How to Legally Start a Business in the United States: A Comprehensive Step-by-Step Guide
Setting up a business in the United States is a major step toward accessing one of the world’s most dynamic and lucrative markets. Whether you are a local entrepreneur or a foreign investor, the process of legally registering your company in the U.S. involves several administrative and legal steps. Although it might seem overwhelming at first, breaking it down into clear phases makes it manageable—and sets the stage for long-term success.
Below is a comprehensive, step-by-step guide that walks you through everything you need to know about forming a business in the United States.
Step 1: Decide on a Business Structure
The first critical decision is choosing your company’s legal form. The main options include:
- Sole Proprietorship – Easiest to form, but offers no liability protection.
- Partnership – Ideal for ventures with two or more owners.
- Limited Liability Company (LLC) – Offers flexibility and liability protection.
- Corporation (C-Corp or S-Corp) – Best for large-scale operations or businesses seeking investors.
Most startups and international founders favor LLCs or C-Corps due to their scalability, tax benefits, and clear legal separation between personal and business assets.
Step 2: Select the State for Registration
U.S. companies are registered at the state level, not federally. Therefore, you’ll need to decide where to incorporate. Popular options include:
- Delaware – Favored by investors and large corporations due to its pro-business laws.
- Wyoming – Offers low fees and anonymity.
- Nevada – Known for tax benefits and minimal regulations.
If you plan to run a physical business, it’s often best to register in the state where you operate. Online businesses or holding companies, however, may benefit from incorporating in states like Delaware or Wyoming.
Step 3: Choose a Distinct Business Name
Your company’s name must be unique and comply with state-specific rules. Most states provide an online portal to check name availability.
Tips:
- Make sure the name isn’t trademarked or too similar to another business.
- Include the appropriate legal ending (e.g., LLC, Inc.).
- Secure your domain name and social media handles.
You may also consider registering your business name as a trademark with the U.S. Patent and Trademark Office (USPTO) to protect your brand.
Step 4: Appoint a Registered Agent
Every U.S. company must designate a registered agent—an individual or service authorized to receive legal and tax documents.
Requirements:
- Must have a physical address in the state of incorporation.
- Must be available during normal business hours.
Many businesses hire professional registered agent services, especially if the owner is located outside the U.S. These services often charge a modest annual fee.
Step 5: File the Formation Documents
To legally form your business, you must file certain documents with the Secretary of State in your chosen jurisdiction.
- LLCs file Articles of Organization
- Corporations file Articles of Incorporation
Details typically required include:
- Business name and address
- Registered agent information
- Type of business
- Ownership and management structure
Filing fees vary from state to state, ranging from $50 to over $500. Some states offer expedited services for an extra cost.
Step 6: Obtain Your EIN (Employer Identification Number)
The Employer Identification Number (EIN) is your federal tax ID, issued by the IRS. It’s necessary for:
- Filing taxes
- Opening a bank account
- Hiring employees
- Applying for licenses
U.S. residents can apply online via the IRS website. Foreign nationals must submit IRS Form SS-4 by mail or fax. No SSN is required for non-residents.
Step 7: Draft Operating Documents
While not always legally required, internal documents like Operating Agreements (for LLCs) and Bylaws (for Corporations) outline the company’s governance, roles, and financial arrangements.
These documents:
- Clarify ownership percentages
- Prevent future conflicts
- May be required by banks or investors
If you have partners or multiple shareholders, these documents are essential.
Step 8: Open a U.S. Business Bank Account
A dedicated business account is required to separate personal and company finances. You’ll typically need:
- EIN
- Formation documents
- Owner identification (passport, driver’s license)
- Proof of U.S. address (in some cases)
International founders may face challenges here, but some U.S. banks and fintech platforms offer remote account setup. Consider companies like Mercury, Relay, or Wise Business.
Step 9: Apply for Necessary Licenses and Permits
Depending on your business activities, you may need various local, state, or federal permits, such as:
- General business license
- Sales tax permit
- Health or safety permits
- Professional licenses (e.g., lawyer, doctor)
Use the SBA’s License and Permits Tool to identify requirements in your state and industry.
Step 10: Stay Compliant with Ongoing Legal Requirements
Once your company is registered, you must fulfill routine obligations, which can include:
- Filing annual reports
- Paying state franchise taxes
- Maintaining a registered agent
- Holding regular meetings and keeping meeting minutes (for corporations)
Non-compliance can lead to fines, suspension, or even dissolution of your company by the state.
Step 11: Understand Tax Responsibilities
U.S. tax rules vary based on your business structure and location. You may be subject to:
- Federal income tax
- State income and franchise taxes
- Sales and use taxes
LLCs usually enjoy pass-through taxation, while C-Corps pay corporate taxes. Working with a tax professional or CPA is highly recommended to avoid errors and optimize your tax strategy.
Step 12: Secure Your Intellectual Property
Protect your brand and products by registering your intellectual property. You may want to consider:
- Trademarks for your logo, business name, and slogans
- Copyrights for content, software, or creative works
- Patents for inventions or unique processes
Early registration is critical to protect against infringement and enhance your business’s value to investors.
Step 13: Consider Immigration and Visa Needs
Foreign entrepreneurs who plan to live in or frequently travel to the U.S. to manage their business may need a visa. Common options include:
- E-2 Investor Visa – For nationals of treaty countries who invest in a U.S. business.
- L-1 Visa – For executives transferring from an international branch.
- EB-5 Immigrant Investor Visa – Requires significant capital and job creation.
Immigration law is complex, so consulting an attorney is advised.
Step 14: Hire Legal and Financial Advisors
Even if you understand the process, professional advice can save time, prevent mistakes, and ensure full compliance. Consider working with:
- Business attorneys – For incorporation and contracts
- Tax advisors – For reporting and tax strategy
- Immigration lawyers – If you’re a non-resident or investor
Final Thoughts
Starting a business in the United States is not just about paperwork—it’s about setting a legal and financial foundation for growth. While the process involves careful planning and formalities, following these steps ensures your company is built to last.
Take the time to do things right from day one, and you’ll position yourself for success in one of the most opportunity-rich economies in the world.