Looking to become self-employed in the United States? Or wanna register a company and make sure you do everything right? Let’s discuss the first steps to starting a business in the U.S.
Why Set Up a Business in The United States?
It’s not uncommon for people from abroad to decide to do that. That’s mainly because they want to be exposed to the American market.
There’s a ton of information available online that can help you understand the audience, and even decide whether your product is a good fit before you even build anything.
Then there are the benefits offered to business owners in the United States. Some enjoy getting a small business loan, others turn to venture capital. For some, it’s enough to just open a US bank account and thus become trusted in the greatest country of the world.
The people there are so different, that you’ll find all kinds of target groups, at least one of which will be ideal for what you have to offer.
Together with the fact that this is the largest economy on the planet, there’s a lot of money to be made there if you set up a business.
Now, let’s move onto the things you need to know before you proceed with registering a company or yourself as an individual:
Things to Know Before Starting a US Business
Know that different rules and regulations apply to different states. So carefully choose one after doing a thorough research.
If you’re gonna be a local business, then you’re already aware of the location.
If you’re operating from abroad, there are some states known for being international-friendly. Or just check out the list of top American states for starting a business in 2017 by CNBC and see what’s best.
Then, it’s time to decide on a business model.
If you’re on your own and just want to legally provide freelance services, or are a one-man business and not looking to expand, then you’ll be a Sole Proprietorship.
If you want to share ownership with 2 or more people, then you’d go for Partnership.
If you’re looking for something bigger, will involve shareholders, or have other specifics about your business, you’ll consider LLC (Limited Liability Company) or a corporation. With these, of course, come a lot of responsibility and legal procedures.
The next step is to choose a name for your business. You should have something in mind already. Just don’t forget to check if it’s available.
Steps After Registering a Company in the USA
1. Get a tax identification number.
That’s the 9-digit number used by the IRS to effectively take control of your taxes.
For tax purposes, that’s a TIN number. For employment purposes, that’s EIN (Employer Identification Number).
Once you have that, you will be able to open a bank account, accept payments in the US, and pay taxes in the country.
2. Get a business license.
As the US Small Business Administration states: ‘Most small businesses need a combination of licenses and permits from both federal and state agencies. The requirements — and fees — vary based on your business activities, location, and government rules.’
Get familiar with all possibilities, depending on your business structure. And fill in the necessary documents (better to use an EIN number than just your Social Security Number).
As a business owner, you have to be prepared for anything and that includes personal issues as they might affect your company.
In some cases, you might need a business attorney to protect you against lawsuits, help you when buying or selling a business, handle employee issues, and more.
You might need a lawyer in other situations in life too (drink driving, fraud, etc.) Even if you aren’t guilty, an expert needs to handle that carefully so you can be without a criminal record and keep running your business.
3. Get insurance.
It’s always a good idea to protect your business, and a business insurance is the best way to do that.
Sadly, that’s something many newbies in the field ignore, and later regret. Especially as the business grows and involves more risk.
There are different kinds of insurance products you might benefit from, such as General or Professional Liability Insurance, Property Insurance, Product Insurance, and more.
Think everything that can go wrong though, and apply for those you might one day need.
Read also: How to Recession-Proof Your Business
4. Take control of your finances.
Most people starting a business don’t want to deal with numbers or take the risk of making a mistake that can cost them a lot in the future. So they immediately hire an accountant and let them do everything related to taxes.
But as a one-man business, you might be more invested in your finances than others and want to do your own bookkeeping. Here are some tips for the self-employed, to help you do it right.
For more serious documents, though, such as your annual report or what tax refunds you’re eligible for, you’ll still want to use the help of a professional.
So that’s what you need to consider before and during the process of starting a small business in the U.S. Are you excited about your new venture?