When starting a U.S. business, you’ll have to choose a business structure that fits your company’s goals and decide when and how to register for an employer identification number (EIN). This article covers all the steps and key takeaways.
Check for U.S. trademarks before naming your company, product, or service.
Your long-term goals should determine your business structure and location.
Hiring a registered agent, filing for incorporation, registering for an EIN, and setting up a U.S. business address require state-specific steps.
Design your website and logo carefully, and get professional help if needed.
How to Start a New Business in the US?
Building a solid foundation when starting a U.S. company can ensure long-term success. Below are the steps.
Select a business structure.
Your business structure should match your goals. Your legal structure affects registration, taxation, and personal liability. International business owners can benefit from common business structures:
C-corporation: Corporations are legal entities separate from their owners. They have shareholders, directors, officers, and employees. Corporations offer unlimited stock and attract more investors, so most business owners incorporate.
S-corporation: Only Americans can form S-corporations. They have the same benefits as corporations but more tax flexibility. Profits and losses from S-corporations are passed through to business owners’ personal income taxes.
LLC: An LLC is a partnership-C-corporation hybrid. LLCs shield owners from liability. LLCs can pay business taxes on their personal income or as S-corporations.
The government will evaluate your business registration after you submit it. This process can take days to months depending on your state of registration and whether you paid extra for expedited processing.
Register your company name
Check for trademarks after choosing a company name your team likes. It’s important to prove you’re not invading another company’s name, as all U.S. businesses have the right to do so. Check with your state’s business name registration rules now. Business structure and location may require registration.
Business name registration has four purposes:
Trademark: A federal trademark can prevent others in the same or similar industries from using your name or logo. Another company can use your name and logo without a trademark. They own the legal rights and can sue you for using them.
To prevent other coffee companies from using Ana’s Coffee Beans and Rise and Shine, you must trademark both names. Your trademark protects your logo from other companies.
Trademark infringement is costly for all U.S. businesses. Search the U.S. trademark database for all registered business, product, and service names to avoid confusion.
Trademarks and entity names: Some states require both. State entities name your business. They protect your business name in the state you registered in, with some exceptions. Some states require your entity name to match your business (e.g., Ana’s Coffee Beans).
DBA name: A DBA name is a registered name a business uses that is not its legal business name.
If you have a formal business entity but want to brand your products and services under a different name, you may choose a DBA. John’s Cookies could be John’s Baked Goods. DBAs must be registered in many states.
DBAs do not protect against trademark infringement. However, since multiple businesses can use the same DBA in a state, you have fewer restrictions on your business name. A small business could use Ana’s Coffee Beans for its entity name and Brew & Sip for its DBA.
Domain: A domain name, or URL, helps your business establish an online presence. It need not match your legal business name, trademark, or DBA. For as long as you own it, your domain name is yours.
Domain names must be renewed regularly through accredited registrars or website builders.
A nine-digit EIN identifies your business for tax purposes. EINs are needed to form an LLC or corporation, hire employees and contractors, and open a business bank account.
EINs are easy to get. The IRS offers free online EIN registration for businesses.
EINs are valid tax IDs (TIN). You can apply for an EIN for your business by mail or fax if you previously registered for a TIN (enter foreign/none for the Taxpayer Identification Number).
Choose a state to incorporate.
Company location is crucial. There are many factors to consider when choosing a business. You can do business in other states, but you’ll have to keep track of tax rates and compliance rules.
Let’s say you run a skateboard company. Consider:
Demographics: Skating is centered in Los Angeles.
Competition: Texas has a thriving skateboard scene, but less than California.
Supply chain: Nevada offers cheap skateboard manufacturing.
State taxes: Delaware is famously business-friendly.
Alabama bans skateboarding in commercial areas.
Your choice should help your company achieve its goals without compromising quality.
Register an agent
U.S. registered agents receive legal documents for your company. Your agent will receive annual reports, tax notices, and urgent legal notices from your registered state. Every state requires corporations and LLCs to have a registered agent
Except for California, which requires a third-party agent, a registered agent can be a company employee with a physical address in a state where you do business. Even in states where company members can be registered agents, many use lawyers. If your company fails to maintain a registered agent, you may miss important legal notices or tax filing documents, affecting your business.
Registered agents typically:
Send your company Secretary of State tax notices and official documents.
Forward any legal process to your company.
Some registered agents are more qualified for your business. Before choosing an agent, shop around, ask questions, and research state average costs.
Register company articles
After choosing a name and registered agent, form your business. Ecommerce companies often form LLCs. LLCs offer personal liability protection and flexible taxation.
LLCs are created by filing articles of organization with the local Secretary of State. Your LLC’s management structure—member-managed or manager-managed—will be requested in the articles of organization.
Form an LLC in your business state. You must register a foreign LLC if your LLC does business outside its registered state.
LLC formation costs $40–$500 per state. State-specific annual fees apply. Processing times vary by state, time of year, and completeness of articles of organization. Expedited filing costs extra.
ZenBusiness or LegalZoom can form your LLC. An operating agreement, which details your LLC’s ownership and member roles, is required in some states. Operating agreements are often recommended as truth sources.
Get a US office or virtual office.
A U.S. business address lends credibility. Mail and company accounts can use your address. Your registered agent is not meant to receive mail. Consider whether your state allows you to use a mailbox service’s physical address, including a P.O. box, when choosing a physical address.
Virtual offices, also known as co-working spaces, provide a professional mailing address, phone number, receptionist services, meeting spaces, workspaces, and mail forwarding.
Open a US bank account
A customized business account can boost your business, improve customer and vendor relations, and keep you legal.
Before choosing a bank, consider rewards, online services, deposit convenience, and interest rates on deposits. Maintain personal and business accounts. The state may require separate business and personal accounts.
Create a website and company logo.
Creating a business website is easier than ever, regardless of technical skill. Wix, Weebly, and Shopify are the most common website builders. Website builders use templates and drag-and-drop interfaces to handle back-end development while you focus on design and content. Some website builders allow domain registration.
After selecting a website builder, you must take the following steps:
Choose a monthly or annual plan that fits your business needs and budget.
Register or use a domain name you bought elsewhere.
Choose a brand-appropriate template.
Modify your template using online tutorials.
Upload and format value-oriented copy and content.
Review your website with trusted third parties.