Starting a US business: the complete founder's guide

Almost every guide to starting a US company is really a guide to filing one document. You pick a state, you pay a fee, a certificate arrives, and the article ends on a note of congratulation. Then you try to open a bank account and discover that the certificate was the easy part.

The company is a container. What makes it useful is the infrastructure you attach to it — a tax ID, an account that will hold money, a processor that will take card payments, and a filing calendar that stops the whole thing being administratively dissolved eighteen months later. This guide is the full sequence, in the order you will actually meet it.

The sequence

Each step depends on the one before it. You cannot open a bank account without an EIN, and you cannot get an EIN without a formed entity. Skipping ahead is the most common way people lose a fortnight.

Step 1 — Entity and state

Two decisions, and people routinely agonise over the wrong one. The entity type matters a great deal. The state matters much less than the internet suggests.

Entity type

• LLC — the default for most founders. Cheap, flexible, no board, no minutes, and by default the profit passes through to the owners rather than being taxed at the company level.
• C-Corporation — the right answer if you intend to raise venture capital, issue stock options, or bring on outside shareholders. Delaware C-Corps are what US investors expect. The cost is double taxation and materially more admin.
• Sole proprietorship — not really a company. No liability protection and nothing to open a business bank account with. Fine until it isn't.

The honest rule: form an LLC unless you have a concrete reason to form a C-Corp, and "I might raise money one day" is not concrete. Converting an LLC to a C-Corp later is a well-trodden path.

State

If you have a physical presence in a US state — an office, employees, inventory, yourself — form there. Forming in Wyoming to avoid California does not work: you will end up registered as a foreign LLC in California anyway, paying both.

If you have no US physical presence at all, which is the case for most international founders, then the state is genuinely a choice. Wyoming and New Mexico are cheap and private. Delaware is expensive but is what investors and some banks recognise instantly.

Step 2 — Filing, and what it actually buys you

Filing articles of organisation with a Secretary of State creates the entity. That is all it does. It does not register you for tax, it does not get you a bank account, and it does not give you the right to operate in any other state.

Every state requires a registered agent with a physical street address in that state, who can receive legal documents during business hours. If you don't live there — and if you're reading this from outside the US, you don't — this is a paid service at $50–$150 a year.

Step 3 — The EIN

An Employer Identification Number is the company's federal tax ID. You need one to open a bank account, to onboard with Stripe, to hire anyone, and to file a return. You need one even if you will never employ a single person.

Step 4 — Banking

This is where founders outside the US hit the wall. Traditional US banks generally expect the beneficial owner to appear in a branch with a US address and identification. Fintech business accounts have made this much easier, but approval is not universal and it varies by the owner's nationality and country of residence.

Have ready: your formation certificate, your EIN confirmation letter, your operating agreement, a passport, and proof of your home address. Missing any of these restarts the clock.

Step 5 — Getting paid

A US entity plus a US bank account plus an EIN is the combination that opens Stripe, PayPal, Shopify Payments, Amazon and the app stores. For a great many founders this is the entire reason the company exists: the local payment rails in their country either don't reach their customers or don't accept card payments from them at all.

Two things to plan for. Processors hold funds on new accounts, so your first payout is slower than you expect. And getting money from a US account to a personal account in your own country has its own fees and its own paperwork.

Step 6 — The part everyone forgets

A US company generates recurring obligations from the day it exists, whether or not it earns anything.

• Annual report to the state, most years, with a fee.
• Franchise tax in some states — Delaware charges LLCs $300 a year regardless of revenue or activity.
• Federal filing. A foreign-owned single-member LLC must file Form 5472 with a pro forma Form 1120 every year, even with zero revenue. The penalty for missing it is $25,000.
• Beneficial ownership reporting under the Corporate Transparency Act — the scope of which has changed materially since 2024, so confirm the current requirement rather than trusting an older article.
• Registered agent renewal, or the state loses its ability to serve you and eventually dissolves the company.

What this costs in year one

The mistakes that cost the most

1. 1Forming in the wrong state. If you have a real presence somewhere, form there. Chasing a low-tax state you have no connection to usually means paying two states instead of one.
2. 2Waiting to apply for the EIN. It gates everything downstream. Start it immediately.
3. 3Assuming you need an ITIN first. You don't, and believing you do can add months.
4. 4Treating a dormant company as a company with no obligations. See the $25,000 penalty above.
5. 5Mixing personal and business money. It undermines the liability protection you formed the company for, and it makes the first tax return genuinely painful.
6. 6No operating agreement. Single-member companies skip it and then find a bank asking for it.
7. 7Missing the first annual report. Falling out of good standing is quiet, and getting back into it costs more than staying there.

Where to go next

If you are starting from outside the United States, read the international founders guide next — the sequence is the same, but three of the steps behave differently. If you're weighing entity types, formation has the decision framework. If you already have a company and something has gone wrong, start with compliance.