integrate it into their own product, get product liability coverage bound under your formed entity's exact legal name. Many customer contracts will require a certificate of insurance naming them as an additional insured before they'll release a purchase order, so sequence this ahead of your first real production run rather than treating it as paperwork to catch up on later.

CNC machines, presses, and other precision equipment are often financed with the equipment itself as collateral, which means a lender will file a UCC lien against your entity. Get your entity's legal name and EIN finalized before you're deep into equipment financing conversations, since lenders will want that information locked down before issuing final loan documents, and a name change mid-process can delay funding on equipment you may already be waiting on for a customer commitment.

If you're financing several machines over time from different lenders, keep a simple internal log of which UCC filings exist against the entity, since a future lender or an acquirer doing diligence will ask for a clean picture of what's encumbered and what isn't.

Some manufacturers split ownership of expensive equipment, real estate, or proprietary tooling designs into a separate holding entity that leases them to the operating company running day-to-day production. This can offer liability separation between the equipment's ownership and the operating risk of running a shop floor, and it's worth discussing with a CPA and attorney once your equipment base is substantial enough to justify the added complexity of a second entity.

This is where Doola's ongoing compliance handling across multiple entities becomes more useful than it would be for a single-entity shop; Bizee remains the simpler, cheaper choice if you're staying with one entity for now.

If your customer base includes aerospace or defense primes, expect them to eventually ask for AS9100 quality certification, or at minimum a documented quality management system, tied to the entity actually performing the work. Any work that touches controlled unclassified information can also bring NIST 800-171 cybersecurity requirements into your contracts. Neither certification depends on which formation vendor you used, but both depend on the entity being stable, correctly named, and properly documented by the time an auditor or a customer's quality team comes to review it.

The state filing fee itself averages around $132 nationally¹, a genuinely minor figure next to the cost of a single CNC machine or a product liability policy. Don't let that figure drive your entity structure decision; let the export control screening, customer contract requirements, and equipment financing conversations drive it instead, and treat the formation vendor choice as the easiest decision in the sequence.

Use this short list as a final check before your first production run:

• Ask your largest prospective customers whether they prefer contracting with a corporation or an LLC before you file.
• Screen your prospective work for ITAR or Export Administration Regulations exposure before you accept it.
• Bind product liability coverage under the formed entity's exact legal name and have certificates of insurance ready for customers.
• Lock down the entity's legal name and EIN before final equipment financing documents, since lenders file UCC liens against that name.
• Discuss a separate holding company for equipment and IP with a CPA and attorney once the shop owns meaningful assets.