How to Start a Business in the USA: 7 Steps Every New Entrepreneur Should Know

By the Simple Consulting Services team · Reviewed by Awais Ali, Tax Consultant, and Prathyusha Penumathsa, Finance Consultant · Updated October 2026

The 7 legal steps to start a business in the USA.

At a Glance

Who This Guide Is For

The legal steps are the same for everyone. What changes is how you get through them.

US Citizens and Residents

If you live in the US, your path is the simplest. You will usually form your company in your home state, get your EIN online in minutes, and open a bank account at a local branch. Your main decisions are the structure and how you want to be taxed.

Non-US Residents and International Founders

If you live outside the US, you can still own 100% of a US company. You do not need a Social Security Number, a visa, or a US home address. The differences show up in three places: how you get your EIN, which banks will accept you, and which IRS forms you must file every year. This guide flags each one as it comes up.

Step 1: Choose a Business Structure

Your structure decides three things: whether your personal assets are protected, how your profits are taxed, and how much paperwork you handle each year.

When an S-Corp Election Makes Sense

An S-Corp is not a separate entity. It is a tax election that an LLC or corporation makes with the IRS. Once profits are high enough, paying yourself a reasonable salary plus distributions can reduce self-employment tax. S-Corp shareholders must be US citizens or residents, so non-residents cannot use this option.

When a C-Corp Is the Better Choice

Investors and venture funds usually require a C-Corporation (often formed in Delaware) because shares are easy to issue and transfer. A C-Corp is also a common choice for non-residents who want to keep profits inside the company rather than have them pass through.

Step 2: Choose Your State

Every state has its own fees, annual requirements, and privacy rules. The cheapest state to form in is not always the cheapest state to stay in.

The Foreign Qualification Trap

This is the mistake that costs founders the most. If you form an LLC in Wyoming but have an office, employees, or a physical location in California, the law treats you as "doing business" in California. You must then register your LLC there as a foreign LLC and pay California's fees, including its $800 minimum annual franchise tax. You end up paying two states instead of one.

Rule of thumb: if you have a physical presence in a state, form there. Out-of-state formation mainly helps founders who have no physical presence in any state.

State Comparison

State fees as of October 2026. States change fees, so confirm the current amount with the Secretary of State before filing. Registered agent fees are not included.

Step 3: Choose a Business Name

Run a Business Entity Search

Each Secretary of State has a searchable database of registered businesses (Florida's is called Sunbiz, for example). Your name must be clearly different from existing companies in that state, or the filing will be rejected.

Follow the Naming Rules

• LLCs must include "LLC," "L.L.C.," or "Limited Liability Company."
• Corporations must include "Inc.," "Corp.," "Corporation," or similar.
• Words like "Bank," "Insurance," or "University" usually need extra approval.

DBA (Doing Business As) Names

If you want to trade under a brand name that differs from your legal name, you can register a DBA (also called a fictitious or assumed name). One LLC can run several brands this way.

Check the Domain and Trademark Before You File

A state name registration does not stop another company from using your name in other states. A federal trademark gives you nationwide protection. Check the domain at the same time, because renaming a business after launch is expensive.

Step 4: Appoint a Registered Agent

Your registered agent must be available at a physical street address (not a P.O. box) during normal business hours. If your company is sued, the court papers go to the agent. If state notices are missed, your company can fall out of good standing.

Can You Be Your Own Registered Agent?

You can if you live in the formation state and are reliably available at that address. Most founders still use a professional agent because:

• Your address becomes public record.
• You must be present during business hours.
• Non-residents and founders forming out of state have no in-state address, so they need a professional agent.

Step 5: File Your Formation Documents

What the Filing Includes

• Business name and principal address
• Registered agent name and address
• Management type (member-managed or manager-managed for LLCs)
• Organizer or incorporator details
• Business purpose (often a general statement)

Draft an Operating Agreement

Most states don't require you to file an operating agreement, but you need one. It sets out ownership percentages, how decisions are made, and what happens if an owner leaves. Banks routinely ask for it when you open a business account, and it supports your liability protection.

Processing Times

Online filings in many states are approved within a few business days. Paper filings and busy periods can take several weeks. Most states offer expedited processing for an added fee.

Step 6: Apply for an EIN

You need an EIN to open a business bank account, connect Stripe or PayPal, hire employees, and file business tax returns. Without it, your company exists on paper but cannot move money.

US Residents: Apply Online

If the responsible party has a Social Security Number or ITIN, the IRS online application issues the EIN immediately during business hours.

Non-Residents: Getting an EIN Without an SSN

The IRS online tool only works for applicants who already have an SSN or ITIN. Non-residents complete Form SS-4 and submit it by:

• Fax: usually the fastest written option, often around a week when a return fax number is included
• Mail: the slowest option, often four weeks or more
• Phone: international applicants can call the IRS and receive the EIN during the call

You do not need an SSN or ITIN to get an EIN for your company.

EIN vs. ITIN: Which One Do You Need?

Step 7: Understand Ongoing Requirements

State Annual Reports and Franchise Taxes

Most states require an annual or biennial report with a fee. Some, like Delaware and California, charge a flat annual tax. Missing these can lead to late fees and, eventually, administrative dissolution of your company.

BOI Reporting in 2026: What Changed

The Corporate Transparency Act originally required almost every LLC to report its owners to FinCEN. That changed in March 2025, and a 2026 final rule made it permanent: companies created in the United States are exempt from BOI reporting, even if all their owners are foreign nationals. Only foreign companies registered to do business in the US still file. FinCEN never charges a filing fee, so treat any "BOI filing fee" email as a scam.

Federal Tax Returns by Entity Type

• Single-member LLC (US owner): reported on the owner's personal return (Schedule C)
• Multi-member LLC or partnership: Form 1065, plus a K-1 for each partner
• S-Corp: Form 1120-S
• C-Corp: Form 1120

Form 5472 for Foreign-Owned Single-Member LLCs

If a non-US person owns a single-member LLC, the LLC must file Form 5472 with a pro forma Form 1120 for every year with a reportable transaction, such as you putting money in or taking money out. This applies even when the company owes no US tax. The penalty for not filing is $25,000. This is the most commonly missed filing for international founders.

Sales and Use Tax

If you sell taxable products or services, you may need to register and collect sales tax in states where you have "nexus." Nexus can come from a physical presence or from crossing a state's sales threshold (economic nexus), even with no office there. Ecommerce sellers often owe in several states.

Business Licenses and Permits

Requirements depend on your industry and location. You may need a state business license, a city or county license, and industry permits (food, health, construction, professional services). Check with your city and county as well as the state.

Compliance Calendar

Step 8: Open a US Business Bank Account

Documents Banks Usually Ask For

• Articles of Organization or Incorporation (state-approved)
• EIN confirmation letter from the IRS (CP 575 or 147C)
• Operating agreement or bylaws
• Valid passport or government ID for each owner
• A US business address (some banks won't accept a registered agent address alone)
• A short description of what your business does and where customers are

Traditional Banks vs. Online Business Banks

Traditional banks often prefer an in-person visit, which can be difficult for non-residents. Many online business banking platforms accept non-resident LLC owners remotely with just an EIN and passport. Requirements change often, so check each bank's current rules before applying.

Connect Your Payment Processor

Once your account is open, connect it to Stripe, PayPal, or your ecommerce platform using your company's EIN. This is when your business can start accepting payments in US dollars.

Step 9: Set Up Bookkeeping, Payroll, and Hiring Compliance

QuickBooks or Xero?

Both are reliable. QuickBooks is the most widely used by US accountants and has strong payroll features. Xero is popular with international founders and handles multiple currencies well. The best choice is the one your bookkeeper and tax preparer work in every day.

When You Need Payroll

You need payroll as soon as you hire employees, or as soon as an S-Corp owner starts taking a salary. Payroll covers withholding, tax deposits, quarterly filings, and year-end W-2s.

E-Verify for New Hires

E-Verify confirms that new employees are authorized to work in the US. It is required for federal contractors and by several states for some or all employers.

Step 10: Build Your Online Presence and Start Getting Customers

Your Website

A clear, fast website builds trust with customers, and with banks and payment processors that review it during approval. Service businesses usually do best on WordPress. Product businesses usually do best on Shopify.

Getting Found: SEO and AI Search

Customers now search on Google and ask AI assistants like ChatGPT and Gemini for recommendations. Search engine optimization helps you rank. AI search optimization helps your business appear when those assistants answer questions in your industry.

Your First Leads

Paid search ads bring traffic quickly while SEO builds over time. Social media keeps your brand visible. A CRM like HubSpot keeps every inquiry, follow-up, and deal in one place.

Starting a US Business as a Non-Resident: Complete Checklist

Non-residents follow the same steps, but the order matters more because each step waits on the one before it.

What You Need Before You Start

• Valid passport
• Your home address abroad
• Your company name, plus two backup options
• A short description of what the business will do
• Owner names and ownership percentages

The Right Order

1. Choose your structure and state
2. Appoint a registered agent in that state
3. File your formation documents and sign your operating agreement
4. Apply for your EIN with Form SS-4
5. Open your US business bank account
6. Connect Stripe, PayPal, or your sales platform
7. Set up bookkeeping from the first transaction
8. Apply for an ITIN only if you need one
9. File Form 5472 every year (single-member LLCs)

What You Do NOT Need

• A Social Security Number
• A US visa or Green Card
• A US home address
• A trip to the United States (for most remote banking options)

How Much Does It Cost to Start a Business in the USA?

Your actual cost depends on the state, structure, and how much of the setup you want handled for you. Here is what to budget for in year one.

DIY vs. working with us: Doing it yourself saves the service fee but costs time, and errors cost more. A rejected filing, a wrong answer on Form SS-4, or a missed Form 5472 can easily cost more than professional setup. Our pricing sits at or below market for comparable service, and setup includes the pieces most formation companies leave out, like bank support and bookkeeping configuration.

How Long Does It Take?

Here is a realistic timeline from first call to taking payments.

• Days 1 to 3: Structure and state decided, name checked, registered agent appointed
• Days 3 to 10: Formation documents filed and approved (faster with expedited filing)
• Same day to 1 week after approval: EIN issued for US residents (online) and for non-residents applying by phone
• 1 to 4+ weeks after approval: EIN issued for non-residents applying by fax or mail
• 1 to 2 weeks after EIN: Bank account opened and payment processor connected
• Ongoing from week 1: Bookkeeping set up, website built, marketing launched

For most US residents, the full setup takes 1 to 3 weeks. For non-residents, plan on 3 to 8 weeks.

7 Common Mistakes New Founders Make

1. Forming in the "cheap" state while operating in another. You end up registered and paying fees in both.
2. Skipping the operating agreement. Banks ask for it, and owner disputes have no rules to fall back on.
3. Applying to banks before the EIN is issued. The application stalls or gets rejected.
4. Mixing personal and business money. This weakens your liability protection and makes tax time harder.
5. Missing Form 5472. Foreign-owned single-member LLCs face a $25,000 penalty even when no tax is due.
6. Ignoring sales tax nexus. Online sellers can owe sales tax in states where they have no office.
7. Waiting too long to build a website. Banks, payment processors, and customers all check it.

DIY vs. Hiring an End-to-End Partner

How Simple Consulting Services Takes You From Idea to Operating Business

Most founders don't need five different vendors. They need one partner who sees the full picture. Simple Consulting Services gives you a single point of contact and a dedicated team of human specialists for every stage, from your first filing to your first customer. All of our client work is 100% human-crafted.

Frequently Asked Questions

References

• U.S. Small Business Administration: Launch Your Business
• IRS: Get an Employer Identification Number
• IRS: About Form SS-4
• IRS: About Form 5472
• IRS: About Form W-7 (ITIN)
• FinCEN: Beneficial Ownership Information