Turning your vision into an established business marks a major milestone in your professional journey. When you prepare to launch your new venture, you must move through several specific checkpoints, choosing a specific legal structure and filing the correct paperwork with your state government.
These actions create a foundation for your growth. By following this streamlined path, you transform your ambition into a fully recognized legal entity.
Choose a structure and register with the state
You make your business a distinct legal entity when you select a structure and register it with the state.
It’s important to start with an understanding of how your business looks. A sole proprietorship works for simple setups, while an LLC offers flexibility and personal liability protection for many small businesses. If your business has multiple owners or you have plans for outside investment, a partnership or corporation could be the best fit.
Register with the appropriate state agency by filing formation documents like Articles of Organization or Incorporation. For example, if you’re planning to operate on the West Coast, you’ll need to know how to start an LLC in California to understand state-specific formation requirements beforehand.
Get your federal tax ID (EIN)
Once your structure and name are set, you need a federal Employer Identification Number to operate smoothly. An EIN allows you to hire employees, open a business bank account, and report taxes without using your Social Security number.
The IRS issues EINs through its online application system, which asks for basic details about your business and ownership. Apply directly through the IRS website to receive your EIN immediately and avoid third-party fees.
Obtain the necessary licenses and permits
Most businesses need licenses or permits before they can legally operate. You’ll need to be aware of the organizations to approach for these:
- Federal agencies: Transportation, agriculture, and alcohol sales
- States and local governments: Professional licenses, zoning permits, and general business registrations
Requirements depend on what you do and where you do it, so a home-based consultant and a food truck will face very different rules.
Additionally, in many US cities, even if you don’t need a specific industry license, you may still need a General Business License (sometimes called a Tax Certificate or Business Privilege License) just for the right to operate within city limits. Check your state and city government websites to identify the exact licenses tied to your activities and location.
Organize banking and compliance
After registration, you need systems that keep your business compliant and financially organized. Most businesses must file ongoing reports and pay taxes at the state and federal levels, with requirements varying by structure and location.
LLCs benefit from maintaining an updated operating agreement and clear ownership records, even when the law doesn’t demand strict formalities. As they can issue stock and tend to have more shareholders than LLCs, corporations face tighter rules, including annual meetings and detailed recordkeeping.
Open a dedicated business bank account so you can track income and expenses accurately, protect your liability shield, and simplify taxes.
Taking these steps means you transition from overseeing a side project to creating a legitimate US business entity that meets legal requirements and signals to your customers that you mean business.
