Every year, millions of Americans and international citizens launch businesses in the United States. The many benefits of forming a company in the United States steadily emboldens entrepreneurs to take on the multidimensional task of registering their businesses.
Unbeknownst to many, there is no American citizen requirement to register a business in the USA. Savvy international entrepreneurs are taking advantage of the non-residency provision to both form and expand their companies in the United States.
Our comprehensive guide takes you through the various steps involved with opening a company in the USA. Straightforward and easy to read, our guide makes it a simple task to garner the education and knowledge you need to not only get started on registering your business, but also advises you how to effortlessly deal with the most common challenges that occur during the registration process.
Step 1: Determine the legal disposition of your business
Any successful business endeavor must first start with determining and defining the type of enterprise that it is. Common examples include sole proprietorships, corporations, nonprofit organizations, and limited-liability companies or partnerships.
With so many options to choose from, business owners must carefully examine multiple aspects of their business to find the most prudent course of action. Regardless of the type of business you form, each type must be organized as a legal entity that encompasses highly specific financial, legal, and tax concerns.
When determining the legal classification of your business, you should include the level of autonomy and control that you desire, the degree of vulnerability to litigation and lawsuits, and the financing needs.
Also, depending on the legal characterization of your business, there will inevitably be other structure-specific registration requirements. These are often dependent on the state, and registration forms may have to be filed in more than one agency.
If the business is considered a sole proprietorship, or sole trader, then you will not need to register on the state level. However, numerous states require that sole proprietorships register their business name with their own name unless a DBA (Doing Business As) name is registered.
Keep in mind that your choice of business type is not a permanent decision. You can, for example, switch your business classification from a sole proprietorship to an LLC. Businesses change their legal status frequently, particularly when the business experiences significant growth and concurrent risk of liability.
The legal name of your business is necessary on all associated government forms and documents, including, but not limited to licensed, employer tax IDs, and permits. A “fictitious name” may be registered if your business intends on setting up a storefront or selling products under an alternative name.
Consider consulting with your local Small Business Administration chapter to get guidance and advice from those experienced in the business registration process.
Step 2: Obtain the federal tax ID for your business