How To Open A Business In The USA
Starting a business in the United States can be an exciting yet challenging endeavor. The country’s business atmosphere is one of the friendliest in the world. Its infrastructure, technology, and workforce are great.
As of 2023, there are over 33 million small businesses in the country, according to the Small Business Administration (SBA). This business model comprises 99.9% of all enterprises nationwide.
The road to business success may be long and winding, but you have to start somewhere. Here’s a step-by-step guide on the key things you need to know when opening a business in the States.
Choose a business structure
The first major decision you need to make is choosing a business structure. The most common structures for small businesses are sole proprietorship, partnership, limited liability company (LLC), and corporation. Each comes with different legal and tax implications in terms of paperwork, liability protection, ability to raise investment capital, and more. Carefully weigh the pros and cons of each when deciding.
Open a business bank account
Opening a bank account is an important step that aligns with financing and money management. This separates your personal and business finances for legal and tax purposes.
If you’re an immigrant entrepreneur, establish a business bank account for non-US residents. Explore financial institutions that offer services catered specifically to business needs like payroll, credit cards, loans, merchant services, etc. Being a long-time account holder builds credibility when applying for loans or lines of credit.
Pick a location
Your business location can play a huge role in your chances of success. Look for commercial spaces or properties zoned specifically for businesses if opening a physical storefront. Get legal address establishment for mail and tax purposes. Or, establish your legal address and entity, even if solely running an online business from your home.
Register your venture
Once you select a business structure, you need to make it legal by registering with the right government agencies. You must register your business at the state level for any type of partnership or corporation.
Additionally, you may need licenses and permits for your particular industry. You also need an Employer Identification Number (EIN) from the Internal Revenue Service when hiring workers. These registrations legally create your business entity.
Follow licensing and permit rules
Most businesses need special licenses and permits to operate legally. This includes things like a sales tax permit, a food handler’s permit if selling food products, professional licenses if offering certain services, and more. Do thorough research to identify and properly obtain all licenses and permits needed for your type of business. Failing to do so can result in heavy fines.
Get insured
Business insurance is crucial to protect yourself from major liability issues. There are various types, including general liability insurance, commercial property insurance, errors and omissions insurance, workers’ compensation insurance, and more. Work with an insurance broker to determine the right policies and coverage levels you need for your unique risks.
Raise your capital
You need financing to start and run a business. Self-funding from personal savings is one route. Outside options include getting a small business loan or line of credit from a bank, borrowing from friends or family, using crowdfunding platforms, and more. Each comes with different requirements, costs, and risks that must align with your business capabilities.
Establish online presence
In today’s digital world, most businesses need a website and a professional domain name. Even brick-and-mortar shops benefit from having an online presence. Use this platform to market your brand, communicate with customers, sell products or services, share company info, and more. For best results, invest in a professionally designed site.
Develop a business plan
A detailed business plan is vital for guiding your entrepreneurial endeavor and increasing your chances of obtaining outside funding if needed. It covers your competitive analysis, marketing plan, operational plan, financial projections, and contingency plans. Even if solely self-funding, a business plan keeps you strategically focused.
Leverage local support
Despite extensive preparation, entrepreneurs still encounter unforeseen learning curves and costly errors. Data shows that about a third of small businesses fail within two years, while half of businesses close within five.
Rather than struggling in isolation, regular involvement in one’s regional small business ecosystem brings camaraderie and essential insider knowledge. Reach out for local small business resources such as your Chamber of Commerce, business incubator programs, or mentoring services through your local SBA chapter. Making use of these supports can help you navigate the complexities of entrepreneurship.
Final thoughts
Following this thorough step-by-step guide will help properly cover all your bases when starting a business in the United States. Be sure to research your specific state and city requirements as well. Stay organized with licensing paperwork and financial records. Reach out for local small business resources. By laying the right groundwork and foundation, you give your new entrepreneurial endeavor its best shot at success.
