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How to set up a company in the US

Law Offices of Yu & Associates

Technically, you can start doing business as a sole proprietor right away, without any preparatory work. However, chances are your company will do better if you take the time to prepare and organize C think carefully about choices such as a business name and structure, make sure you fulfill legal requirements for registration, permits, and so on, and come up with a business plan to lead your company to success.

1. Write a business plan

Before starting to do business, you should have a well-developed business plan. Before doing anything else with your business, you need to know what it's about, what you want to achieve and how. You have probably already done some of this planning in your head, but you should also do some research and think carefully, and develop a plan for both the short term and the long term. A business plan usually includes a description of the business, its products and services, marketing analysis and strategies, sales plan, and may also describe the operations, management and finances of the company. There are numerous templates and guides online to help you think through all the parts of a business plan. Having a plan is vital not only for choosing your company's business structure, but also for its growth and success.

2. Choose a company name

The first step in actually setting up your company is to choose a name. The name cannot be similar or easily mixed up with that of another registered company. Every company must register a legal name with the state where it does business, and most states require that corporations add "Inc.," "Corporation," "Incorporated," or "Corp." to the end of their names, and that limited liability companies add "Limited Liability Company" or "LLC" to their names. A sole proprietorship or partnership, meanwhile, cannot use these terms to make others think they are a corporation or LLC.

If you find you need to use another business name in the course of your company's growth, you can also select a trade name to use in place of the company's legal name. The trade name must also be registered with the state. Whether legal name or trade name, your company's name cannot resemble any other company's legal name or trade name in spelling, pronunciation or combination thereof. You should be very careful in choosing your company's name and make sure to do a thorough search of registered names in order to avoid legal problems later on.

3. Choose a business structure

After choosing a name for your company, you will need to select the business structure that best suits your business. Most states allow the following major types of businesses: corporations, limited liability companies (LLCs), partnerships and sole proprietorships. The key factors in selecting a business structure are liability and tax responsibility. (See our article about choosing a business structure for more information.) It is recommended that you seek the assistance of an attorney and an accountant to analyze the advantages and disadvantages of each type and select the most suitable one for your business.

4. Register your company

To register your company, the documents you will need usually include Articles of Incorporation, Company By-Laws and Shareholder Agreements. The Articles of Incorporation are usually required in the process of incorporation, while the By-Laws and Shareholder Agreements usually are not, but these three documents are the most basic and most important documents not just for starting the company but also it its operation. Each state has different requirements and regulations, so pay close attention to these in drafting your companys documents. Some states provide a template that you can simply fill out.

The Articles of Incorporation generally must include the following items: the company founder's name and address, the company's objectives, the company's location, the first meeting of the Board of Directors, and the company's registered agent's name and address. If the company is a corporation, you must also provide the number and value of shares issued. The company is considered officially established from the date the application is approved by the state.

You do not need a large amount of capital to start a company in the U.S. There is generally no minimum for registered capital. As the company grows, you can invest more capital as needed. This not only facilitates starting a new company, but also reduces the risk of investment.

Company registration fees vary by state, and can range from tens of dollars to several hundred dollars. It normally takes a few days to two months for an application to be approved, but many states offer rush services ranging from same day processing to processing within one week, although you will have to pay a rush fee. In addition, every year your company must submit an Annual Report and pay taxes on company assets. Even if the company has not done business or made a profit, most states will still require the company to pay taxes or a license fee.

5. Apply for an Employer Identification Number (EIN)

With the exception of sole proprietorships without any employees, all companies must obtain an Employer Identification Number (EIN) by submitting Form SS-4 to the IRS. Your EIN is your company's tax identification number. You will need it in order to open a company bank account and report tax information to the IRS.

6. Apply for any required licenses or permits

Besides applying for a business license, you should also consult with an attorney to determine whether your company will need any special licenses or permits for your area of business. The major Federal agencies that issue permits are the Securities and Exchange Commission (SEC), the Food and Drug Administration (FDA), the Federal Communications Commission (FCC) and the Federal Aviation Administration (FAA). Companies may also be required to obtain licenses or permits from their state, county or city in order to carry out business.

Areas of business which normally require a license include aviation, pharmaceuticals, food, entertainment, auctions, chain stores, construction, dry cleaning, agricultural machinery, waste disposal, plumbers and electricians, restaurants, retailers and warehouses. In addition, some technical personnel must also apply for individual licenses from the state licensing department. These professions include architects, certified public accountants (CPAs), land surveyors, real estate agents, barbers, electricians and air conditioning and refrigeration technicians.

7. Make sure to comply with zoning requirements

In choosing a location for your business, you should make sure to check whether your chosen location has any zoning requirements that limit or forbid you from doing business there. This issue should be considered before signing a lease agreement.

8. Open a bank account for your company

As soon as you have obtained a certified copy of your company's Articles of Incorporation from the state and have been assigned an EIN by the IRS, you can open a bank account for your company and begin to do business.

And that's it! Some parts are not as complicated as they may seem, and for the truly complicated parts, you can get help from an attorney, accountant or tax professional. Just make sure not to skip any steps. Do these eight steps thoroughly, and your business will be off to a good start.

The above is a general introduction to immigration policies, and should not be construed as individual legal advice. For specific legal questions, please contact the Law Offices of Yu & Associates. Attorney Xiaohui (Sharon) Yu is a graduate of New York University School of Law, one of the top five law schools in the US, and has practiced law at some of the top firms in the US, UK and China.

Tel: 301-838-8986, Fax: 202-595-1918; E-mail:, Address: 110 N. Washington St., Suite 328E, Rockville, MD 20850. (All rights reserved.)

Ó Yu & Associates LLC, 110 North Washington Street, Suite 328E, Rockville, MD 20850, USA. Tel: 301-838-8986