Starting a business in the United States is a dream for many entrepreneurs around the world. The USA offers one of the most business-friendly environments with strong legal protection, large consumer markets, access to investors, and countless opportunities for growth.
However, starting a business in the U.S. also requires understanding certain legal rules, business structures, registrations, taxes, licenses, and compliance steps.
This guide explains everything clearly so that anyone, including first-time entrepreneurs and international founders, can understand the process of starting a legal business in the United States.

1. Understand the Importance of Legal Compliance

Starting a business legally ensures:

• You are protected under U.S. law

• Your business can open a bank account

• Investors can trust your company

• You avoid fines, penalties, or shutdown

• You can access government programs and tax benefits

Legal compliance is the first and most important requirement for operating any business in the USA.

2. Choose the Right Business Structure

The business structure determines your tax system, legal protection, registration cost, and ownership rules.

Below are the major business structures in the U.S.

2.1 Sole Proprietorship

• Easiest and cheapest to start

• One person owns the entire business

• No legal separation between owner and business

• Owner personally pays all taxes

Best for: Freelancers, small shops, self-employed workers.

2.2 Partnership

• Two or more owners

• Profits and losses shared

• Simple tax process

• Partnerships can be General Partnerships (GP) or Limited Partnerships (LP)

Best for: Small businesses with two founders.

2.3 Limited Liability Company (LLC)

• Most popular structure in the USA

• Owners are called members

• Provides strong liability protection

• Simple tax requirements

• Flexible for small and medium businesses

Best for: Online businesses, startups, agencies, consulting companies, small retail businesses.

2.4 Corporation (C-Corp)

• Separate legal entity

• Owners are shareholders

• Strong liability protection

• Best for raising investment or going public

• More complex tax and reporting requirements

Best for: Tech startups, large companies, investor-backed companies.

2.5 S-Corporation

• Only available to U.S. citizens and permanent residents

• Avoids double taxation

• Good for small to medium U.S.-based businesses

3. Choose the State for Business Registration

Different states have different rules, taxes, and fees.

Popular states:

Delaware

• Known for business-friendly laws

• Preferred by startups and investors

Wyoming

• Low fees

• Strong privacy protection

• No state corporate tax

Nevada

• No state income tax

• Strong privacy laws

Your home state

• Best if you operate a local business

• Required if you run a physical store or office

4. Register Your Business Name

Every business needs a legal name, which must be registered to avoid duplication.

Key steps:

1. Choose a unique business name

2. Check name availability on the state business registry

3. Register the name during LLC or corporation formation

4. If using a different brand name, file a DBA (Doing Business As)

This ensures that your brand and business identity are legally protected.

5. Apply for an EIN (Employer Identification Number)

An EIN is like a business Social Security Number. It is required for:

• Opening a business bank account

• Hiring employees

• Filing taxes

• Applying for licenses

You can get an EIN through the IRS website.

Non-U.S. citizens can also obtain an EIN, even without a Social Security Number, by completing additional verification steps.

6. Open a U.S. Business Bank Account

A business bank account separates personal and business finances.
To open an account, banks generally require:

• LLC or corporation registration documents

• EIN

• Passport or ID

• Business address

Some banks allow non-residents to open accounts through international branches or fintech platforms.

7. Obtain Required Business Licenses and Permits

Depending on your industry, you may need federal, state, or local licenses.

Examples:

• Food business license

• Retail license

• Professional license (lawyer, doctor, engineer)

• Import/export permits

• Alcohol sales license

• Construction permits

• Transportation licenses

Operating without a license can lead to fines or business closure.

8. Understand Federal, State, and Local Taxes

Taxes in the USA operate on three levels:

8.1 Federal taxes

Managed by the IRS. Applies to all businesses.

8.2 State taxes

Each state has its own tax system.
Some states have no business income tax (like Wyoming, Nevada, Texas, Florida).

8.3 Local taxes

Counties and cities may add small taxes on businesses.

Common taxes businesses may pay:

• Income tax

• Sales tax

• Payroll tax

• Franchise tax

• Self-employment tax

Maintaining proper bookkeeping and hiring an accountant is advised.

9. Create a Business Plan

A strong business plan includes:

• Business idea

• Target customers

• Market research

• Competitor analysis

• Legal structure

• Marketing strategy

• Financial projections

• Funding needs

A professional business plan is useful for:

• Bank loans

• Investors

• Immigration purposes

• Internal planning

10. Set Up Accounting and Bookkeeping

Accurate financial tracking is legally required.
New businesses should:

• Use accounting software

• Track expenses

• Keep receipts

• Record income

• Prepare tax documents

• Separate personal and business funds

Hiring a bookkeeper or accountant can prevent future legal issues.

11. Apply for Insurance

Business insurance protects you from financial loss, lawsuits, and accidents.

Common types:

• General liability insurance

• Workers compensation insurance

• Property insurance

• Professional liability insurance

• Cybersecurity insurance

Many states require certain insurance types by law.

12. Understand Hiring and Employment Laws

If you hire employees, you must follow federal and state rules:

• Minimum wage laws

• Overtime rules

• Employee safety regulations

• Anti-discrimination laws

• Payroll tax requirements

• Workers’ rights policies

Businesses must follow the rules of the Department of Labor and state labor boards.

13. Protect Your Intellectual Property

If your business has a unique brand, invention, or design, you should consider legal protection.

Types of IP protection:

• Trademark

• Copyright

• Patent

• Trade secret agreements

Protecting intellectual property prevents others from copying your brand or products.

14. Build an Online Presence

Even legally strong businesses need an online presence to grow.

Steps include:

• Register a domain

• Build a professional website

• Create Google Business profile

• Set up social media pages

• Use online marketing tools

Online presence helps attract customers nationwide.

15. Maintain Compliance After Starting the Business

Starting the business is only the beginning. You must maintain compliance to avoid penalties.

Important ongoing requirements:

• Annual report filing

• Renewing licenses

• Paying taxes on time

• Updating business records

• Maintaining accurate books

• Following employment laws

States may dissolve a business if it fails to maintain compliance.

16. Special Notes for Non-US Citizens

Non-U.S. residents can start a business in the USA.
Key points:

• You do not need a U.S. visa to form a company

• You can own 100 percent of the business

• You can run the business remotely

• You can obtain an EIN without a Social Security number

• You can hire U.S. employees

• You can open a U.S. bank account depending on the bank’s rules

However, forming a business does not automatically give U.S. work authorization.

Conclusion

Starting a business in the United States can be a highly rewarding opportunity. The process is straightforward if you understand the legal requirements, including selecting the correct business structure, obtaining an EIN, registering your business name, opening a business bank account, securing licenses, understanding tax obligations, and maintaining compliance.