How to start a company in the US in five simple steps

We covered "How to test your startup idea" in a previous post, in this post, we will walk you through how to start a company in the United States, in five simple steps .

Unlike many other countries, such as Austria, which requires the founder to have a certain amount of funds, minimum €35K in the bank to start a company, luckily United states does not have a minimum balance requirement to get started.  

Here are the five steps you can follow to set up the company of your dreams.

Step One: Pick a state 

The basic steps to set up a company is pretty similar in all states. Some states might have different fees and paperwork to fill in.

So how do you pick a state? If you have an office addressed in a state, you must pick that state as the state you do business in for tax purposes.

However, you can legally register your company in another state - which for most startups, if you are going to raise capital, it is Delaware - but do business in another. For example, if your company have an office location in California, it will be a Delaware company doing business in California. 

Why Delaware? Because Delaware has the most advanced and complete legal protections for both founders and investors. VCs will want to invest in your company as a Delaware C-Corp. (We will talk about company type next.)

Step Two: Pick a name

First, make sure the name of your company was not registered by others already. Depending on where your company is, you can check the availability of your company name in the the Department of State's website. For example, if it is a Delaware company, you can check your name availability here. 

Step Three: Pick a corporation type 

Next, pick a corporation type.

Again, if you are going to raise money, pick C-Corp. Why C-Corp? Because you can issue shares to founders, future employees and investors.

If none of the founders are Americans, you will have to choose S-Corp.

If you are just starting the business yourself, you can choose LLC(Limited-Liability-Corporation), which is very useful when it comes to pass the liability to your LLC rather than yourself when doing business. 

Step Four: Get an EIN

What is EIN? An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN.

You can get it for free through IRS here.

Step Five: File it and get started!

Yes, you made it to the last step! Make sure you file the paperwork online or by mail with your Secretary of State. The wait time usually varies from 2 weeks to 1 month, depending on the state and corporate type.

It is not that complicated right? If you have any questions, feel free to email us at [email protected]. Get started on your dream today!

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