Starting a business in the United States is procedurally straightforward and conceptually confusing. The paperwork can be finished in a fortnight; the decisions behind it — which entity, which state, which tax election — shape your costs and obligations for years. This guide takes the decisions first and the forms second.
Step 1: Choose your business structure
Structure determines liability, tax treatment, paperwork burden, and your ability to raise money. Four options cover nearly every case.
| Structure | Liability protection | Taxation | Best for |
|---|---|---|---|
| Sole proprietorship | None | Personal return | Testing an idea with low risk |
| LLC | Yes | Pass-through by default | Most small businesses |
| S-corporation | Yes | Pass-through, payroll required | Profitable owner-operators |
| C-corporation | Yes | Corporate, then dividends | Venture-backed startups |
Step 2: Choose your state
Register where you do business. If you have an office, employees, or a physical presence in a state, you must register there regardless of where you formed — so forming elsewhere usually means paying two states instead of one.
| State | Filing fee | Annual cost | Note |
|---|---|---|---|
| Wyoming | $100 | $60 report | Low cost, strong privacy |
| Texas | $300 | No annual fee under threshold | No personal income tax |
| Florida | $125 | $138.75 report | Fast online filing |
| Delaware | $110 | $300 franchise tax | Investor-standard |
| California | $70 | $800 minimum franchise tax | Highest ongoing cost |
Step 3: Register the business
- 1Check name availabilitySearch the Secretary of State business database in your formation state, then check federal trademarks and domain availability before committing.
- 2Appoint a registered agentEvery state requires an address in-state to receive legal notices. Commercial agents cost $50–$150 a year; you can serve as your own if you have a physical address there.
- 3File formation documentsArticles of Organization for an LLC, Articles of Incorporation for a corporation. Most states process online filings in 1–10 business days.
- 4Write an operating agreementRequired in some states and advisable everywhere. It records ownership percentages, profit splits, and what happens when someone leaves.
- 5Get an EIN from the IRSFree, online, and issued immediately for applicants with a Social Security number. Non-residents file Form SS-4 by fax or mail and wait several weeks.
- 6Open a business bank accountBring the formation certificate, EIN letter, operating agreement, and personal ID. Keep every business dollar out of your personal account.
Step 4: Licences, permits, and compliance
There is no single US business licence. Requirements stack by level of government and by industry, and the city layer is the one most founders miss.
- Federal: only for regulated activity — alcohol, firearms, aviation, broadcasting, transport
- State: professional licensing, sales tax permit, employer registration
- County: health permits, zoning approvals
- City: general business licence, signage permit, home-occupation permit
Do I need a sales tax permit?
If you sell taxable goods or certain services, almost certainly yes.
Register for a sales tax permit in any state where you have nexus — a physical presence, or economic activity above that state's threshold, commonly $100,000 in sales or 200 transactions a year.
Collecting sales tax without a permit is unlawful in most states, and so is failing to collect where you have nexus. Marketplace facilitators such as Amazon and Etsy remit on your behalf for sales made through them, but not for your own storefront.
The businesses that get into trouble are almost never the ones that filed the wrong form. They are the ones that never opened the second bank account.
Step 5: Taxes and ongoing obligations
US business tax runs on a quarterly rhythm. Owners of pass-through entities pay estimated tax four times a year rather than through withholding, and underpayment carries interest penalties.
| Obligation | Frequency | Who it applies to |
|---|---|---|
| Estimated income tax | Quarterly | Owners of pass-through entities |
| Self-employment tax | With estimated tax | LLC members and sole proprietors |
| Payroll tax deposits | Monthly or semi-weekly | Anyone with employees |
| Sales tax return | Monthly to annually | Businesses with a sales tax permit |
| State annual report | Annually | Almost every registered entity |
Checklist
Business launch checklist
The full sequence from decision to operating. Tick items off as you go — progress is saved on this device and the printable version leaves space for filing dates and reference numbers.
- Choose the business structure
- Choose the formation state
- Confirm name availability and secure the domain
- Appoint a registered agent
- File formation documents with the Secretary of State
- Draft and sign the operating agreement
- Apply for an EIN with the IRS
- Open a dedicated business bank account
- Apply for state, county, and city licences
- Register for sales tax where you have nexus
- Set up bookkeeping and a quarterly tax reminder
- Buy general liability insurance
Founders outside the United States
Non-residents can own a US company outright. Ownership is not employment: forming an LLC gives you no right to live or work in the United States, and that distinction is where most confusion begins.
Sources & notes
- 1.1 — Fees and thresholds are 2026 published figures from state Secretary of State offices and the IRS. This guide is general information, not legal or tax advice; confirm requirements for your industry and state before filing.
