Starting a business involves strategic planning, detailed work, and considered preparation. Registering your business is an important step in the process. According to the Small Business Administration (SBA), there are nearly 33 million small businesses and over 20,000 large businesses operating in the US in 2023—and the number of new business registrations continues to grow each year.
If you’re starting a new business, registering your business can seem overwhelming. Below is a step-by-step guide outlining the steps, requirements, and considerations of registering a business in the US.
What’s in this article?
- Choose a business structure
- Pick a name for your business
- Apply for an EIN
- Apply for business licenses
- Register with state agencies
- Open a business bank account
- Understand your compliance requirements
- Understand your tax obligations
Choose a business structure
Choosing the right business structure is the first step in registering a business in the US. The structure you choose will impact your business’s legal liability, tax obligations, and management structure. There are several types of business structures to choose from, each with its own advantages and disadvantages. Here are the most common business structures to consider:
A sole proprietorship is the simplest business structure, because it is owned and managed by a single person. The owner is personally responsible for all business debts and liabilities, and the owner reports business profits on their personal income tax return.
A partnership is owned by two or more people who share profits and losses. Each partner is personally responsible for the partnership’s debts and liabilities, and each partner reports profits and losses on their personal tax return.
A corporation—such as an S corp or a C corp—is a separate legal entity that’s owned by shareholders. It’s responsible for its own debts and liabilities, and profits are taxed separately from the owners’ personal income. Corporations also offer limited liability protection to their owners.
Limited liability company (LLC)
An LLC is a hybrid of a corporation and a partnership. It offers the same limited liability protection as a corporation, but with more flexibility in management and tax structure. Owners report profits and losses on their personal tax returns.
Sometimes the best structure for your business is obvious; in other cases, the decision is less clear. If you have trusted advisors, cofounders, or hired counsel, seek out their input. Once you have chosen your business structure, you can move on to the next step of choosing a name for your business.
Pick a name for your business
The business name you choose will impact your brand identity and create the first impression with customers and competitors. Pick a name that accurately reflects your business and is easy to remember.
Here are some practical tips to help you get started:
- Brainstorm a list of potential names that align with your business’s values and mission. Consider using words that evoke positive feelings or that are relevant to your industry.
- Verify if the names you have chosen are available and do not conflict with existing trademarks. You can use the US Patent and Trademark Office’s (USPTO) search tool to check for existing trademarks that might conflict with your name. This is also a good time to check whether the relevant website domain names and social media handles associated with your desired business name are available. Don’t underestimate the importance of claiming the right digital footprint for your business; this can be the deciding factor between two otherwise strong options for names.
You might opt to protect your business name by trademarking it. Trademarking your business name can give you exclusive rights to use it and prevent others from using a similar name. It can also protect your brand identity and help you stand out in a competitive market.
Apply for an EIN
After choosing a business structure and name, the next step to register your business in the US is to apply for an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned by the IRS, and receiving one helps to establish its legal identity. It’s like a social security number for your business. An EIN is often required for tax and banking purposes, and it can also help protect your personal assets from business debts and liabilities.
You can apply for an EIN online, through the IRS website. To apply, you will need to provide some basic information about your business, such as its legal name, address, and business structure. You will also need to provide information about the person who will be responsible for the business’s tax matters.
Once you have completed the application, you will receive your EIN immediately. Keep your EIN safe and use it whenever you need to identify your business, such as opening a bank account or filing tax returns.
Apply for business licenses
Depending on your industry and location, you may need to obtain various permits and licenses in order to legally operate your business. The process of identifying and applying for business licenses might look slightly different based on location, but it’s mostly similar throughout the US:
1. Identify the necessary licenses
Before applying for licenses, research and identify which ones are required for your business, based on your industry and location. Common examples include professional licenses, industry-specific licenses, and business activity permits.
2. Check the issuing agency
After identifying the required licenses, check with the issuing agency to confirm the specific requirements and process for applying. This may vary by state or even by county or city.
3. Gather the necessary documentation
Depending on the license, you may need to provide various types of documentation, such as proof of insurance, zoning approval, or educational credentials.
4. Complete the application
Once you have gathered all the necessary documentation, you can complete the license application. This can often be done online or by mail, depending on the issuing agency.
5. Pay the application fee
Most licenses require payment of a fee. The amount may vary depending on the type of license and issuing agency.
6. Wait for approval
After submitting your application and fee, you will need to wait for the license to be approved. This may take several weeks, so it’s important to plan accordingly.
7. Display your license
Once you have received your license, you may need to display it prominently at your business location if doing so is required by law.
There are many resources available to help you identify the necessary licenses for your business. A good place to start is your state’s Secretary of State office or Department of Revenue. You can also use online resources such as the SBA’s permit and license guide, which allows you to search for necessary licenses by state and industry.
Register with state agencies
After choosing a business structure, naming your business, and obtaining an EIN, the next step is to register with state agencies. The requirements may vary, depending on your state and the type of business you operate. However, at minimum, you will likely need to file paperwork with the state government and pay any necessary fees.
Here’s what registering your business with state agencies typically entails:
Register your business entity
Register your business entity with your state. This involves filing paperwork such as Articles of Incorporation, Articles of Organization, or Partnership Agreements, depending on your business structure.
File for taxes
Depending on your business structure and where your business operates, you may need to register for federal, state, or local taxes. This may include income tax, sales tax, and payroll tax.
Obtain any necessary insurance
Depending on your industry and location, you may need to obtain certain types of insurance, such as liability insurance or workers’ compensation insurance.
Comply with any other state requirements
Depending on your business type and location, there may be additional state requirements you need to comply with, such as registering for unemployment insurance or complying with environmental regulations.
Open a business bank account
A business bank account is a separate account that is used exclusively for business transactions. Here is why opening a business bank account is important:
It separates personal and business finances
By opening a business bank account, you can keep your personal and business finances separate. This will help you track your business’s income and expenses more accurately and simplify tax reporting.
It provides legal protection
Having a separate business bank account can help protect your personal assets in case of legal issues or bankruptcy. It shows that your business is a separate legal entity from yourself and can help shield your personal finances from business liabilities.
It establishes credibility
Having a business bank account can help establish your business’s credibility and professionalism. It shows that you are serious about your business and that you are committed to keeping accurate financial records.
It makes it easier to accept payments
Even though you might accept customer payments with a merchant account, you’ll still need to transfer those funds into a regular business bank account. Businesses that use Stripe to accept and process customer payments are required to have a business bank account to get paid.
Shop around and compare different banks’ fees and services. Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection. You may also want to consider working with a bank that specializes in small business banking.
Understand your compliance requirements
Compliance requirements comprise a variety of rules and regulations that businesses must adhere to, in order to operate legally. Failing to comply with these requirements can result in significant financial penalties and legal consequences.
Understanding your compliance requirements is important for several reasons, including:
Avoiding legal issues
By adhering to all applicable requirements and regulations, businesses can prevent legal issues from arising. Compliance requirements vary depending on the industry, location, and business structure, making it necessary to have a comprehensive understanding of the specific rules applicable to your business.
Protecting your business reputation
Maintaining compliance helps businesses safeguard their reputation. Compliance violations can negatively impact a business’s reputation, making it challenging to attract customers and investors. By following all applicable rules and regulations, businesses can establish themselves as responsible and trustworthy entities, which can enhance their credibility.
Compliance requirements help create a level playing field in any industry. Compliance rules are designed to promote fair competition and protect customers. Adhering to industry requirements—and generally accepted norms, even those that aren’t officially mandated—helps businesses to remain competitive and be perceived as committing to fair and ethical business practices.
Accessing funding and partnerships
Many lenders, investors, and business partners require that businesses meet certain compliance requirements before working with them. Adhering to compliance requirements not only helps businesses maintain professional integrity and uphold their reputation, but it can also help them access more funding and partnership opportunities.
Understand your tax obligations
Tax obligations are the monetary dues that businesses must pay to the government, including income tax, payroll tax, sales tax, and excise tax. Such obligations have a significant impact on a business’s financial stability and future success.
Comprehending tax obligations is important for several reasons. First, failure to pay taxes or filing taxes inaccurately can lead to penalties, interest, or legal action. Understanding your tax obligations can ensure that your business remains compliant with the tax laws and regulations in force, preventing any penalties or legal consequences.
Businesses must also plan and prepare for their tax obligations, as taxes can significantly impact cash flow and financial stability. Accounting for tax obligations in your financial planning is important to ensure that your financial projections are sound and that you have the necessary funds to meet your tax obligations and remain financially stable.
Staying up-to-date on tax obligations can help businesses remain compliant with tax laws and regulations that are subject to change. This can also help businesses establish a reputation for financial responsibility and compliance, creating a foundation for future business opportunities and growth.
Meeting your tax obligations can provide access to funding and partnership opportunities. Lenders, investors, and business partners often look for businesses with a strong tax history and compliance record.
To understand your specific tax requirements, conduct comprehensive research on the specific tax laws and regulations that apply to your business, making sure to factor in variations based on every state where you have tax obligations. It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.
How Stripe can help
Stripe Atlas makes it simple to incorporate and set up your company so you’re ready to charge customers, hire your team, and fundraise as quickly as possible.
Fill out your company details in the Stripe Atlas form in less than 10 minutes. Then, we’ll incorporate your company in Delaware, get your IRS tax ID (EIN) for you, help you purchase your shares in the new company with one click, and automatically file your 83(b) tax election. Atlas offers multiple legal templates for contracts and hiring and can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.
Atlas founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free Stripe payments processing credits. Start your company today.
The Stripe Atlas application
It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company, or subsidiary) and pick a company name. Our instant company name checker will let you know if it’s available before you submit your application. You can add up to four additional cofounders, decide how you split equity between them, and reserve an equity pool for future teammates if you choose. You’ll appoint officers, add an address and phone number (founders are eligible for one year of a free virtual address if you need one), and review and sign your legal documents in one click.
Forming the company in Delaware
Atlas will review your application and file your formation documents in Delaware within one business day. All Atlas applications include expedited 24-hour processing service at the state, for no extra fee. Atlas charges $500 for your formation and your first year of registered agent services (a state compliance requirement), and $100 each year thereafter to maintain your registered agent.
Getting your IRS tax ID (EIN)
After your formation in Delaware is complete, Atlas will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing; all other users will receive standard processing. For standard orders, Atlas calls the IRS to retrieve the EIN for you, using real-time IRS data to determine when your filing is likely to be available. You can read more about how Atlas retrieves your EIN and view current tax ID ETAs.
Purchasing your shares in the company
After Atlas forms the company, we’ll automatically issue shares to the founders and help you purchase them so you formally own your share in the company. Atlas allows founders to purchase their shares with intellectual property in one click and reflect this in your company documents, so you don’t need to mail and track cash or check payments.
Filing your 83(b) tax election
Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. Atlas can file and mail your 83(b) tax election in one click for both US and non-US founders—no trip to the post office required. We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.
Partner perks and discounts
Atlas partners with a range of third-party tools to offer special pricing or access to Atlas founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including OpenAI and Amazon Web Services. Atlas also partners with Mercury, Carta, and AngelList to provide faster, automatic onboarding using your Atlas company information, so you can get ready to bank and fundraise even faster. Atlas founders may also access discounts on other Stripe products, including up to one year of free credits toward payments processing.