What you need to open a business in the US

Before you start

Opening a business in the US is not hard, but the steps have an order. If you do them out of order, you redo paperwork. Below is the order we follow, with the official page for each step so you can check the details yourself.

1. Choose a business structure

The structure decides who is liable when something goes wrong and how you are taxed. The SBA's guide to business structures compares the common options:

• Sole proprietorship: the simplest to start, but your business and personal assets are not separate. You can be held personally liable for business debts.
• LLC (limited liability company): in most cases it protects your personal assets, like your house, car and savings, if the business is sued or goes bankrupt.
• Corporation: the strongest protection from personal liability, with more record-keeping and reporting.

Every business carries some risk: an unhappy customer, an accident on your premises, a contract that goes wrong. That is why many small business owners choose an LLC. Which structure fits you depends on your taxes, partners and plans, so this is the first question for your CPA.

2. Register with your state and name a registered agent

LLCs and corporations register with the state where they do business. According to the SBA's registration guide, you also need a registered agent in that state before you file. The agent receives official papers and legal documents for the business, and must be located in the state where you register.

Pick a name you can use everywhere: on the state filing, your signage, your website and your Google profile. If you operate under a different name, most states require you to register it as a DBA. The SBA's page on choosing your business name explains how the state name, a DBA, a trademark and a domain name differ.

3. Get your EIN (it's free)

An EIN (Employer Identification Number) is your business's federal tax ID. You need one if you hire employees or operate as a partnership or corporation, and banks usually ask for it. The EIN is free from the IRS. The IRS EIN page says you never have to pay a fee for an EIN, and warns about websites that charge for one.

You can apply online if the business was formed in the US and its principal place of business is in the US or a US territory. The person applying needs an SSN or ITIN. When the online application is approved, the IRS issues the EIN right away. Apply after the state approves your LLC or corporation, so the EIN matches the registered entity.

4. Check your licenses and permits

There is no single national business license. Industry-specific licenses and permits vary by state and city. The SBA's licenses and permits guide says requirements depend on your business activities and your location, and that most businesses need some combination of licenses and permits from federal, state and local agencies.

• Federal: only needed if what you do is regulated by a federal agency, such as selling alcohol, dealing in firearms or running an aviation business.
• State: many professions and activities need a state license, and the rules, fees and renewal dates differ from state to state.
• City or county: many places require a general business license, and some add zoning rules about where you can operate, or permits for signs, food service or a home-based business.

Start with your state's business or licensing website and your city or county clerk, and ask them directly what your type of business needs. Some licenses take weeks because of exams, inspections or background checks, so check early, before you sign a lease or take your first customer. Operating without a required license or permit can bring fines and delays.

If you sell products or taxable services, ask your CPA whether you also need to register for sales tax with your state. Keep copies of every license and permit together, because your bank, your landlord and Google may ask to see them later.

5. Get insured

The SBA's business insurance guide says businesses with employees must carry workers' compensation, unemployment and disability insurance, and that laws requiring insurance vary by state. Beyond what the law requires, general liability insurance is a common starting point, and landlords and larger clients often ask to see it.

Ask an insurance agent who works with small businesses what your state and your industry require, and whether you also need coverage for property, vehicles or professional mistakes. Get quotes before you open, because some leases and contracts require proof of insurance before you can start.

6. Open a business bank account

Keep business money out of your personal account from day one. The SBA's banking guide notes that separate accounts offer some personal liability protection and make taxes simpler. Banks usually ask for your EIN, your formation documents, ownership agreements and any business license, so open the account after steps 2 to 4.

7. Set up the digital basics

Customers check you online before they call. Once the company exists, set up these four things, all in the company's name:

1. A domain that matches your business name, registered to the company, not to a freelancer.
2. A business email on that domain, so quotes and invoices come from your company and not a personal inbox.
3. A simple website that says what you do, where you work and how to reach you.
4. A Google Business Profile with the same name, phone and service area. Our guide on why Google suspends Business Profiles explains how to set it up without getting suspended.

Use the exact same business name, phone number and address details on the state filing, your website and your Google profile. When those match, customers and search engines can tell they belong to one real company.

Your checklist

• Talk to an attorney and a CPA about the right structure and state.
• Choose a business name and check that the domain is free.
• Register the LLC or corporation with your state and name a registered agent.
• Get your EIN free from the IRS, directly on irs.gov.
• Check which federal, state and local licenses and permits your business needs, and apply for them.
• Get the insurance your state and industry require, including workers' compensation if you have employees.
• Open a business bank account with your EIN and formation documents.
• Check local business license, zoning and permit rules with your city or county.
• Set up your domain, business email, website and Google Business Profile.

If you would rather not handle the paperwork yourself, our US business setup service walks you through these steps and coordinates with licensed professionals where the law requires one.

Sources

1. Choose a business structure, U.S. Small Business Administration
2. Register your business, U.S. Small Business Administration
3. Choose your business name, U.S. Small Business Administration
4. Get an employer identification number, Internal Revenue Service
5. Apply for licenses and permits, U.S. Small Business Administration
6. Get business insurance, U.S. Small Business Administration
7. Open a business bank account, U.S. Small Business Administration