United States — Business: Company Formation

Why this matters

Relocating entrepreneurs should understand the process of company formation in the United States to ensure a smooth transition and compliance with relevant laws.

Key facts

• SBA says LLCs, corporations, partnerships and nonprofit corporations probably need to register in each state where they do business, and need a registered agent located in that state.
• Typical filings are articles of organization for an LLC and articles of incorporation for a corporation; an operating agreement is recommended for an LLC.
• The IRS issues the EIN free; the online application is not available if you have no legal residence or principal place of business in the US or its territories.
• Form the LLC or corporation with the state before applying for an EIN, or the application may be delayed; enter the name exactly as on the formation documents.
• The online EIN session cannot be saved and expires after 15 minutes of inactivity; a DBA and EIN allow you to open a business bank account.
• State fees and processing times vary and are set by each Secretary of State.

Steps

1. Step 1: Choose a Business Structure — Select the most suitable business structure (e.g., LLC, corporation, partnership) based on personal preferences, business goals, and tax implications.
2. Step 2: File Articles of Incorporation — Prepare and submit articles of incorporation to the relevant state agency, usually the Secretary of State or Department of State.
3. Step 3: Obtain Licenses and Permits — Secure necessary licenses and permits from local, state, and federal authorities, depending on the type of business and industry.
4. Step 4: Register for Taxes — Obtain an Employer Identification Number (EIN) and register for federal, state, and local taxes.

Common mistakes

• Applying for an EIN before the entity exists with the state.