How to Register a Company in the US: The Complete Step-by-Step Guide I Wish I Had When Starting Out

You’re about to open a business, and you’re full of excitement and hopes for the future. It’s a great time, for sure, but there are many boxes you need to tick. Don’t allow your excitement to cloud what really needs to be done! For instance, your first priority should be learning how to register a company in the US. 

It’s important to take your time and thoroughly grasp the process before you make even the smallest move. After all, missing even half a step could lead to major headaches further down the road. One of those headaches could actually end up being a migraine, as there are severe penalties for not following the process to the letter. 

While it might seem overwhelming right now, it’s simply a case of understanding the moves you need to make. That’s what we’re going to talk about next, including everything from paperwork to payment processing. 

Of course, we’ll also give you the lowdown on how PayCompass can help you streamline your payments and reduce stress along the way.

TL;DR

• Your business structure (LLC, Corporation, Partnership, or Sole Proprietorship) determines your taxes, liability, and growth potential – choose wisely based on your specific goals. 
• You’ll need an EIN (Employer Identification Number) from the IRS (Internal Revenue Service), proper state registration, and industry-specific licenses before you can legally operate. 
• Separate business banking is legally required for LLCs and corporations, plus you’ll need reliable payment processing to accept customer payments. 
• Annual compliance requirements vary by state and structure – missing deadlines can result in fines or dissolution of your company.
• Planning for multi-state expansion requires foreign entity registration in each new state where you’ll do business. 

Why Your Business Structure Choice Makes or Breaks Everything

The first step to setting up a company in the US is to know which type of business structure you need. You might think that it’s nothing more than a box-ticking exercise on a piece of paper, but it goes far beyond that. It’s the foundation you build on and determines your tax obligations, personal liability, management flexibility, and growth options. So, as you can see, it’s worth taking your time! 

To help you choose the best option for you, let’s take a look at the main types. 

LLCs: The Sweet Spot Most New Businesses Choose

LLC stands for Limited Liability Company. This is a popular choice these days, particularly for new businesses. An LLC offers corporate-level liability protection, so what does this mean? It means that your personal assets, such as your car, bank account, or house, are totally protected if you have business debts or you get sued. Only the assets and money owned by the actual business would be at risk. 

Another positive of choosing an LLC is partnership-style tax flexibility. This means that the actual business itself doesn’t pay the taxes. Instead, all profits and losses are passed through to members/owners. They then report these on their personal tax returns.

Overall, LLCs are easier to manage than other types of businesses and they give a strong level of protection. These are a good choice for small and medium businesses. 

Picking the Right State for Your LLC

If you’re opting for an LLC, you need to think carefully about where you’ll register. Technically, this can be done anywhere, so you can opt for where you live or a state that has ‘friendlier’ business rules, e.g., Wyoming or Delaware. You don’t actually have to live or operate where you choose to register. 

However, wherever you choose, it’s important to first think about things like filing fees, tax implications, annual requirements, and where you’ll actually carry out your business operations. Many small businesses choose their home state simply because it’s an easier option, but it’s worth exploring before you make a final decision. 

The table below gives some useful information as a guide, helping you understand filing fees and other important nuances related to key states. When learning how to register a company in the US, don’t overlook this key process! 

State	LLC Filing Fee	Annual Report Fee	Franchise Tax	Best For
Wyoming	$100	$60	None	Privacy, low costs
Delaware	$90	$300	None	Investor credibility
California	$70	$20	$800 minimum	CA-based operations
Nevada	$75	$350	None	No state income tax
Florida	$125	$138.75	None	Growing businesses

Your Operating Agreement: More Important Than You Think

Now let’s talk about the operating agreement. This is a written contract that states how the business will run, rules of ownership, what happens to profits, how it’s managed, and what occurs when someone leaves. The more detailed this is, the easier it will be if something happens further down the road, while also giving a stronger degree of legal protection. 

When exploring how to register a business in the US, many potential owners don’t spend enough time on their operating agreement. Yet, it’s not something to rush through. Here’s what your agreement should cover:  

• How profits and losses get distributed
• Management responsibilities and decision-making authority
• What happens if someone wants to leave or join
• How you’ll handle major business decisions

Getting Your EIN: Easier Than You’d Expect

What’s next? You need to get your EIN (Employer Identification Number) from the IRS – also known as the tax people. This allows you to file your taxes, open business bank accounts, and hire employees. The good news is that it’s entirely free and very easy to get. You just head to the IRS website and apply, and it’ll be there in minutes. You don’t need to hire a third party service for this; they’ll charge you the earth for no reason whatsoever. It’s extremely easy to do this yourself. In fact, the checklist below gives you all the information you need to obtain this important number: 

EIN Application Checklist:

• [ ] LLC formation documents approved by state
• [ ] Legal business name (exactly as filed)
• [ ] Business address (can be home address)
• [ ] Responsible party information (SSN required)
• [ ] Business start date
• [ ] Nature of business description
• [ ] Estimated number of employees in next 12 months

Corporation Registration: When You Need Maximum Credibility

If an LLC doesn’t fit your needs, you could consider a corporation. This type of business is considered extremely credible by investors, so it’s a useful option if investment is your aim. However, it is more complex to manage and has a complicated structure, including boards of directors, along with regular meetings, and a need for robust record-keeping. Yet, if you’re aiming for large-scale growth, it’s a good choice. 

Filing Your Articles of Incorporation

Another step in learning how to open a company in the USA, particularly with corporations, is your Articles of Incorporation. 

This is similar to the LLC operating agreement, but goes further. It’s an important legal document that must contain: 

• Corporate name (must include “Corporation,” “Inc,” or “Corp”)
• Registered agent with a physical address in the state
• Number of authorized shares
• Incorporator information

Corporate Bylaws: Your Internal Rulebook

Next in your company registration guide is corporate bylaws. This is a set of rules that governs how your business is run, covering many different areas. It’s important to make sure that these are well-written as it will ensure that decision-making is a lot smoother as time goes on. 

While bylaws aren’t filed with the state, they are still legally binding. Here’s a quick rundown of what they cover: 

• How often the board meets and voting requirements
• Officer roles and responsibilities
• Shareholder meeting procedures
• How to handle conflicts of interest

Partnership and Sole Proprietorship: Simple but Risky

The final category includes both a partnership and a sole proprietorship. These are both options available to you, and they’re simpler in some ways, but they do carry more risk. These allow you to start operating your business without formal registration, but they do expose you to personal liability for your business debts or any legal issues. For this reason, they’re only suitable for very low-risk businesses. 

Understanding Partnership Structures

We’ve quickly touched upon the fact that general partnerships expose you to personal liability risks, and this is unlimited. Yet, we can also talk about limited partnerships. In this case, silent partners can limit their risk exposure in line with how much they invest. However, at least one partner must retain unlimited liability to have this type of business. 

If there are two or more people who do business together, the default option is a general partnership. In this case, both partners have the same unlimited liability, so in the event of debt, creditors can go after everything – your house, car, and everything else. 

Is this the best option? Only you can decide, but liability exposure is one of the reasons why people often choose an LLC instead. 

The Legal Maze: Compliance and Documentation You Can’t Skip

Next in our guide to how to register a company in the USA, let’s talk about the legal side of the equation. This is something you 100% need to get right. The process goes further than filing documents. You’ll also need to understand the various requirements on a federal, state, and local level, identify the licenses you need, register for tax, and ensure that you remain compliant with all regulations. It’s difficult to pinpoint exactly what these requirements are because they vary according to location, so it’s vital that you do your due diligence ahead of time. 

Federal Requirements That Apply to Everyone

While local requirements vary, there are some federal obligations that everyone must adhere to. This includes registering for tax with the IRS, and ensuring that you remain compliant with employment law if you plan to have staff. 

Depending on your industry, you’ll also need to adhere to specific regulations, and this is likely to be even more stringent if you’re a high-risk business. In this case, you’re probably going to run into more hurdles than businesses that don’t fall into this bracket. Yet, don’t worry; at PayCompass we’re on hand to help you with your payment processing endeavors. We’ll talk about this in a little more detail shortly, but know that we’re experts in the high-risk category, and we can make your life a whole lot easier from a financial point of view. 

Making Smart Tax Elections

Your tax requirements will vary according to what type of business you registered as. For instance, LLCs can opt for S-Corporation taxation. We touched upon this earlier, but it basically means that the business itself doesn’t pay tax, the owners do this via their personal tax returns. The plus point here is avoiding double taxation, which happens in corporations. 

This means that the company pays corporate taxes, and the shareholders also pay tax on their dividends. 

Employment Law Compliance Gets Complex Fast

If you have employees, you’ll need to register for unemployment insurance, workers’ compensation, while also ensuring you comply with both federal and state wage and hour laws. These often vary by location and industry type, so homework is vital here. You’ll also need to implement anti-discrimination policy to ensure you remain compliant with other regulations. When setting up a company in the US, these are vital steps that, if missed, carry hefty penalties. 

State and Local Licensing: The Hidden Requirements

Depending on the type of business you have, you’ll likely need some kind of license. If you fall into the high-risk category, you’ll probably notice even more requirements heading your way. All of this is a vital part of learning how to register a company in the US and requires careful research beforehand. 

Professional License Requirements

Licensed professionals, such as contractors, doctors, and real estate agents, can’t just open a business and start operating. Most US states require you to not only have your professional license but also have proof that all owners hold active professional licenses too. It adds another layer of complexity but it’s designed with protection in mind. 

Additionally, you’ll find that in most jurisdictions, contractors need their individual license and a business license. You might also need specialized permits for the different types of work you do. 

While it might seem overwhelming, it’s important to sit down and list everything you need before you make a move. That way, you can tick all boxes and you won’t find yourself in hot water later on if you miss something. This advice goes for all industries, all of which have different licensing and permit requirements.  

Setting Up Your Financial Foundation (Banking and Payment Processing)

Our company registration guide is now moving to the operational side of things, and we’re going to talk about how your money moves. This is where you need to think about banking and payment processing, something we’re experts in at PayCompass. 

This part of the story is time-consuming, but ensuring that you set up proper financial systems will save you a lot of time and money in the future. You need dedicated business banking, professional accounting, and reliable payment processing capabilities. Once you have this, you’ll find that the financial side of your business almost runs itself. 

Business Banking: Not Optional for LLCs and Corporations

It’s critical to separate your business and personal finances. Not only does this avoid confusion but it ensures that you can conduct your accounting and taxes accurately. You’ll need to set up a dedicated business account, and this is a legal requirement for both LLCs and corporations. 

This stage of setting up a company in the US can be challenging and you may encounter some hurdles. However, careful moves and plenty of research will help you through the process. For instance, many new companies often encounter merchant account setup challenges, and this can delay your ability to be able to trade and accept payments. 

What Banks Want to See

Before we get into payment processing, let’s first talk about banks. To open a banking account for your business, you’ll need your formation documents, operating agreement or your corporate bylaws, your EIN letter, and personal ID from all authorized signers. This is the baseline evidence you’ll need and you won’t be able to open an account without it. Of course, you’ll also need your first deposit into the bank, and the amount varies depending on the account type and the bank itself. 

Additionally, some banks have stricter requirements and may want to see business permits and licenses before they’ll open an account for you. For this reason, it’s best to call ahead of time to find out exactly what you need. To simplify matters, here’s a basic checklist: 

Business Banking Documentation Checklist:

• [ ] State-certified formation documents
• [ ] Federal EIN confirmation letter
• [ ] Operating Agreement or Corporate Bylaws
• [ ] Valid government-issued photo ID for all signers
• [ ] Proof of business address (lease, utility bill, etc.)
• [ ] Initial deposit funds
• [ ] Business licenses (if applicable)
• [ ] DBA certificate (if using trade name)

Building Business Credit Takes Time

Many new businesses want to jump straight in and take out credit to help them get their business underway. However, establishing business credit takes time. You’ll need to show a consistent payment history with vendors who also report to business credit bears. It can take anything up to a year to develop a positive credit score that banks will look upon favorably. 

Payment Processing: How Customers Actually Pay You

Now let’s talk about something we know very well indeed – payment processing. 

These days, most transactions are done via card not present means, i.e., online. If you want to be able to accept online transactions, credit cards, and digital payments, you’ll need a suitable payment processor. However, if you fall into the high-risk category, you may find your choices limited. Platforms such as Stripe, Square, and PayPal all prohibit high-risk transactions, and merchants often find their accounts restricted or even closed without warning. Don’t worry; we’ve got the answer for you. 

At PayCompass, we’ve designed our services to help you overcome payment processing challenges specific to high-risk businesses. We don’t restrict or close accounts simply because your business is high-risk; instead, we’ll help you. 

Merchant Account Approval Process

When you apply for a merchant account with a payment processor, they’ll look at several factors before deciding whether to accept you or not. This includes your type of industry, your average transaction size, processing volume, and your chargeback history. From this criteria, you can see why high-risk businesses face a problem from the get-go. 

High-risk businesses often face rolling reserves, higher processing fees, and longer approval times. The table below shows the scale of this problem via a comparison. 

Risk Level	Processing Rate	Setup Fee	Monthly Fee	Reserve Requirements
Low Risk	2.6% + $0.10	$0-$99	$0-$25	None
Medium Risk	3.2% + $0.15	$99-$299	$25-$50	5-10% rolling
High Risk	4.5% + $0.25	$299-$799	$50-$150	10-20% rolling

The good news is that at PayCompass, we don’t make you wait around for an answer. We offer fast acceptance, and if for whatever reason we can’t accept you this time, we’ll work with you to improve your chances the next time. 

Integration and Security: Non-Negotiable Requirements

Another part of learning how to register a company in the US is the need to integrate new payments systems with your existing business software. While doing this, you’ll also need to tick the PCI DSS compliance box and ensure you have strong fraud protection in place. This doesn’t only protect your business but also your customers’ data. 

At PayCompass, all our merchant accounts come with built-in fraud protection. We also offer real-time transaction monitoring so you can spot any potentially suspicious activity before it turns into a major headache. 

Something else you need to think about as part of the setting up a company in the US process is payment gateways. This ensures smooth movement of payments from the customer, to the bank, to your business. At PayCompass, our payment gateway is designed with you in mind; it’s completely customizable and is designed to support various needs. 

Staying Compliant and Planning for Growth

You’ve learned the majority of how to register a company in the US, but now it’s time to look to the future. Registration isn’t only about the initial stages, it’s also about ensuring that you remain compliant moving forward and stay in good standing with regulatory bodies. Of course, you also want to ensure that you position your business to take advantage of growth opportunities as time goes on. 

Annual Compliance: The Ongoing Responsibility

In most cases, businesses are required to submit annual filing, updated registrations, and fee payments to stay on the good side of state authorities. If you don’t do this, you’ll find yourself in hot water, with a fine as the best case scenario, and your business being closed down as the worst. 

State Annual Reports: Don’t Miss These Deadlines

In an annual report, you’ll usually have to submit updated business information, confirm your registered agent, and pay your fees, which can vary depending on your business type and state. It’s also important to remember that all states have their own deadlines, so ensure you’re 100% sure of the date you need to submit this information. 

While missing a deadline by a small amount is unlikely to result in your business being dissolved, it will incur a fine. And if you continue to go down the non-compliance route, you’ll find it extremely expensive and time-consuming to get your business reinstated. 

To avoid this, set reminders on your calendars the moment you register. If you have a registered agent, they will remind you but it’s always best to keep the control in your hands – don’t wait for someone else to tell you when! You can also use the checklist below to stay up-to-date. 

Annual Compliance Tracking Checklist:

• [ ] Mark state annual report deadline in calendar
• [ ] Set 60-day advance reminder
• [ ] Update registered agent information if changed
• [ ] Review and update business address
• [ ] Confirm officer/member information is current
• [ ] Prepare annual report fee payment
• [ ] File report before deadline
• [ ] Save confirmation receipt

Strategic Growth Preparation: Thinking Ahead

So, what about your business growth plan? 

If you’re considering expanding across state lines, you’ll need to take action. This means registering as a foreign entity in every state where you plan to do business. Of course, this could mean extra tax obligations and extra compliance requirements. Checking ahead of time will help you avoid costly mistakes. 

Many business owners make the mistake of assuming that ‘foreign entity’ means an international business, but it’s not the case. Let’s say you’re registered in New York and you decide you want to start operating in California too. That means you’ll need to register as a ‘foreign entity’ in California simply because that’s not where you’re originally registered.

However, there’s a complication to bear in mind. All states have a slightly different definition of what ‘doing business’ means. For some, it could be simply trading there, for others it could be maintaining an office or having employees. It’s important to check this ahead of time. 

Of course, there are fees to be paid and this is something else that varies across the board.  

Final Thoughts

We’ve reached the end of our company registration guide and you now know how to register a company in the US. As you can see, it’s not a simple process, and it requires careful thought and attention to ensure you don’t miss an important step. 

While it might seem overwhelming at first, when you break it down step by step, it’s much more manageable. The first step is to choose your business structure, and it’s vital to take your time here. After all, this one decision shapes your entire business journey. 

Yes, there’s a lot of paperwork involved, and many rules you need to follow. Is there a way around it? No. You simply have to know what to do, do it, and then look forward to running your business a lot more smoothly as a result. After all, miss one critical step and you could find yourself with a hefty fine at best, and no business at all at worst. 

Of course, getting your financial setup right from the get-go is extremely important too. How your money moves dictates how successful your business will be. A solid and personalized payment processor will help you run your business much more smoothly, and that’s where PayCompass comes in. 

Our specialized merchant accounts are designed to help you cut out the stress from the start. We make payment processing easy, secure, and a whole lot easier, whether you’re in the high-risk category or not. With our large range of features, including chargeback prevention, multi-currency support, and our excellent customer service, we’re firmly on your side. 
Are you ready to get started? Reach out to us today and let’s kickstart your business journey!