How to register a business in the US: A step-by-step guide

Going to start your business in the USA? It’s an exciting journey that also comes up with responsibilities. One of the most important ones is to set a foundation by registering your company in the US state. Registration gives your business a legal identity and opens the door to a lot more market advantages.

Did you know that the USA is the best country for entrepreneurs? As there are over 33 million small businesses out there running successfully and driving the economy. Thousands of new business registration occurs each year according to the US Small Business Administration.

So, if you are also starting your own company, register it following the given steps below.

Register Your Business in the US in 9 Easy Steps

1. Choose Your Business Structure

The process of registering a company starts with choosing the right structure. The right structure matters as it has direct effects on personal responsibilities and everyday operations. After all, it’s time to set the foundations of your business to make things easier down the road.

Consider factors like your business goals, resources, level of comfort, and risks before going for registration. For example, a basic structure works well for a simple setup. However, a formal structure would be better for a business with partners and seek investors. It’s easy to determine by thinking of your control over the business and the extent of risk you are willing to take.

In the end, all you have to do is revise your future goals. This choice may vary if you want to raise money or looking to turn your business into a successful brand. In the long run, it will help you avoid any legal or financial problems.

2. Select the State for Registration

The US comprises different states each with unique laws, tax rules, and registration fees. So, how to decide where you have to register your company out there in the USA? After all, it will affect the amount of taxes you pay and the way your business will operate.

The choice is simple if you want to target one state. In this case, it would be the state where you have to run your business. For example, if you have a store or office in Taxes, it makes sense to register there. However, if you want to target multiple states or conduct your operations online, look forward to suitable options.

To decide right, understand what each state offers in terms of taxes, legal protection, and friendly policies. Some states like Delaware and Nevada have lower fees and flexible rules for businesses. But states like New York and California have higher fees yet easy access to markets and resources. So, weigh the pros and cons before registering in any state.

3. Name Your Business

Tell what your business is about with a simple yet unique name. The name you choose represents your business and helps your customers remember. This way, you can make your products recognizable and trustworthy in the long run.

Choose an easy name but ensure that it’s not already in use by any other business. The same name of two businesses confuses customers and also can cause legal issues. In short, the step requires proper research or looking at the state business name database.

Also, check if the domain name is available for your business name. This is because having an online presence is important nowadays to target a broader audience. The same works for social media platforms to get easy access.

4. Register Your Business Name in the USA (DBA or Trademark)

Register your business name to protect it legally and get an official identity. DBA (Doing Business As) and Trademark are two ways of registration with their own purpose.

DBA is relevant when you have to operate with a different name from your official company name. However, a trademark is there to protect your brand name or logo. It’s better to choose a trademark when you want to grow on a large scale or develop a brand image.

5. Get an Employer Identification Number (EIN)

Make your business identity separate from your personal identity with EIN. It acts similar to a Social Security number for your business. The Internal Revenue Service (IRS) of the USA issues an EIN that identifies businesses for tax deductions. Even the businesses that don’t have employees, having EIN is important to open a business bank account or file taxes.

Getting an EIN is simple as you can apply online through the IRS website or using mail. The best part is that it’s free to get one in the USA online and it’s a quick way too. To do this, consider basic information about your business including name, address, and structure to complete the application.

6. Get Necessary Licenses and Permits

Get important licenses and permits in the USA to get legal approval for business operations. However, these vary on the basis of business structure, location, and the sector you are targeting.

To get the right licenses, search the rules of your industry and state of working. For example, restaurants require a health permit, a food service license, or a liquor license to serve alcohol. Similarly, home-based services require zoning permits. In this regard, the US Small Business Administration can help you know the requirements. You can also seek help from business advisors to avoid missing essential paperwork.

Having the right permits in hand shows that you are serious about what you are doing. So, take time to apply for the necessary ones upfront to be safe in the future.

7. Register for State and Federal Taxes

Apply for state and federal taxes to operate legally and stay on good terms with the government. It’s important to make sure that your business follows tax laws. Use an EIN number to register for state taxes.

However, it requires proper research to apply for required taxes only. It depends somewhat on your business type and location in the USA. For example, businesses have to apply for sales tax if they sell goods or certain services physically. Similarly, it requires you to register for payroll taxes to hire employees. But these tax rules differ from state to state. So, check out the rules in your state of registration to understand what applies to your business.

8. Open a Business Bank Account

Separate your personal finances from your business funds with a business account. It keeps your finances from mixing and creating confusion during tax time while organizing everything. It’s the best way for tracking business profits and expenses.

First of all, find a suitable bank as per your needs in terms of fees, banking features, and types of services. After that, apply for a business account and finalize the paperwork. Provide your business details, EIN, and proof of identity. It’s a simple yet important step to support your business as it grows.

9. Obtain Business Insurance

Protect your business from financial crisis with business insurance. It’s better to get it while registering your company in the USA. In case of unexpected damage to your business property, insurance will be there to cover costs. Otherwise, you have to pay yourself which is a huge burden, especially for small businesses.

Understand your business and the type of coverage you want to get insurance. For example, it’s better to have worker’s compensation insurance if you have employees. Similarly, property insurance is great if you have a physical store. Even if you don’t have any physical assets, having liability insurance can protect your business.

To get insurance at reasonable prices, find and compare different insurance providers. The overall cost will vary as per your business type, the number of employees, and the possible risks you can have in the future.

Registering Business in the USA: Common Mistakes to Avoid

Since registration is an important step to your dream success, it should be accurate both officially and legally. So, here are some common mistakes to avoid while registering your company in any state of the USA. 

Choosing the Wrong Business Structure

There are a number of business structures to choose in the United States for any business. For example, these are solos, partnerships, LLCs, nonprofits, or corporations. But the main thing is to choose it right from day one. 

This is important to decide as it affects taxes, personal liability, and operations later on. So, plan the future of your business ahead, understand all the options, and choose what fits your needs. 

Skipping Name Availability Checks

Don’t forget to check your business name before registration. In fact, research it properly even on social media platforms, and look if your chosen name is already in use. Similarly, check if the domain name is available for your business name. 

Later on, it can cause legal issues or application rejections. 

Besides online research, check out your target state database and trademark registry to completely ensure the availability. 

Not Registering in the Right State

Similar to the business name, choosing the right state of the USA is also important. Some people register their businesses in states like Delaware because of their favorable laws. But it isn’t always necessary. 

However, the most important thing is your store location and the coverage of your operations. So, try to register your business in your own state in the case of a local business which is often simpler. 

Not Getting Necessary Licenses and Permits

Getting important licenses and permits is important for any business to operate in the United States. However, the type and number of these permits depend on the location and structure of a business. 

Some businesses don’t take it seriously to get necessary licenses which is a big mistake. By researching your business industry and state rules, you can find out what and how to get. One can also take the help of professionals or business owners of the same sector to go right. 

Rushing Through the Process

Registering a company is not a thing to proceed in a rush. Take your time to research the industry and understand your business goals to do things right. Otherwise, rushing can cause incorrect filings or missing documents that can delay or even reject the application. 

Ignoring Post-Registration Requirements

There are also many things to take care of even after registration. Some of the steps involve legal compliance, file annual reports, and renew licenses to work professionally. So, forgetting these steps can cause fines or penalties that ultimately affect your business’s legal status.

So, avoid these common mistakes to set the strong foundation of your business right from the first step.

Final Words

As you see here, registering a company in the US is straightforward with these steps. However, it’s important to understand your business goals and resources before proceeding to registration. During planning, also assess business scalability and potential liabilities to avoid confusion later. And once you have registered your business, maintain good standing with the state. Also, keep your paperwork organized about filing annual reports and paying renewal fees. In short, registration is like setting a strong foundation for your company ready to grow in the market.