Starting a business in the US comes with many advantages. As the world‘s largest economy, the US offers entrepreneurs access to sophisticated capital markets and a culture that celebrates innovation. Formally registering your company makes it easier to operate across different states, open business bank accounts, protect your personal assets and build credibility with customers.
This step-by-step guide covers everything you need to legally set up your company in the United States.
Step 1: Choose a Business Structure
The first key decision is selecting the right business structure for your needs and future plans. The main options are:
Limited Liability Company (LLC): The most popular choice for small businesses. LLCs combine aspects of partnerships and corporations to give owners flexibility and personal asset protection. LLCs limit each owner‘s personal liability to their investment in the company.
C-Corporation (C-Corp): Separate legal entities owned by shareholders. C-Corps provide the strongest personal liability protection but have more complex regulations and face double taxation. Better for businesses seeking external investors or eventual IPOs.
S-Corporation (S-Corp): A special tax status for corporations with 100 or fewer shareholders. S-Corps avoid C-Corp double taxation but come with limitations like ownership structure rules.
Partnerships: Two or more business co-owners sharing control based on a partnership agreement. General partnerships don‘t provide limited liability but other forms like LP/LLPs do.
Sole Proprietorship: Simplest structure with no formal registration. You operate as an individual with unlimited personal liability.
Each model has different regulations, legal protections, ownership rules and tax implications, so consider seeking professional advice on the best structure for your objectives.
Step 2. Choose and Register Your Business Name
Once you‘ve picked an appropriate business structure, it‘s time to make your entity official with a name registration. Every state has its own rules and fees for reserving company names, which generally must be unique, distinctive and indicate your structure using legal endings like:
- Limited Liability Company = LLC or L.L.C.
- Corporation = Corp., Inc. or Incorporated
- Partnership = LP, LLP, GP or LLLP
You‘ll need to check name availability to avoid duplicates in your state. Some popular options for officially registering a business name include:
- Online Direct Filing with your State‘s Secretary of State website
- Third-party Filing Services like LegalZoom or IncFile to handle documentation
- Registered Agents who‘ll file necessary paperwork on your behalf
Fees are typically $100+ depending on your state. Approval for your desired business name can take a few weeks.
Step 3. Draft and File Formation Documents
The next vital step is preparing your business formation documents, also known as "articles of incorporation" or "certificate of formation". Required details include:
- Your registered business name
- Address of your registered business office
- Name/address of your registered agent
- Names, addresses and signatures of owners/partners
- Number and type of authorized business shares
You‘ll also make important elections at this point regarding how your entity will be structured and taxed. Common additional formation documents are:
Operating Agreement – For LLCs to outline financial/management details
Bylaws – Key rules and procedures for operating corporations
Filing formation documents finalizes your business registration with your state. This is typically done through:
- Your State/Province‘s Secretary of State website
- Online filing services that submit documents for you
- Hiring an attorney to prepare and submit paperwork
State filing fees depend on your entity type but average $100-$800. Processing can take 2-6 weeks.
Step 4. Obtain an EIN from the IRS
You‘ll need an Employer Identification Number (EIN) to identify your business for key federal and state tax purposes. Acquiring an EIN is free and easy through IRS.gov.
An EIN functions like a Social Security Number (SSN) for your company and is required before you can open business bank accounts or hire employees later on.
Step 5. Understand Compliance Requirements
Maintaining your business registration in good legal standing requires staying compliant with various state and federal regulations. Common requirements are:
Annual Reports to update government databases with company changes
State Taxes & Fees like franchise taxes or annual report charges
Meeting Notices & Minutes to record major company decisions
Changes to Ownership or Company Type requiring amended formation docs
Consider small business compliance software or services to ensure you meet all mandated filings and deadlines across different states.
Step 6. Appoint a Registered Agent
An important compliance requirement is appointing a Registered Agent to handle government communications on your company‘s behalf. All states require Registered Agents on file when registering an LLC or corporation.
Ideal Registered Agents have address services in your state of incorporation so they can efficiently receive Important legal and tax documents. Then they forward any submissions from the Secretary of State or IRS to your company. Using proper business registration agents relieves liability risks from missing crucial filings.
When evaluating Registered Agent services, check for competitive state fees, free address forwarding and multiple office locations within your chosen state in case address changes are ever required.
Step 7. Obtain Business Licenses
Separate from corporate formation, you may need to apply for specific state, county or municipal business licenses to operate legally based on your industry and location. Common examples include:
- Sales Licenses to collect sales tax if selling physical goods
- Health Department Permits for serving food or beverages
- Professional Certifications for specialized services like medical, legal, accounting and more
Research if your business activities require any specific licenses, registrations or training certificates in your region. Failing to acquire mandatory permits can lead to penalties down the road.
Step 8. Open Your Business Bank Account
Finally, evidence your business registration status by opening dedicated small business bank accounts. Present your business EIN, formation documents and licenses when applying for company accounts.
Maintaining separate financial accounts keeps your personal and business transactions organized for easier tax reporting and filings later. Shop small business banking offers to find the best deposit rates, low fees and digital tools to manage company funds conveniently.
In Closing
The process of starting a registered business entity may seem complicated but following this structured 8-step guide will ensure you establish your company‘s legal frameworks correctly from day one. Invest time in choosing the right business name, entity type, completing formations accurately and appointing a qualified Registered Agent.
If any piece still feels confusing, consider affordable filing services or business lawyers to handle documentation smoothly so you can focus on your startup‘s core mission sooner. With the major compliance boxes checked, you‘ll gain credibility plus the financial and legal protections that proper incorporation provides growing companies over the long term.
