Starting your USA business is an exciting and rewarding opportunity. The United States offers a dynamic and strong business environment, making it one of the best choices for business establishment. This blog will walk you through the step-by-step process of how to start your business in the USA, highlighting everything you need to know to successfully launch your company in this thriving economy.
Choosing the Right Business Structure:
The first and foremost important step is choosing the right business structure in the USA, but not all options are available to foreign citizens. The most preferred business types for non-USA residents are:
- Limited Liability Company (LLC): A hybrid business structure, it is the most common form of business found in the USA. It offers liability protection for owners while allowing flexible management and taxation options.
- C-Corporation: Also known as C-Corp, it is a separate legal entity distinct from its owners (shareholders), providing strong liability protection, but it also involves more paperwork and regulations.
- Select a State: Unlike India, each state in the USA has its own state income tax, operating costs and fees. Businesses are required to pay both federal and state taxes. To register a company, one must choose the state that provides the best business opportunities in terms of state taxes, business-friendly regulations, and potential market reach.
- Reserve a Unique Business Name: Choose a unique and distinctive name that aligns with state laws. The chosen name must not be similar to other existing businesses in the same state and should not infringe on trademarks. Check the availability of the business name on the State Secretary of State’s website. Furthermore, the chosen name should be a clear reflection of the business operations or brand identity.
- Appoint a Registered Agent: Appoint a Registered Agent, either an individual or a company, who will be the official point of contact, to receive all the legal and official documents on behalf of the business. The Registered Agent must have a physical address in the USA and be available during regular business hours to receive important correspondence.
- Filing of Formation Documents: To legally establish a business in the USA, one must prepare and file all the requisite documents with the State Secretary of State’s Office. The relevant forms and documents may differ depending on the state and structure selected. Once the Secretary of State’s Office is satisfied with the documents, they will issue a Certificate of Incorporation (name differs between states).
- Obtain an Employer Identification Number: Apply for an Employer Identification Number (EIN) with the Internal Revenue Services (IRS) once the necessary forms and documents are filed and approved. Also known as, the Federal Tax ID Number, this unique nine-digit number is essential for tax purposes, hiring employees, and opening a business bank account.
- Report to FinCEN: Submit the Beneficial Ownership Information to the Financial Crimes Enforcement Network after the incorporation of the business within 90 days.
- Comply with State and Federal Taxes: After Incorporation, steps should be taken to ensure that the business complies with the various applicable federal and state taxes, such as state tax, employment tax, income tax, etc. depending on the nature and structure of the business.
- Obtain necessary Licenses and Permits: Depending on the structure and industry of the business, check for all applicable licenses and permits. This may include zoning permits, health licenses, and professional certifications.
- Opening of business bank account: After obtaining the EIN, the next step is to open a business bank account. One can opt for either a virtual or a physical bank account depending on the structure of the business. Some documents required to open a bank account include an incorporation document, EIN, copies of the passports of the beneficial owners, and so on.
- Maintain ongoing compliance: The business must ensure that it is continuously in compliance with all the applicable laws and legal obligations. This includes, but is not limited to, filing annual reports, proper maintenance of records, including operating agreements and the payment of various taxes. Furthermore, keep track of any changes in the legal requirements at the state or federal level that might impact the business.
Conclusion
In short, starting a business in the USA requires meticulous planning and attention to both the formation process and ongoing compliance obligations. Each step, from choosing the right business structure to registering with the appropriate authorities, is crucial in creating a strong foundation for the business. Staying compliant with tax, reporting, and all the regulatory requirements is equally important to ensure that the business continues to operate smoothly and avoid penalties.
As Legal Professionals, we at Juris Consultants Inc. understands the intricacies involved in starting a business in the USA and we specialize in helping the entrepreneurs to navigate such complexities by offering expert guidance on every aspect of the incorporation process.
