Even though today’s marketplace is a global one, the United States remains one of the world’s preeminent business environments. This leads a lot of enterprising professionals to start up US corporations in order to further their entrepreneurial ambitions. If you are considering a US startup of your own, here are the most important decisions you will need to make.
Choosing Your Venue
The key factor to understand here is that businesses in the United States are registered at the state rather than the federal level. The state you choose to register in makes a huge difference in the regulations and taxes your startup will be subject to. If your business is going to be making direct sales in one region, it makes sense and may be required to register within the state where you are operating. If you are establishing a nationwide business or doing business online, you have a greater level of flexibility.
Certain states are more popular than others for business registration. C corporations (see below) favor Delaware due to its lenient regulations, for instance, and Nevada is generally popular thanks to its low taxes.
Picking Your Structure
Startups in the US can be structured in a number of different ways. Of all of your ground-floor choices, this one may be the most flexible. Changing one from one structure to another is relatively easy even after a business is established.
C corporations are separately taxed entities that assume full liability for all of their operations. This is the structure that is required for publicly-traded companies. S corporations (limited liability companies and partnerships) are taxed through their owners. This form is suitable for a lot of smaller businesses. Finally, a sole proprietorship is an option for single-person operations.
Naming Your Business
Choosing your company’s name actually deserves careful thought. Your startup’s official name will be used in all legal documentation. It can be tremendously difficult to change in the future. This makes it a good idea to research potential names to avoid trademark issues and unwanted confusion with competitors or other companies. This is also the time to start thinking about your company’s brand. Your business name should fit in with your future marketing plans.
The Registration Process
The specific applications and submittals you will need to make vary widely depending on your chosen location and your industry. Professional licensure, for instance, will be required in applicable fields. One step that is virtually universal is securing an Employer Identification Number. This federally-issued ID is very similar to a private citizen’s Social Security Number in that it is required for a host of vital business functions, including gaining access to commercial financing resources. Your startup will need an EIN whether or not you intend to hire employees.
Review the business registration requirements of your chosen state carefully to ensure you are following all of the necessary steps. Although registering a new company can be very straightforward and in many states it can even be done online, skipping a required license, certification, or registration can turn into a costly mistake. Be aware that you may need to register at the municipal (city) level, as well as, the federal and state levels.
Do You Need Professional Assistance?
Although private individuals are allowed to register companies in practically all of the states, the help of a business lawyer is strongly recommended. Attorneys who concentrate on corporate law will be thoroughly familiar with the registration process in, at least, their own state and turning the process over to a professional is often the most efficient way to get it done. Good attorneys can also provide very useful advice regarding your crucial early startup choices, such as, where to register or how to structure your company with a knowledgeable eye on your tax obligations.
Although the process of starting a business in the US involves a lot of paperwork, it is rarely beyond the mastery of a dedicated professional who takes the time to research his or her obligations thoroughly. Do your homework before you start filing and you will develop a very firm grasp on the different rules and regulations that apply to your specific business.
Matthew Long is a successful businessman and event specialist. He is co-founder and CEO of Gigcentric, a company that provides professionals with event planning software designed to help run and grow their business.