Starting a business in the United States can be exciting, but it’s essential to follow the legal steps to ensure your company is compliant and set up for success. From choosing the right business structure to registering your company and obtaining necessary permits, this guide covers everything you need to know to start your business legally in 2025.
1. Decide on Your Business Idea and Plan
Before dealing with legal requirements, you need a solid business idea and plan:
- Define your product or service: What problem are you solving? Who are your customers?
- Market research: Identify your target audience, competitors, and potential demand.
- Business plan: Include financial projections, marketing strategies, and operational plans.
Tip: A well-prepared business plan not only helps you organize your ideas but is often required when seeking funding or investors.
2. Choose a Business Structure
The business structure determines your legal responsibilities, taxes, and personal liability. The most common types in the U.S. are:
LLC (Limited Liability Company)
- Protects personal assets from business debts
- Flexible management structure
- Simple tax options
- Ideal for small to medium businesses
Corporation (C-Corp or S-Corp)
- Separate legal entity
- Limited liability for shareholders
- More complex compliance and taxation
- Suitable for larger businesses or those seeking investors
Sole Proprietorship or Partnership
- Easy to set up
- Owner personally liable for business debts
- Limited ability to raise capital
Tip: Most entrepreneurs choose an LLC for its flexibility and protection, but a corporation may be better for scaling or attracting investors.
3. Register Your Business
Once you’ve chosen a structure, you need to register your business legally:
Step 1: Choose a Business Name
- Must be unique and comply with state rules
- Check trademark databases to avoid conflicts
- Reserve your name if necessary
Step 2: File Formation Documents
- LLC: File Articles of Organization with your state
- Corporation: File Articles of Incorporation with your state
- Pay the filing fee (varies by state)
Step 3: Obtain an EIN (Employer Identification Number)
- Required for taxes, hiring employees, and opening a business bank account
- Apply through the IRS for free
4. Obtain Licenses and Permits
Depending on your business type and location, you may need:
- State licenses: Sales tax permits, professional licenses, or industry-specific approvals
- Local permits: Health permits, zoning approvals, signage permits
- Federal permits: For businesses dealing with alcohol, firearms, or transportation
Tip: Research your specific industry and state regulations to ensure full compliance before starting operations.
5. Open a Business Bank Account
Separating personal and business finances is critical:
- Use your EIN to open a business account
- Consider a business credit card for expenses
- Keep clear records for taxes and accounting
Tip: This also protects your personal assets and simplifies bookkeeping.
6. Draft Essential Contracts
Contracts are key to protecting your business:
- Partnership agreements: If you have co-founders
- Employee contracts: Outline roles, salaries, and responsibilities
- Vendor agreements: Define terms with suppliers and service providers
- Customer agreements: Terms of service or sales contracts
Tip: Consider consulting a business attorney to draft or review contracts to avoid future legal issues.
7. Understand Tax Requirements
Different business structures have different tax obligations:
- LLC: Pass-through taxation by default, can choose corporate taxation
- C-Corp: Corporate tax applies, dividends may be taxed
- S-Corp: Pass-through taxation for shareholders
- Sole Proprietorship: Owner reports business income on personal tax return
Also, you may need to pay:
- State and local taxes
- Employment taxes for staff
- Sales tax if selling products
Tip: Hire a CPA or tax professional familiar with U.S. business tax laws.
8. Maintain Compliance
After starting your business, ongoing compliance is critical:
- File annual reports with the state
- Renew licenses and permits
- Keep accurate financial records
- Follow employment laws and regulations
Tip: Set reminders for renewal dates and consider using accounting or compliance software.
9. Final Tips for New Entrepreneurs
- Plan ahead: Understand all legal steps before launching
- Keep records organized: Helps with taxes, audits, and growth
- Consult professionals: Attorneys, accountants, and business advisors save time and prevent mistakes
- Stay informed: U.S. business laws can change, so stay updated on regulations
Starting a business in the U.S. in 2025 is achievable with the right preparation. Following these legal steps ensures your company is compliant, protects your personal assets, and sets the foundation for growth and success.