There is no degree, certification, or formal credential needed to start your own business in the United States; the qualifications to start your own business are legal and regulatory. You need to be old enough to sign contracts, choose a business structure, register with the right state and local agencies, get a federal tax ID if your situation calls for one, and hold any professional or trade license your specific industry requires. A freelance designer and a licensed electrician face very different checklists, but neither one starts with a diploma review.
Who Is Legally Eligible
Most states do not set a specific minimum age for organizing a business entity, but owners under 18 run into practical walls. Minors generally have the right to void contracts under common law, which makes banks, landlords, and suppliers reluctant to deal with them. Some states explicitly bar minors from serving as LLC organizers or registered agents, and nearly every state requires a registered agent to be at least 18. A workable path for a teenager with a business idea is to have a parent or guardian serve as organizer and registered agent while the younger owner handles operations.
Citizenship is not a requirement. Non-citizens can form LLCs, hold corporate shares, and serve as officers or directors. The restriction is on actively working in or managing the business from inside the United States, which requires valid work authorization or an appropriate visa classification such as an E-2 investor visa or L-1 intracompany transfer. Federal immigration law ties the right to work to the specific visa conditions set at admission.1Office of the Law Revision Counsel. 8 USC 1184 – Admission of Nonimmigrants
A criminal record does not automatically disqualify you from starting most businesses. The main exception involves insured depository institutions: anyone convicted of a crime involving dishonesty, breach of trust, or money laundering is prohibited from owning, controlling, or participating in the affairs of a bank or savings institution without prior written consent from the FDIC.2FDIC. Federal Deposit Insurance Act Section 19 – Penalty for Unauthorized Participation by Convicted Individual Insurance companies face similar ownership restrictions under state insurance codes, which vary. For Small Business Administration loans, the SBA revised its rules in 2024 so that the main disqualifiers are being currently incarcerated, actively serving a sentence of imprisonment, or being under indictment for a felony or a crime involving financial misconduct.3Federal Register. Criminal Justice Reviews for the SBA Business Loan Programs, Disaster Loan Programs, and Surety Bond Guaranty Program
Picking a Business Structure
Your structure decides how much paperwork you file, how you pay taxes, and whether your personal assets are shielded from business debts. The SBA recommends choosing it before you register anything with the state, because the entity type dictates every form that follows.4U.S. Small Business Administration. Choose a Business Structure
A sole proprietorship is the default. If you start doing business without registering a formal entity, that is what you are. There are no state formation documents, no separate business tax return, and no filing fees. The tradeoff is that you and the business are legally the same person, so your personal accounts and property are exposed to any business debt. If you want to operate under a name other than your legal name, you typically file a “doing business as” (DBA) registration with the county clerk or a state agency.
A limited liability company creates a legal wall between personal assets and business liabilities. It requires filing formation documents with the state and paying a filing fee, and profits pass through to your personal return unless you elect otherwise. A corporation is more formal, with shareholders, directors, and officers, and involves more ongoing paperwork; it is usually the right choice only if you plan to raise outside investment or eventually go public. For most small operations, the real decision is sole proprietor or LLC.
Registering With the State
Sole proprietors can skip state entity registration entirely unless they need a DBA. If you are forming an LLC or corporation, you file formation documents with your state’s business filing office, usually the Secretary of State.
Business Name
Your entity name must be distinguishable from any other entity already registered in the same state. Most states will reject a filing that duplicates or closely mirrors an existing name, and you can search the state’s business name database online before filing.5U.S. Small Business Administration. Choose Your Business Name Registering an entity name with the state does not give you trademark rights. A separate federal trademark registration through the U.S. Patent and Trademark Office is a different step if you plan to build a brand nationally.
Formation Documents
LLCs file articles of organization. Corporations file articles of incorporation. Both typically require the business name, the physical address of the principal office, the names of the initial managers or directors, and a statement of purpose. Many filers use a broad “any lawful purpose” statement. Most states accept online filings now.
Registered Agent
Every LLC and corporation must designate a registered agent with a physical street address in the state of formation. The agent receives legal notices, lawsuit papers, and official state correspondence. A P.O. box does not qualify. You can serve as your own agent if you have a qualifying address, or hire a commercial service for a modest annual fee.
Fees and Processing
State filing fees for LLC formation range from about $35 to $500 depending on the state, and corporation fees fall in a similar range. Expedited processing is usually available for an extra charge. Online filings typically clear within a few business days; paper filings sent by mail can take several weeks. Once approved, the state issues a certificate of formation or organization as official proof the entity exists.
Getting a Federal Tax ID
An Employer Identification Number is a nine-digit number the IRS assigns to businesses for tax reporting. You can use it immediately to open a business bank account, file tax returns, and apply for licenses.6Internal Revenue Service. Employer Identification Number
Not every business needs one. The IRS requires an EIN if you hire employees, operate as a partnership or corporation, or need to file certain excise tax returns. A sole proprietor with no employees can use a Social Security number instead, though many apply for an EIN anyway so they are not handing their Social Security number to clients and vendors. The application is free, takes about ten minutes on the IRS website, and the number is issued immediately. If you formed a legal entity, the IRS recommends completing state registration first so the EIN application is not delayed.7Internal Revenue Service. Get an Employer Identification Number
Industry Licenses and Professional Credentials
This is where formal education actually matters, and only here. A general retail store, a landscaping company, or a consulting firm needs no degree or professional license. Certain industries are gated, and no amount of entity paperwork will let you operate without the right credential.
Licensed Professions
Doctors, lawyers, accountants, architects, and engineers all need professional licenses issued by state regulatory boards before offering services to the public. The usual path is an accredited degree program, a board examination, and continuing education to keep the license active. A physician cannot form an LLC and start seeing patients. The license comes first; the business structure is built around it. Requirements vary by state, so someone licensed in one state may need to apply separately to practice in another.
Skilled Trades
Plumbers, electricians, and HVAC technicians face licensing in most states. The typical path is an apprenticeship, several years of trade experience, and a technical examination covering building codes and safety standards. The trade license has to come before you can pull permits or legally offer services. Operating without a required trade license exposes you to fines that commonly range from a few hundred dollars to $5,000 or more, and repeated violations can lead to criminal misdemeanor charges.
Other Regulated Activities
Real estate agents, insurance brokers, cosmetologists, pest control operators, and childcare providers all face licensing requirements in most states. The common thread is public safety or consumer protection. If your business involves something that could harm people when done poorly, a licensing requirement is probably attached. Your state’s occupational licensing board or the SBA’s license and permit lookup tool can confirm whether your activity requires a credential.8U.S. Small Business Administration. Apply for Licenses and Permits
Local Permits, Zoning, and Sales Tax
Many cities and counties require a general business license or business tax certificate before you can operate within their boundaries, regardless of industry. Fees typically run from $25 to a few hundred dollars. Activities commonly regulated locally include restaurants, retail stores, construction, dry cleaning, and vending machine operations.8U.S. Small Business Administration. Apply for Licenses and Permits
Zoning is the piece people most often miss. Local ordinances dictate what business types can operate in which areas. Running a commercial operation from a residence may require a home occupation permit, and some neighborhoods prohibit certain uses entirely. A quick check with the city or county planning department before signing a lease or setting up at home avoids fines or forced relocation later.
If your business sells taxable goods or certain services, most states require a seller’s permit or sales tax license before your first sale. Registration is typically free through the state department of revenue. The permit authorizes you to collect sales tax from customers and remit it on a regular schedule. Failing to register and collect when required creates back-tax liability plus penalties and interest. Separately, states generally require registration for income tax withholding once you have employees, and some impose a franchise tax or gross receipts tax with its own registration.
Keeping the Business in Good Standing
Forming an entity is not a one-time event. States impose continuing obligations, and letting them lapse can quietly strip away the liability protection you set the entity up to get.
Annual Reports
Nearly every state requires LLCs and corporations to file a periodic report, usually annually or biennially, updating the state on your business address, current managers or officers, and registered agent. Filing fees run from $0 in a handful of states to several hundred dollars, with most under $150. Missing the deadline triggers late fees, and continued failure to file can lead to administrative dissolution, meaning the state revokes your entity’s legal existence. Once that happens, limited liability goes with it, and your personal assets could be exposed to business debts.
Operating Agreements and Bylaws
LLCs should have a written operating agreement, and corporations should adopt bylaws. These internal documents spell out how the business is managed, how profits are divided, and what happens if an owner leaves. Not every state requires them, but operating without governance documents is one of the classic reasons courts pierce the corporate veil and hold owners personally liable for business debts. If you do not treat the business as a separate entity, a court may not either.
Insurance
The moment you hire your first employee, most states require workers’ compensation insurance. Some states and industries require it even without employees. General liability coverage is not universally mandated by law, but landlords, clients, and licensing boards frequently require it as a condition of doing business. Professional liability coverage, sometimes called errors and omissions insurance, is similarly expected in fields like consulting, accounting, and healthcare.
Beneficial Ownership Reporting
The Corporate Transparency Act originally required most small domestic entities to file beneficial ownership information with FinCEN, the Treasury Department’s financial crimes division. As of March 2025, FinCEN exempted all entities formed in the United States from this reporting requirement, and the obligation now applies only to foreign-formed entities that register to do business in a U.S. state.9FinCEN.gov. Beneficial Ownership Information Reporting If you are forming a domestic LLC or corporation, you do not currently need to file a beneficial ownership report. This rule has shifted multiple times in a short period, so check FinCEN’s site if you are reading this well after 2026.