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By information.com — Published September 26, 2017
If you are planning to start your own business in the United States of America, you might want to first develop an understanding of the various legal and bureaucratic implications of the same to be adequately prepared for the entire process. To make things easier for you, we here have a discussion on the various steps and processes that you might have to consider while getting your new entrepreneurial venture registered in the US.
The first step towards starting your own company in any legal setup is ascertaining as to what kind of business entity it will be. All the different types of legal configurations have their own set of tax, finance and law related implications. You can determine the legal structure of your business based on a number of different factors including its financial goals, susceptibility to lawsuits and also the level of control required by the owners. Depending upon whether you choose to setup a corporation, an LLC (limited liability Company), an LLP (limited liability partnership) or a nonprofit organization, you will be required to perform different types of registration formalities as specified by your local state legislation. For instance, if you have a co-owner who is not a citizen of the US, you will be required to form an LLC or a corporation. Also, there is no upper cap on the number of owners one can have for an LLC or a corporation in the US.
While you can establish a business entity anywhere across the fifty states of the US, there are certain states such as Wyoming, Nevada and Delaware that are typically more conducive to businesses in general as compared to the others in terms of registration requirements. Your choice of state will largely depend on your specific goals with respect to your business operations. For instance, if you are establishing a company primarily for opening a US bank account and might not have a brick and mortar office for running it, then Wyoming might be your best bet given the low annual fees in the state.
It goes without saying that you cannot get your company registered without it having any legal name that can be used on all the various government documents. By default, the full name of the owner is also the legal name of a business. However, if you wish you change the name of your business to something fictitious, you will be requires to register your business under this Assumed name as DBA or ‘Doing Business As’. The legal name of business will be used in all government associated procedures including applications for permits, licenses, employer tax IDs and the like. Needless to say, since your name will play a pivotal role in representing your company in your market niche, you need to pay special attention while picking one that resonates with your target audience and boosts your marketing efforts. Once you have picked a name you would need to clarify with the USPTO or United States Patent and Trademark office and check if there is any other business that has already been registered under the same name.
Once you have got your business registered under a chosen name, you would be required to acquire a Federal Employee Identification Number of FEIN by the Internal Revenue Service or IRS of the United States. All kinds of business enterprises are required to have this special identification number for establishing them as a distinguished business entity recognized by the US government. The FEIN is typically required in a number of business related legal procedures including acquiring a bank account in the US. You can apply for the FEIN via a number of different channels including online with no processing charges.
In addition to having a federal tax id for your business, you are also required to register your company with the revenue agency in your state of establishment. For instance, if you plan to sell goods and services through your company, you will be required to acquire a Vendor’s License or Sales Tax Permit from the local state government office. In addition to this, you also have certain tax obligations with respect to the state including unemployment insurance taxes, state worker’s compensation insurance taxes, corporate income taxes and so on. For instance, states like California, Puerto-Rico, New York, New Jersey and Rhode Island levy state taxes from businesses on temporary disability insurance as well.
There are a number of permits and licenses such as the environmental permit that all new businesses are required to acquire in order to operate anywhere in the US. Most of these permits and licenses are industry specific and can be acquired at local, state or federal level. Given the fact that licensing regulations are typically varied for different states, local regions and industry sectors, you must take your time to research the various clauses in reference to your particular business and place of operation to avoid hefty fines and penalties for non compliance.