How to Register a Business in the USA in 2022: 7 Simple Steps

When you're registereing a new business in the US, it's important to do it the right way. Our business expert explains everything you need to know.

Building a new business is an exciting time, and one of the most crucial steps is ensuring that you register your business correctly. I’ve registered several businesses myself and made some mistakes along the way, but now, I know that the registration process doesn’t have to be difficult if you do it the right way. 

I love helping new businesses out with the first steps of their journey, so I’m here to share what I’ve learned. I’ve organized everything for you in 7 easy-to-follow steps.

If you live in the USA, you’ll want to keep this guide handy and use it along your own journey. It contains everything you need to know to register your business successfully.

Do I Need to Register My Business in the USA? 

The answer to this question depends on the type of business you’re starting and your goals. If you’re planning on operating as a sole proprietor and doing business under your own name, you don’t have a legal obligation to register your business. On the other hand, a limited liability company or corporation must be registered.

If you choose not to register your business, you’ll be able to keep all the profits, but you’ll also be personally responsible for any debts or losses that the company incurs. 

Registering a business not only makes it an official company in the eyes of the law, but also separates the companies’ interests from your own personal assets and removes you from liability for company losses. Your personal assets are also safe in the event of litigation against the company. 

Do I need to Register an Online Business in the USA?

Online businesses have to follow the same rules as brick-and-mortar businesses. If you want to start a limited liability company, you’ll need to register your business. 

If your business is headquartered and registered in the USA, that does not limit you from selling in other locations, so you can have customers from all over the world. A top-notch payment infrastructure like Pay.com can allow you to accept a variety of payment methods and handle payments in different currencies. 

How to Register Your Business in the USA in 7 Easy Steps

Step 1: Choose Your Business Structure

The best choice for your business structure depends on the type of business you’re starting and how big you plan for it to be. Here are your options:

  • Sole Proprietorship: It’s common for an entrepreneur to start out by launching a sole proprietorship and then grow into an LLC or other business type. In this type of business, there is no separation between you, as a business owner, and your business. This means that your personal assets will be taken into account if the company faces liabilities such as expenses, debts, or losses. 
  • General Partnership: Similar to a sole proprietorship, but here, two or more people own the business together. The partners have full liability for the business, and the business’ assets and liabilities are not separate from those of the individuals. 
  • Limited Partnership: This type of business includes at least one General Partner who runs the company and is fully liable for any debts or losses. The rest of the partners are Limited Partners, and their role is primarily to provide financial investment. They are not involved in operational decisions and their liability is limited in proportion to the amount invested.   
  • Limited Liability Partnership: In this type of partnership, there is no designated General Partner. Instead, all the partners are joint owners of the company, with liability for their portion of ownership. Limited Liability Partnerships may be restricted to particular industries and professions in some places, so it’s important to check local regulations. 
  • Limited Liability Company (LLC): This is a good solution for a small business, including individuals who want to be self-employed but also want a legal separation between their business and their personal assets. Creating an LLC is a simpler process than becoming a full-fledged corporation. 
  • C Corporation: Being the biggest type of business you can register, a corporation is fully separate from the founder as an individual. This option offers an array of tax benefits and mechanisms for raising money from investors. 

Step 2: Register Your Business Name

There are 4 different ways to register a business name in the US, and you can choose one or more depending on your specific circumstances. You should also check the laws in your state, as some states have different requirements. 

In most cases, it will make sense for you to use the same name for all types of registration, but there is no legal requirement to do so if you have reason to make them different. 

4 Ways to Register Your Business Name

  • Entity name: Most states require businesses to register a legal entity name, which is what the state uses to identify the company. Entity names must be unique, so you’re protected from the possibility of another business having the same name as yours. State laws differ slightly, and some have guidelines pertaining to company suffixes or may expect the name to reflect the type of business. 
  • Trademark: While an entity name is a state level registration, a trademark protects your business name at a national level. Once your name is trademarked, no one else can use that name when they register a business in the USA. If you have an idea for a name, you should search the US official trademark database to make sure it isn’t already trademarked. This is a critical step, because infringing on someone else’s trademark is a criminal offense and could end up costing you quite a lot in a lawsuit.
  • Doing Business As (DBA) name: If you officially register your business under a certain name (e.g. your own name) but want to operate using a different name, you should register a DBA. DBAs are subject to federal trademark laws, but at a state level, there’s no requirement for a DBA to be unique. 
  • Domain name: Whether or not you plan on using it right away, it’s a good idea to register a domain name for your business as soon as possible. If the domain name you want is already taken, you can try to buy it from the owner, but if that fails, you’ll have to choose a different name. Remember that your domain name does not have to be identical to your business name. 

Step 3: Choose a State to Register your Business

You are not necessarily required to register a business in the state you live in. Each state has its own rules regarding business registration as well as taxes, so registering in a particular state may bring about some tax benefits (if you’re eligible). 

You may be required to register in multiple states if you’re planning on having physical branches in different states, or a significant amount of revenue coming in from them. 

I strongly recommend speaking to a tax professional in your home state to ensure that you follow all relevant laws when setting up your business, but to give you an idea of what you can expect, here are some examples of different business registration and tax laws in different states:

  • Texas: Businesses other than sole proprietorships or general partnerships are required to pay a state franchise tax. The rate is usually around 1% but it depends on total revenue.
  • Florida: In Florida, corporations must pay a 5.5% income tax, but LLC’s, sole proprietorships and S corporations are all exempt. 
  • California: Known for their high taxes, California imposes an 8.84% tax on all businesses, including LLCs. 
  • New Jersey: Corporations in New Jersey pay the corporate income tax which is based on revenues. LLCs, sole proprietorships and partnerships are not charged a corporate tax, but rather the owners are taxed on the income that’s passed-through to them at their regular individual income tax rate.
  • New York: New York State corporations pay a corporate franchise task based on their revenues. Other types of businesses are subject to filing fees in addition to the individual owners paying income tax on the proceeds they receive.
  • Maryland: Corporations pay 8.25% income tax in Maryland. LLCs, partnerships and sole proprietorships do not pay taxes over and above individual income tax. LLCs and partnerships, however, do have to pay income tax on income that is allocated to nonresidents of the state.
  • Idaho: Unlike most other states, Idaho imposes a state tax directly on LLCs, in addition to a corporate tax of 7.84%.
  • Ohio: Rather than a flat corporate tax, Ohio charges companies a corporate activity tax on a sliding scale according to gross receipts. If a company brings in under $150,000 no taxes are owed. This applies to all businesses, including sole proprietorships. 
  • Delaware: Large businesses often incorporate in Delaware because the state serves as a tax shelter, meaning that businesses that are registered in the state but do not operate there do not have to pay corporate tax. There is a flat fee franchise charge of around $200 for LLCs. 
  • Montana: Corporations in Montana are taxed at 6.75%. LLC and partnership income is considered pass-through and is taxed at individual income tax rates.
  • Oregon: Oregon corporations pay a corporate excise tax ranging from 6.6-7.6%. LLCs must pay a minimum excise tax of $150.
  • Alaska: Alaska does not have a state income tax, which means that only corporations are subject to state taxes, and any other type of business is not. The corporate tax rate ranges from 2% to around 10% depending on revenues. 
  • New Hampshire: New Hampshire charges companies a flat rate business profits tax and business enterprise tax. This applies to corporations, LLCs, partnerships and sole proprietorships, unlike in many other states. 

Step 4: Register with Local Authorities

Once you’ve made all the important decisions, the next step is to fill out the forms and deal with the logistical steps of completing your registration. This process will be specific to the local authority where you plan on registering your business

In most cases, the process involves getting an Employer Identification Number (EIN), which is a tax-ID number, and making sure that you are all set up to pay taxes, benefit from any deductibles, hire employees when ready, etc. 

Mandatory Documents to Register Any Type of Business

No matter what type of business you’re registering as or where you’re doing it, there is certain documentation you will always need, including:

  • Articles of formation or incorporation
  • An official business name
  • An official business address
  • Identifying information about the company owner(s)

Documents Needed According to Business Structure

Depending on the type of business you register, you may be required to file additional paperwork. Some examples include:


Document Type Corporation LLC Partnership
Formation Articles of Incorporation Articles of Organization Partnership Agreement
Governance Organizational Bylaws Operating Agreement Partnership Agreement
Ownership Share certificates Member certificates
Tax EIN EIN EIN


Step 5: Acquire Licenses and Permits

The process of acquiring the relevant licenses and permits you need will depend on the type of business you’re starting as well as the local laws. 

It’s very important to research the laws in your specific industry. This will make it easier for you to make sure you complete the process to obtain all of the licenses and permits that you need for your business to be legal. 

Step 6: Open a Bank Account for Your Business

As soon as you have your EIN, you can open a business bank account. Even if you’re operating as a sole proprietor, it’s a good idea to have a designated bank account to keep your personal finances as separate as possible from your business. If you decide to grow your business and become an LLC or eventually a corporation, it will save you the trouble of creating this separation later on down the line. 

Opening a business account is as simple as going to your local bank and filling out the required paperwork. Of course, you may want to shop around first and compare the rates and perks different banks are offering. 

Step 7: Consider Your Intellectual Property

Depending on the type of company you’re starting, you may have some valuable intellectual property that you’ll want to protect. 

  • Trademark: You’ll have trademarked your business name as part of the registration process, but if you develop product names, logos, or other design elements that you want to ensure remain proprietary to your company, make sure you trademark those as well. It generally takes around 4 months to complete the trademark process.
  • Copyright: Copyrights are applicable to any original written work, software, web content, film, sound recordings, images, and more. You don’t have to apply for a copyright as it’s automatically granted as soon as you create something new. It’s your responsibility to make sure no one is violating your copyrights and stealing your material. 
  • Patent: If you invent a new product or piece of machinery, you’ll definitely want to patent it so no one else can take the credit. This is the best way to ensure you will reap the financial benefits. The patent process is extensive and can take up to 5 years, so make sure to get an early start. 

Registering a Business in the US Can Be Simple

The idea of registering a brand new business can seem overwhelming, but truth be told, it’s just a little bit of bureaucracy in exchange for a lifetime of entrepreneurial creativity and freedom.

All you have to do is follow the steps in this guide and you’ll be on your way. 

If you’re looking for the best way for your new business to accept online payments, be sure to check out everything Pay.com has to offer.

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FAQs

What do I need to register a business in the USA?

To start, all you need is a business idea and a name! Then you just follow the steps laid out in this article and complete all of the necessary paperwork.

How much does it cost to register a company in the USA?

Registration costs vary from state to state and range from $600-$1400.

How can a foreigner start a business in the USA?

If a foreigner wants to register a business in the USA, the process is identical to what an American would do. Most foreigners would choose to open a corporation or an LLC in order for the business to be a separate entity with its own tax-ID number. A foreigner would, of course, be subject to all relevant taxes in the USA.

Can a non citizen start a business in the US?

The “land of opportunity” does not require one to have either citizenship or US residency in order to start a business in the USA.

How do I register a small business in the USA?

As described in detail in this article, there are 7 main steps to follow in order to register a business in the USA. First, you choose the type of business you want to be. Next, you name your business. Then, decide in which state to register and complete the registration process with local authorities. Following that, you acquire any licenses or permits you may need depending on your field. After that, open a bank account, protect your intellectual property and you are good to go!

How do I register as an LLC in the US?

Registering an LLC in the USA involves following the steps described in this article. The steps are similar for all types of businesses, with the major difference for an LLC being that its formed with Articles of Organization, is governed by an operating agreement and there are members as opposed to shareholders.

Meet the author

Emily Kirschenbaum

Emily is a content writer with a special interest in fintech and business. She loves sharing her knowledge to help small businesses take their first steps towards success.

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