A business formation in United States may seem a long and boring process. However, if you are not a US citizen or you are operating a foreign company, then forming a US business is a great way to expand your business into the country.
Before coming to the actual process, firstly, you need to choose the type of your business entity. Corporation and Limited Liability Company (LLC) are the best business structures to use while starting a business in the USA. After choosing the type of your business, you should choose the state where you want to operate your business. They say that Nevada, Delaware and Wyoming are the most business-friendly states.
There are several requirements that you must meet to be able to form a business. However, these requirements vary greatly depending on the state. One of these requirements is choosing a name for your business. Keep in mind that US does not allow every name. So, you may contact the certain state and find out what kind of names are permissible there.
Before starting your business in US, it’s better to get The Federal Employer Identification Number (FEIN). It is an identification number for business companies. It is also known as an “EIN” or just “Tax ID Number”. FEIN is a number issued by the United States Internal Revenue Service (IRS). Moreover, if a local government or company needs proof of your business formation of a US corporation or LLC, then you may need to obtain a certificate of authentication or an apostille. Although these papers are optional, you’d better obtain it and avoid further problems with the government.
Hiring a registered agent is also beneficial for your business. Keep in mind that a registered agent is not a mail forwarding service. The registered agent may be a person or a company. It must have a physical address in the state of formation and must be available during business hours. The registered agent is responsible for accepting official state documents and legal documents, as well.
LLCs are a good choice for your business to protect personal assets and personal liability.
Click here to form an LLC for $0 plus State Filing Fees!
Single-member LLCs (SMLLCs) are the most appropriate type of business entity for businesses with one owner.
Corporations (also known as S Corp or C Corp) are the best way of structuring your business to share issues, go public and viral.
Doing Business As (DBAs) give best possibilities to privately owned corporations, sole proprietorships and partnerships that have fewer employees and less annual revenue.
Non-profit corporations do charity, religious, education, scientific, or literary work serving for the common good.
Click here to form a Non-profit for $0 plus State Filing Fees!
Partnerships are the most appropriate type of business entity for two or more people to start a business together.
|Entity Type||LLC||Corporation||Non-profit||Small business||Partnership|
|Limited Liability Protection||✔️||✔️||✔️||✔️||✔️|
|Flexible Management Structure||✔️||❌||✔️||✔️||✔️|
|Ease of Raising Capital||Varies||✔️||✔️||✔️||✔️|
|State Formation Fees||✔️||✔️||✔️||✔️||✔️|
|Ongoing Compliance Fees||✔️||✔️||✔️||✔️||✔️|
The main difference between a corporation and an LLC is that the corporation is owned by its shareholders, while the LLC is owned by its individual investors. Both the LLC and the corporation offer big benefits to your business.
Limited Liability Company is the easiest entity to maintain with the least amount of formal annual requirements. It unites limited liability protection with a pass-through tax structure. LLCs can choose between being taxed as partnership or corporation by IRS rules.
Corporation is a separate taxable entity. In corporations owners or shareholders have limited personal liability for business related debts. The owners or shareholders often organize meetings to maintain corporate status.
Non-Profit Corporation does scientific, charitable, religious, literary, or educational work. The IRS can give tax exempt status to non-profit corporation. Shareholders organize annual meetings or reports to maintain non-profit or tax exempt status.
A small business is a private corporation, partnership, sole proprietorship, or other type of business that has fewer employees and less annual revenue. In other words, it is a sole proprietorship or a corporation. A small business is defined according to a set of standards based on certain industries by the US Small Business Administration.
A small business is a corporation, whereas a Single-Member LLC is one of the most common types of small businesses. A single-member LLC is usually where the company operates business.
As we can guess from the name, the term single-member defines that the LLC has one owner. It is the opposite of an LLC in which there is more than one owner. Like a multi-member limited liability company, a single-member LLC has the same advantages and disadvantages.
A partnership is an unincorporated business organization. Two or more entities create it by contract to carry out a common enterprise. Each partner invests property, money, skill, or label. Each of the investors expects to share in the profits and losses of the undertaking.
A partnership does not pay income taxes. By contrast, the individual shareholders report their share of the partnership’s profits or losses on their individual tax returns. There are several categories of partnership. Each category has its own balance of management rights and personal liability.
A non-profit organization is a tax-exempt organization that is established for the purpose of providing the public benefit. These organizations include universities, hospitals, foundations and national charities. If you want to qualify your business as a non-profit, it must somehow serve the public good.
Alike to a non-profit, a not-for-profit organization (NFPO) does not earn profit for its owners. The owners earn all money through pursuing business activities or through some donations. Not-for-profits do not need to operate for the benefit of the public good. It can just serve for the goals of its members.