A Step-by-Step Guide to Business Formation in the US

Congratulations! As you have decided to start your business in the US. Are you familiar with the legal and procedural aspects of business formation? Working with reputable business formation services will bring extensive experience and expertise to your side.

This blog clarifies the technical jargon surrounding the business formation process. It provides a concise and clear outline of what it takes to form a business in the US. Let's dive in.

The Most Significant Steps for Business Formation in the US

Starting a business in the US can be exciting. Although it may feel overwhelming, breaking down the formation process into planning, launching, and managing can help you realize that it is manageable.

Figuring out your business idea, target market, funding, and operations — these aspects comprise the planning phase. Registering your business by picking a unique name and spreading the word is included in the launching stage. Similarly, ensuring compliance with business laws and tax-related technicalities is in the management stage.

Now, let's discuss with a step-by-step approach. That way, you can plan and carry out task-wise execution of your company formation process:

1. Market Research

The first step is to understand the market and your target audience for the products and services you plan to offer. This crucial planning step helps you assess the practical market requirements and identify target areas where you can offer products or services to grow your brand.

2. Work Out Your Business Idea

Arrive at a clear conclusion regarding the business you wish to establish based on your extensive market research. Determining the nature, shape, and initial size of your business will help you execute the next steps in the business formation process effectively. 

3. Jot Down Your Business Plan

The next step is to document your business plan properly. You should be ready with a strategic roadmap outlining the nature of your business, your value proposition, how you plan to operate, manage finances, and a realistic growth strategy.

4. Pick Your Business Name

Finalize a unique name that no other business has taken. The business name should include the appropriate entity designator (like 'LLP'). As the name will become the identity of your business, choose it wisely.

5. Choose an Appropriate Business Structure

Consider your liability protection, taxation, and capitalization requirements. These aspects help you determine the most suitable legal structure of your business. LLC is a good option as it offers pass-through taxation, while Corporations bring a great deal of ease in capital raising.

At Edom & Co. CPAs, we advise our clients to choose the ideal business structure tailored to their specific business goals and milestones they aim to achieve. 

6. Registration with a State

Consider the fees for company formation, business laws regarding privacy, and the overall ease of business formation when choosing an appropriate state to register your business. Notably, various states offer varied benefits. Therefore, research to determine which option is best suited to your business goals and preferences.

We advise and assist in the process of registering your business with the desired state. Our professionals are experienced in the required documentation and procedures to register your business promptly.

7. Get Your Employer Identification Number

Apply for your EIN after you submit state-specific documents (Articles of Organization for LLCs and Articles of Incorporation for Corporations). Stay legally compliant and ensure your financial security by understanding taxation-related procedures. 

Obtain your tax ID number (EIN), which serves as the social security number of your business. The Internal Revenue Service (IRS) is the concerned authority issuing an EIN to all businesses. You need an EIN for tax filing, hiring employees, and operating your business's bank account.

Our experts are familiar with the process of acquiring an EIN- whether for a single-owner or a multi-owner business entity. So, you can rely on Edom & Co. CPAs for the timely obtainment of an EIN.

8. Obtain Licenses and Permits

Research about the necessary licenses and permits from local, state, and federal authorities. Obtaining these promptly ensures smoother operations in the long run. The licenses and permits may vary depending on your sector. As there can’t be a ‘one-fits-for-all’ formula, researching and obtaining the required approvals is critical.

9. Open a Business Bank Account

You need to open a bank account for your US-based business to help you keep your personal finances separate. Many banks offer business account options. Some banks may require physical presence in the US, yet a few fintech options offer digital onboarding. 

10. Maintain Compliance

Along with hiring suitable employees, managing financial matters, and marketing your brand, staying up-to-date with legal compliance is also critical. Study business insurance, taxation, and filing, and get timely renewals for smooth operations.

Why Work with Us

Edom & Co. CPAs has been a trusted name in Business Formation and Development Services for many years. With our team of experienced professionals across various geographies, we ensure the timely completion of your business formation process. 

You can rely on us for documentation and formalities to establish your business in the US, enabling you to focus on your core business activities.

Key Takeaways

Our blog outlines the key steps involved in forming a business in the US. We hope it helps you execute the process and take informed decisions at the right time. Collaborate with Edom & Co. CPAs, your trusted partner for business formation services, to ensure the timely completion of the process and select the best business structure according to your needs and aspirations.

Frequently Asked Questions (FAQs)

Q 1: How long does the business formation process take in the US?

It may take anywhere from a few days to a few weeks to form a business in the US. The duration mainly depends on state-specific rules and the volume of applications.

Q 2: Is a registered agent mandatory for business formation?

Yes. Every business in the US must have a registered agent with a physical address in the state of formation. Working with reputable business formation services is, therefore, paramount.

Q 3: Do I need to stay in the US to register my business there?

No. Non-residents can form a business in the US and obtain an EIN.

Q 4: Which state in the US is best for registering a business?

Different US states offer varying benefits. Some states may provide legal benefits and ease of formation, while other states may offer pass-through taxation. So, you need to choose a state based on your business goals and preferences.