To open a company in the USA, you file formation documents with one state’s business filing office (usually the Secretary of State), get a federal Employer Identification Number from the IRS, put internal governance documents in place, and then line up whatever licenses your industry and location require. The state filing is the moment the company legally exists. Everything else either prepares for that filing or follows from it. In some states the whole formation step takes a single day.
Pick the State Where the Company Will Be Formed
A company can operate in multiple states, but it can only be formed in one. That state’s laws govern how the company runs internally: how decisions get made, how owners come and go, how the business can be dissolved.
For most small and mid-sized businesses, the right state is the one where you will actually operate. Forming in Delaware while running the business in Texas means paying annual fees in both states and registering as a “foreign” entity in Texas on top of your Delaware filing. Home-state formation avoids that duplication.
Delaware, Nevada, and Wyoming attract larger companies, venture-backed startups, and businesses with complex shareholder arrangements for specific legal reasons — Delaware, for example, has a well-established body of corporate case law. For a straightforward small business, your home state is almost always the better choice.
Pick a Business Structure
Before you can file anything, you need to know what kind of entity you are creating, because each type has its own formation document. The two common choices are the Limited Liability Company (LLC) and the Corporation. Both shield your personal assets from most business debts.
An LLC has flexible management and simpler recordkeeping. Owners are called members, and the LLC can be managed by the members directly or by designated managers. By default, a single-member LLC is treated as a sole proprietorship for federal tax purposes, and a multi-member LLC is treated as a partnership.1Internal Revenue Service. Single Member Limited Liability Companies2Internal Revenue Service. LLC Filing as a Corporation or Partnership
A Corporation is more formal. It has a board of directors, officers, and shareholders, issues stock, and is generally expected to hold annual meetings and keep detailed minutes. A corporation is taxed as its own entity by default (C corporation status) but can elect S corporation treatment to avoid double taxation.
The structure determines the form you file. An LLC uses Articles of Organization (sometimes called a Certificate of Organization). A Corporation uses Articles of Incorporation (or a Certificate of Incorporation). States publish separate forms for each.
Clear a Name and Line Up a Registered Agent
Two things need to be settled before the formation document goes in: the name has to be available, and someone has to be designated to receive legal mail for the company.
Name
Every state requires a new entity’s name to be distinguishable from businesses already in its database. Search your state’s filing office website first. If the name is already taken or too close to an existing one, the state will reject the filing.
State law also requires a designator that signals the legal structure. An LLC’s name generally must include “Limited Liability Company,” “LLC,” or an abbreviation like “L.L.C.” A Corporation’s name typically must include “Corporation,” “Incorporated,” “Corp.,” or “Inc.” Many states let you reserve an available name for a set period, often 60 to 120 days, by filing a short reservation application and paying a small fee.
Registered Agent
Every business entity has to appoint a registered agent: a person or company that accepts legal documents, government notices, and service of process on the company’s behalf. The agent’s name and physical street address go on the formation document and become part of the public record. A P.O. Box will not work. The agent has to be available at that address during normal business hours and either reside in the state of formation or be a professional registered agent service authorized there.
You can appoint yourself to save money, but your home or office address becomes public and you need to be reachable in person during business hours. Professional services typically run $50 to $300 per year. Losing your registered agent is one of the most common reasons states administratively dissolve a business, so this slot cannot sit empty.
File the Formation Documents
The formation document is the legal charter that brings your company into existence. Get the current form from your state’s filing office website. Specific fields vary, but most ask for:
- The exact legal name of the business, including the required designator.
- The name and physical address of the registered agent.
- The company’s principal business address.
- A statement of business purpose, which can usually be broad (such as “any lawful business activity”).
- Duration — most companies choose perpetual.
- The organizer’s name and address.
Corporations may also need to list the number of authorized shares and the names of initial directors. The organizer signs the document and submits it to the state’s filing office.
Filing Methods and Fees
Most states accept filings through an online portal, and online is faster than mail. LLC formation fees range from about $35 to $500, with most states charging between $50 and $200. Corporation fees fall in a similar range but can run higher in states that calculate fees based on authorized shares. Many states offer expedited processing for an additional fee, which can cut turnaround from several weeks to as little as 24 hours. Online payments usually go on a credit card; paper filings generally require a check or money order.
Confirmation
Once the state approves the filing, it issues a confirmation document — commonly a Certificate of Organization, Certificate of Incorporation, or Certificate of Existence — that proves your company legally exists. You will need certified copies to open a business bank account and to establish legitimacy with vendors, lenders, and other agencies. After you receive confirmation, check the state’s online business registry to verify your entity shows up with the correct name, status, registered agent, and filing date. That registry entry is the definitive proof the company is active.
Get an Employer Identification Number
Once the company exists at the state level, the next step is a federal Employer Identification Number (EIN) from the IRS. This nine-digit number is your company’s tax ID. You need it to file federal tax returns, hire employees, and open a business bank account.
The fastest route is the IRS online application, which issues the number immediately. To use the online system, the person applying (the “responsible party”) must have a valid Social Security Number or Individual Taxpayer Identification Number, and the business must have a legal residence or principal office in the United States. Applicants outside the U.S. cannot use the online application and must apply by fax or mail using IRS Form SS-4, or by calling the IRS international applicant line.3Internal Revenue Service. Instructions for Form SS-4
There is no fee. The application asks for the entity’s legal name, the responsible party’s name and taxpayer identification number, the business address, and the entity type. Save the EIN confirmation letter. You will reference that number on nearly every tax document and financial account tied to the business.
Put Internal Governance Documents in Place
Governance documents define how the company is run and how owners share in it. They are not filed with the state, but they should be drafted promptly after formation and kept with the company’s records.
An LLC uses an Operating Agreement, which covers each member’s ownership percentage, how profits and losses are split, voting procedures, management responsibilities, how members are added or removed, and how the business is dissolved. A Corporation uses Bylaws, which cover the roles and duties of directors and officers, procedures for shareholder and board meetings, voting requirements, stock issuance, and amendments.
Without these, the company defaults to whatever rules your state’s business statutes impose, and those defaults may not match what you actually agreed to with your co-owners. Many state LLC statutes, for instance, default to equal profit-sharing regardless of what each member put in. A written Operating Agreement lets you override that with the split you want. Banks, lenders, and investors will also expect to see these documents during due diligence.
Choose Your Federal Tax Classification
How your company is taxed federally is a separate decision from how it is organized at the state level, and it is one of the most overlooked parts of the setup.
Corporations are taxed as C corporations by default. LLCs get pass-through treatment: profits and losses flow to the owners’ personal returns rather than being taxed at the entity level.
An LLC can change its default treatment by filing an election with the IRS. To be taxed as a corporation, the LLC files Form 8832 (Entity Classification Election). The election can take effect no more than 75 days before the filing date and no more than 12 months after it.4Internal Revenue Service. Form 8832 Entity Classification Election
To be taxed as an S corporation, which combines pass-through taxation with the ability to reduce self-employment taxes on part of the income, the LLC must first be classified as a corporation (or elect to be treated as one) and then file Form 2553. That election has to be filed no more than two months and 15 days after the start of the tax year it is meant to cover, or at any time during the preceding tax year.5Internal Revenue Service. Instructions for Form 2553 Miss the window and you generally wait until the next tax year unless you qualify for late-election relief.
Many new owners stay with the default treatment in the first year and reconsider once revenue stabilizes.
Register in Other States If You Operate There
If your company does business in states beyond the one where it was formed, you may need to foreign qualify, meaning register as a foreign entity in each additional state. “Foreign” here means out-of-state, not international.
What counts as “doing business” varies, but common triggers include a physical office, warehouse, or retail location in the state, employees working there, or a significant ongoing presence. Simply holding a bank account in another state or running occasional transactions usually does not trigger the requirement.
Foreign qualification means filing an application (often called a Certificate of Authority) with the other state’s filing office, paying a registration fee that generally runs from $50 to several hundred dollars, and appointing a registered agent in that state. You will also owe annual report fees and potentially franchise taxes in each state where you register. Operating in a state without qualifying can bring fines, loss of access to that state’s courts for filing lawsuits, and personal liability for company officers.
Get the Licenses and Permits You Actually Need
Forming the company and getting an EIN do not, by themselves, let you start operating. Depending on your industry and location, you may need licenses and permits at the federal, state, or local level.
- Most cities and counties require a general business license or tax registration certificate, usually renewed annually.
- Regulated professions — law, medicine, accounting, real estate, plumbing, electrical work, cosmetology, and others — require a professional license from the relevant state board.
- Businesses selling alcohol, firearms, or tobacco need special permits. Food service needs health department permits. Construction companies need contractor licenses.
- If you plan to work from a residential address, check local zoning. Many municipalities restrict business activity in residential zones and may require a home occupation permit.
The specific list depends entirely on what you do and where you do it. Your city or county clerk’s office is usually the best place to start on local requirements, and your state’s business portal will identify state-level licenses.
Keep the Company in Good Standing
Formation is not a one-time event. Every state has ongoing requirements, and falling behind can lead to administrative dissolution, which effectively revokes your company’s legal existence.
Most states require periodic reports, filed annually or every two years, that update the state’s records on your officers or managers, registered agent, and principal address. These are informational, not financial. Filing fees range from $0 in a handful of states to several hundred dollars in others.
Miss an annual report, lose your registered agent, or skip required franchise taxes, and the state can dissolve the company. Once dissolved, it loses authority to conduct business. People who keep acting on behalf of a dissolved company can be held personally liable for debts incurred during the period of dissolution. The company can also lose its name — if another entity registers it while you are dissolved, you may not get it back on reinstatement.
Most states allow a dissolved company to apply for reinstatement by filing the overdue reports, paying back fees and penalties, and submitting a reinstatement application. Reinstatement does not undo personal liability that arose during the dissolution period, so staying current is far cheaper than recovering from a lapse.