To open a company in the USA, you file a short formation document with one state’s business registry, pay a filing fee somewhere between $35 and $520, and then handle the federal tax ID, state tax accounts, and local licenses that let the company actually operate. Each state runs its own registry, so the forms and fees differ, but the sequence of steps is the same everywhere. The filing itself is the easy part. What you do in the weeks after decides whether the company holds up as a real, protective legal entity.
Step 1: Choose a Business Structure
Your structure sets how the company is taxed, who can own it, and how well your personal assets are shielded from business debts. Three options cover almost every new company.
An LLC is the default choice for most small businesses. It separates personal assets from company liabilities without the board meetings, shareholder votes, and recordkeeping a corporation demands. Members can run the company themselves or hire managers.
A C-Corporation is a standalone taxpaying entity owned by shareholders, governed by a board, and run by officers. The company pays income tax, and shareholders pay again on dividends. That double taxation is the price of the structure outside investors expect: a C-Corp can issue multiple share classes and has no cap on shareholders, which is why it is the standard for companies planning to raise venture capital or go public.
An S-Corporation is not a separate entity type. It is a tax election an eligible corporation or LLC makes with the IRS so that profits pass through to the owners’ personal returns, avoiding double taxation. The eligibility rules are strict: no more than 100 shareholders, one class of stock, and every shareholder a U.S. citizen or resident. If you want the election to apply to the current tax year, file IRS Form 2553 by the 15th day of the third month of that year.1Internal Revenue Service. S Corporations For a calendar-year company, that is March 15. Miss it and the election usually waits until the following year.
Step 2: Pick the State Where You Will Form
You are not required to form the company in the state where you live. Every founder picks a home state, and that state’s laws govern the company’s internal affairs: ownership, management authority, and fiduciary duties.2U.S. Small Business Administration. Register Your Business If the company later does business in other states, those states treat it as a foreign entity and require a separate registration.
Delaware is the familiar pick for companies expecting outside investment or complex governance. Its Court of Chancery hears business disputes without juries, and the body of case law makes outcomes predictable. Wyoming draws founders who want low fees and privacy. Nevada markets itself on asset protection. For a company that will operate in one place and does not plan to raise institutional money, forming in your home state is almost always the better call. Forming elsewhere means paying to maintain registration in two states instead of one, plus a registered agent in each.
Step 3: File the Formation Documents
Check That Your Name Is Available
Search the Secretary of State’s business database in your chosen state before you draft anything. States require entity names to be “distinguishable on the record” from active registrations, so a close variation on an existing name will get your filing rejected. Words like “bank,” “insurance,” and “university” are restricted unless you hold the matching license.
Appoint a Registered Agent
Every state requires a registered agent: a person or service with a physical street address in the state who accepts legal papers for the company. If someone sues, the lawsuit is delivered there. You can serve as your own agent if you have a qualifying address, or hire a commercial service for roughly $50 to $300 per year so you do not have to sit at that address during business hours.
Prepare and File the Articles
The core document is called Articles of Organization for an LLC or Articles of Incorporation for a corporation. You file it with the Secretary of State, usually through an online portal. What you need to include is short:
- The exact legal name you confirmed in the availability search.
- Your registered agent’s name and physical street address in the state.
- A principal office address where the state can send renewal notices.
- The organizer or incorporator’s name and address.
- For LLCs, whether the company is member-managed or manager-managed. Many states ask you to declare this on the form.
- For corporations, the total number of shares authorized. Some states base the filing fee on this number, so pick a reasonable figure rather than an inflated one.
Online filings typically process within a few business days. Mailed paper filings can take weeks. Base fees run from about $35 to $520, with most states falling between $50 and $200. If you need it faster, most states offer expedited processing for an added $25 to $150 or more. Expedited fees are not refunded if the filing is rejected, and neither is the base fee, so fill every field carefully. Typos and missing information are the most common reasons filings bounce back.
Once approved, the state issues a Certificate of Formation, Certificate of Organization, or Certificate of Incorporation. Keep it safe. You will need it to open a bank account, apply for financing, and prove the company exists to vendors.
Step 4: Get Your Federal and State Tax IDs
Your next move is an Employer Identification Number from the IRS. The EIN is a nine-digit number that functions like a Social Security number for the business, and you need it to file taxes, open a bank account, and hire employees. The application is free, takes about ten minutes on the IRS website, and asks for the Social Security number or ITIN of the “responsible party,” meaning the person who controls the entity.3Internal Revenue Service. Get an Employer Identification Number Third-party sites that charge for EIN applications are selling something the IRS gives away.
Federal registration is only part of it. Most states require separate accounts for the taxes that touch your business.4U.S. Small Business Administration. Get Federal and State Tax ID Numbers The common ones are a sales tax permit if you sell taxable goods or services, a state employer withholding account if you have employees, and a state unemployment insurance registration. Skipping these does not save money. It builds back-tax liability with interest and penalties until the state catches up.
Step 5: Write the Operating Agreement or Bylaws
The formation filing creates the entity. The governance document says how it runs. For an LLC that is an operating agreement; for a corporation, bylaws. Both cover decision-making authority, how profits are split, how ownership transfers work, and what happens if a member or shareholder wants out.
You do not file these with the state. They stay at the company’s principal office. Some states require an operating agreement; others apply default rules if you do not create one. Skipping it is a bad idea even where it is legal. State defaults rarely match what founders actually intended, and the absence of governance documents is one of the first things courts look at when deciding whether to pierce the liability shield you formed the entity to get.
Step 6: Handle Licenses, Permits, and Any Other States You Operate In
Forming the entity and getting tax IDs does not clear you to open the doors. Most businesses need a mix of federal, state, and local licenses tied to their industry and location.5U.S. Small Business Administration. Apply for Licenses and Permits Alcohol, firearms, aviation, and commercial fishing require federal licenses. Construction, food service, professional services, and retail are commonly regulated at the state or local level. Many cities and counties also charge a general business license or occupational tax just to operate inside their boundaries, with annual fees ranging from under $50 to several hundred dollars. Operating without a required license can bring fines or a forced closure, so check with the city and county clerk’s office before you open.
If you do business in states beyond the one you formed in, you likely need to foreign qualify in each of them. Having a physical location, employees, or regular in-person activity in a state almost always triggers the requirement.2U.S. Small Business Administration. Register Your Business The consequences of ignoring it are harsher than most founders expect. Every state has a statute that bars an unqualified foreign entity from suing in its courts, so if a customer in that state owes you money, you cannot collect through the courts until you register and pay back fees. Penalties for operating without qualification range from a few hundred dollars to $10,000 or more, and some states can pin personal liability on officers who knew the company was not qualified.
Keeping the Company in Good Standing
Most states require periodic reports, either annually or every two years, that update the company’s address, registered agent, and officers or managers. Fees run from $0 in a handful of states to over $800 in the most expensive jurisdictions, with California’s combined franchise tax and filing fee topping out at $820. The typical LLC fee across all fifty states is around $90.
Missing the deadline is costly. States administratively dissolve entities that stop filing, which strips the company of legal authority to conduct business. You can usually reinstate by filing the overdue reports and paying penalties, but obligations you incurred while the company was dissolved may not be covered by the liability shield.
That shield is the whole reason to form an entity, and it is not automatic. Courts can pierce the corporate veil and hold owners personally liable when the company was never really treated as separate. The patterns that lead there are consistent:
- Running personal expenses through the business bank account, or depositing business income into a personal account. Commingling funds is the fastest way to lose protection.
- Operating without an operating agreement or bylaws, which signals that the owners never took the entity’s separateness seriously.
- For corporations, skipping annual meetings, minutes, and documentation of major decisions.
- Signing contracts in your personal name when acting for the company, or treating your name and the entity’s name as interchangeable on invoices and accounts.
No single failure guarantees a court will pierce the veil, but each one weakens the separation that makes the entity worth having. Separate bank accounts, documented decisions, and current state filings cost almost nothing compared to the exposure they prevent.
A Note on Beneficial Ownership Reporting
The Corporate Transparency Act originally required most new companies to report their beneficial owners to the Financial Crimes Enforcement Network within 30 days of formation. An interim final rule issued in March 2025 exempted all entities formed in the United States from that requirement.6FinCEN. Beneficial Ownership Information Reporting As of 2026, domestic companies and their beneficial owners do not need to file beneficial ownership reports with FinCEN.
Foreign-formed companies that register to do business in a U.S. state are not covered by the exemption. They still must file reports identifying their beneficial owners within 30 days of registration.7Federal Register. Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension FinCEN has signaled a final rule is coming, and the rules in this area have changed more than once since 2024, so check the current status before you rely on the exemption.