Registering your company should be the next step once you decide your idea is valuable enough to become a viable business. While you can register your company in any country you find suitable, registering a company in the US means setting up in the country with the largest economy by GDP globally as of 2024. In 2023 alone, up to 5.5 million new business applications were filed in the US.
Registering your company can be exciting and offers many benefits, such as legal recognition and protection for your company. However, the process can also be daunting when you lack the information to understand where to start and what to expect at each stage.
You also need to know some key things, like how much registering a company in the US costs. Can foreigners register a company in the US? What are the requirements for registering a company in the US? How do you successfully register a company in the US?
No matter your concerns, this guide will help you navigate registering a company in the US. It provides a step-by-step guide, answers your most frequently asked questions, and shares tips to help you successfully register your company in the US.
Key takeaways
- Registering your company makes accessing funding, grants, loans, and government contracts easier. It establishes your business as a legitimate entity and builds trust with customers, suppliers, and investors.
- Choose the right business structure. Consider factors such as liability protection, tax obligations, and management structure when deciding between a sole proprietorship, partnership, LLC, or corporation.
- Select a state wisely. When registering your business in a state, consider factors like taxation, business laws, and market access.
- Non-residents can register a company in the US by following a process similar to that of US residents. This includes considering tax obligations, opening a US bank account, and determining the business structure.
- Registration costs, filing fees, and tax rates vary from state to state. However, some states offer tax exemptions for certain company types.
Benefits of registering a company in the US
Legal protection
When you register your business in the US, you gain legal protection. By registering a company, you separate your personal assets from your business liabilities, allowing your business to operate independently. If your company faces legal issues, debts, or bankruptcy, your personal assets—like your house or car—stay protected.
Remember that your liability level depends on your company's structure. As a sole proprietor or partner, you remain personally liable for debts or bankruptcy. However, structures like corporations or LLCs protect your personal assets from business liabilities.
Credibility and trust
Customers feel more comfortable interacting with a legally registered business. This process helps you establish credibility with customers, suppliers, and investors. It shows them that you’re serious and professional about your business, which builds trust in your brand. Registration also helps you create a recognizable brand identity.
Access to funding and opportunities
Registering your business makes it easier to access funding and growth opportunities. Investors prefer to fund registered companies. Registration also simplifies applying for grants, loans, and government contracts, helping you grow faster.
Written by Omoruyi Edoigiawerie, a seasoned startup attorney with over a decade of experience. Learn more.
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In many cases, registering your business is a requirement to access funding. You might also need to disclose your company's legal structure when applying for these opportunities. The legal structure shows how decisions are made and how you manage investor funds.
Tax benefits
Registering your company in the US ensures you pay the correct taxes and avoid overpaying. You can take advantage of tax benefits and deductions, including business expenses and startup costs like legal and accounting fees.
However, your tax obligations depend on federal and state laws and your company’s structure. Remember that tax laws can change, so you must always stay informed.
How to register a company in the US
Before you start, know that your preferred state will determine how you'll register your company and the associated cost. Once you identify these factors, the registration process becomes straightforward.
When choosing a state, consider these factors:
- Taxation: Some states have lower business taxes or no state income tax.
- Legal system: Some states have business-friendly legal environments.
- Filing fees: Initial and annual filing fees vary by state.
- Franchise taxes: Some states impose franchise taxes based on business size and revenue.
- Nexus obligations: A physical presence in a state may create tax obligations.
- Privacy: Some states offer better privacy protections for business owners.
- Market access: Registering near your target market can improve opportunities.
Step-by-step guide to registering a company in the US
Step 1. Choose your business structure
You need to choose your business structure, as different structures have different registration requirements. Your choice depends on the size of your business, the level of control you want, and tax implications. This structure can be:
- Sole proprietorship: With this structure, you are liable for your business's finances because your personal and business assets are not separated. While you keep all the profits, you must pay income tax on them.
- Partnership: In a partnership, you run the business with two or more individuals. In a limited partnership, one partner assumes personal liability while the others have limited liability. In a general partnership, all partners share the same liability. The liability for each partner is typically limited to their initial investment.
- Limited Liability Company (LLC): An LLC allows you to separate personal assets from business assets. You are not personally liable for the company’s debts. Many small businesses prefer this structure because it is easier to register than a corporation.
- Corporation: A corporation (C Corp or S Corp) has shareholders, and you are not personally liable for business debts since the corporation is its own legal entity. However, this structure involves more federal reporting and tax requirements. A C Corp is suitable for non-US residents, while an S Corp is unavailable for non-US businesses.
Factors to consider when choosing a business entity:
- Liability protection
- Tax obligations
- The management and governance structure
- Compliance
- Funding and investment opportunities
- Future growth and expansion
Step 2. Choose a business name
Pick a unique, memorable, and relevant name that has not already been taken or trademarked. Your business name is part of your brand identity. To avoid choosing a name that’s already in use, you can:
- Search the state business database.
- Check the US Patent and Trademark Office (USPTO) for trademarks.
- Google the name or check social media platforms.
Step 3: Register your business name
After choosing a business name, register your business entity with the relevant government authorities. Sole proprietorships and partnerships typically register under the owner’s legal name or file a DBA (Doing Business As).
Other business structures can also use a DBA to operate under a different name from their registered one. You can register your business name as a legal entity or use a DBA. You can also trademark your business name. You may even choose to follow all these routes and use the same name for each method.
Step 4: File the relevant legal documents
You have to officially establish your business by filing the necessary paperwork with your state. If you're forming a corporation, file articles of incorporation. For an LLC, file an operating agreement.
The documents contain the purpose of your business, your business structure, and the rights and responsibilities of the owners.
Step 5: Apply for licenses and permits
Operating legally requires obtaining specific licenses and permits based on industry, business type, and location. To find out what licenses you file for:
- Consult a professional, like a lawyer or an agency, or conduct thorough research.
- Visit the US Small Business Administration's (SBA) website to search by business activity.
You may need a sales tax license, health department permits, or a professional license.
Step 6: Obtain an EIN
Get the employer identification number (EIN) from the IRS. This ensures you can pay taxes, claim deductions, hire employees, and manage operations.
Step 7: Open a US business bank account
Don’t use your personal account for business. When you open a separate US business bank account, it helps you:
- Track expenses
- File taxes accurately
- Protect your personal assets
Step 8: Keep track of deadlines and filings
Follow up on important deadlines like annual reports, tax filings, and other required documents.
Remember, there are fees associated with these steps, which vary depending on your state and business structure.
Also, aside from registering your business name, consider protecting your intellectual property with trademarks, copyrights, and patents.
- Trademarks protect brand names and logos.
- Copyrights protect original creative works like written content.
- Patents protect inventions.
Cost of registering a company in the US
State-by-state variations in business registration
| State | Business Type | Registration fees | Other costs |
| Alaska | LLC and Corporation | $250 | Business license application: $50 Business license renewal: $50 yearlyBiennial report filing: $100 yearly Note: Only corporations are subject to state taxes, up to 2 to 10%. |
| California | LLC and Corporation | Incorporation: $115Filing fee: $100 There is an LLC fee of $105 | Annual report filing fee: $25 Business license: $50-100/year Note: Both business types are subject to taxes |
| Delaware | LLC and Corporation | LLC: Minimum $300Corporation: For incorporation, minimum $89 | Annual report filing fee: $50 Note: Both business types are subject to state tax |
| Florida | LLCFiling fee: $125Annual report: $140 yearly Annual report filing fee: $35 CorporationAnnual report: $150 yearlyAnnual report filing fee: $35 | Business license: Maximum $100Registered agent fee: $99Name registration: $90 Note: LLCs are exempt from tax, as are most businesses. Partners and owners pay income tax. However, Corporations pay up to 5.5% tax | |
| Idaho | LLC and Corporation | $120 | Certificate of organization: $100 Note: Both business types pay state tax |
| Maryland | LLC and Corporation | $100 | Name reservation: $25Annual report fee: $300 Note: Corporations pay up to 8.25% in tax. LLCs are not subject to tax; however, business owners pay income tax. |
| Montana | LLC and Corporation | $35 | Name registration: $10 Note: Corporations pay up to 6.75% on tax. LLPs are exempted from taxation, but individual owners pay income tax on profits distributed to them. |
| New Hampshire | LLC and Corporation | $100 | Annual report filing: $100 Note: companies pay a flat tax rate of up to 7.6% |
| New Jersey | LLC and Corporation | $125 | Annual report filing fee: $75Annual tax fee: minimum of $500 Note: Corporations pay up to 9% tax, while other business types are not taxed, but income tax is applied. |
| New York | LLC and Corporation | LLC: $200Corporation: $125 | Reservation of name: $20 Note: The tax rate for Corporations is up to 6.5% |
| Ohio | LLC and Corporation | $99 | Name registration: $40 Note: Businesses operating in Ohio pay a commercial activity tax according to their gross income; under $150,000 are not taxed. The tax rate is up to 0.26%. |
| Oregon | LLC and Corporation | $100 | Name registration: $50Annual renewal of incorporation: $100 Note: New businesses can obtain a tax holiday of up to 10 years upon meeting certain requirements. The tax rate is a minimum of $150 for LLCs and up to 7.6% for corporations. |
| Texas | LLC and Corporation | LLC: $200/partnerCorporation: $300 | Name registration: $40 Note: Texas has really low tax rates ranging from 0.33% to 0.75% for both business types. |
Popular states for registration in the US
- Delaware: You might choose Delaware for its business-friendly laws, making it a top option for many companies.
- Nevada and Wyoming: These states attract businesses because of their favorable tax policies and strong privacy protections.
- California and New York: If you’re based in these states, you may prefer them for their large markets and extensive business networks. However, keep in mind that their tax policies aren't the most favorable.
Conducting business in multiple states
After incorporating in a single state and you want to register to operate your business in additional states, you file a foreign qualification. With this, you register your business in any other state you plan on conducting company. You should know that conducting business without filing a foreign qualification could mean going against state laws and being charged. Fines and fees may be involved, and you may be held liable for back taxes.
Registering a company in the US as a non-resident
Can foreigners register a company in the US?
As a non-US resident, you can register your company by following a process similar to that of a US resident. You should consider several important factors, including:
- Tax obligations: Ensure you understand your tax responsibilities in the US and your home country.
- Opening a US Bank Account: You may need to provide additional documentation or use services designed to help international entrepreneurs.
- Business structure: You can form a corporation or a limited liability company (LLC), depending on your business needs.
- Location: The process for registering a business as a foreigner varies by state, so check the specific requirements for the state where you plan to operate.
To effectively manage these complexities, consult a professional who understands foreign ownership requirements.
FAQs on registering a company in the US
How much does it cost to register a company in the US?
The cost varies by state and typically ranges between $50 and $500.
Can you register a company in the US online?
Yes, you can register a company in the US online. Online registration platforms eliminate the need for physical presence and reduce paperwork. However, make sure you choose a reputable and reliable platform to ensure the security and legitimacy of your registration.
Keep in mind that online registration may lack the personalized support of traditional methods. Traditional registration often takes more time and requires physical visits. Choose the method that suits your comfort level and business needs.
What is a company registration number in the US?
A US Company Registration Number is a unique identification number assigned to a company during registration. This code primarily identifies a specific business entity. State government authorities usually assign this number during the business registration process. However, it's not the same as an EIN (employer identification number) or tax ID number.
How long does it take to register a company?
Registering a company in the US typically takes a few weeks, but in some cases, it can be as short as a few days. The timeline depends on the state and the type of company.
Do you need a physical address in the US to register a company?
No, you don’t need a US business address. However, you do need a registered agent in the state where you want to register your company. The registered agent must have a physical address and will receive mail on your behalf.
How can you register a company in the US from Nigeria?
You can register a company in the US from Nigeria by following the steps for non-residents, which are typically the same as those for residents. However, you’ll need to obtain the necessary documents and follow the steps strictly.
What are the most common mistakes to avoid when registering a business?
- Not knowing your state’s specific requirements.
- Not checking if your business name is available.
- Mixing personal and business finances.
- Not seeking professional advice.
What is the best state to register your business?
Delaware and Nevada are popular options for registering a business.
Registering there may be simpler if most of your business operations are in your home state. Consider tax implications and regulations, and consult a legal or financial advisor to make the best decision.
Conclusion
While it can be overwhelming, registering a company in the US is achievable. To get started, you need to choose the right business structure. This means deciding whether to form a Limited Liability Company (LLC), a corporation, or a partnership. Evaluate the pros and cons associated with each to choose the one that best fits your business needs.
Next, choose a state. This decision is important because different states have different tax policies and business laws. You want to choose a state that will help your business thrive.
Once you've chosen your business structure and state, it's time to register your business. This involves filing necessary legal documents and obtaining necessary licenses and permits.
Moreover, take your time and carefully evaluate your options to ensure you're making the best decisions for your business. Ignoring certain steps might cost your company a lot or everything.
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