Do you want to start a business in the United States? Check out this post for the step-by-step approach to starting and running a successful company!
How to start a business in the U.S
According to the World Bank’s Doing Business rankings, the United States is ranked sixth regarding ease of business. Are you planning to start your own business in this country? If yes, this article is for you. Here is how you can open a business in the U.S. Read on!
Step 1: Perform Market Research
Before collecting documents and undertaking a business plan, you must carefully analyze the market. Tarek Riman, a successful entrepreneur, advises you to get a complete picture of the chosen industry: study the consumer habits and financial capabilities of the target audience, data on competitors, bank interest rates, etc.
Step 2: Write a Business Plan
A business plan is a company roadmap for managing, planning, and attracting investments. The document might look unique depending on the chosen strategy: traditional or lean startup. The lean approach is more flexible and involves constant changes depending on market demands. The Lean Startup model hones along the way, so the initial plan is a short document that summarizes the main points:
- Unique Selling Proposition: what are the values of a product or service for consumers and its competitive advantage?
- Market analysis: who is your target audience and competitors?
- Relationships with customers: what communication channels will you use, and what kind of experience will consumers get?
- Financing: sources of income and initial costs.
Step 3: Review the Tax Requirements
Each state has its tax laws. Hence, all U.S. companies are subject to local and federal taxes, varying by region. Main types of federal taxes:
- Income: Charged to businesses as they generate income during the year.
- For self-employment includes social security tax and health insurance for sole proprietors.
- Employment: Refers to businesses with employees and includes Social Security and Medicare taxes, federal income tax, and federal unemployment tax.
- Excise: Fees for certain activities such as communications and air travel, fuel, and retail sales of trucks, trailers, and tractors.
- Sales tax: trade in certain goods or services
- Property tax: computer equipment, vehicles, and other business assets
Step 4: Determine Funding Sources
You already know how much startup capital you will need: it remains to determine where to get the money. It can be self-financing, a loan, or different types of investments.
Use your own resources: savings, help from relatives or friends. In this case, you get full control over the business, but you bear all financial responsibility yourself. To get venture capital funding, find an experienced investor, show him a business plan, get an expert opinion and agree on investment terms.
Unlike venture investors, crowd funders do not require an ownership stake in a business in exchange for funding. They expect gratitude through a “gift” such as a product, service, perk.
The method of financing is especially relevant for small businesses associated with creativity or innovation. The advantage is that the risks are minimal: you retain complete control over the company.
Step 5: Choose a Location
The state where you register your business will determine taxes, benefits, and additional business requirements. You can read more about them on the website of each state. We will tell you what the main criteria should be guided by:
Business Expenses: Different regions have different requirements for licenses and insurance, real estate and utilities, the cost of rent, minimum wage laws, and many other factors.
Zoning Ordinances: Any locality is usually zoned by law for residential and commercial use. Some ordinances may restrict or prohibit certain activities, including even home-based businesses.
Taxes: Income tax, property tax, and sales tax, vary by region. Some states are known for tax environments that are loyal to certain types of companies.
Privileges: Sometimes, local governments offer special conditions for small businesses: soft loans, tax breaks or other incentives.
Step 6: Register Your Company
Registration will turn the business into an official legal entity. You can apply online on the website of the selected state. To do this, you must pay fees, usually not exceeding $300, and collect the necessary information and documents: company name, location, type of structure, number, and value of shares for corporations. The number and content of documents depend on the type of enterprise and region. It is better to check local requirements on the state website.
Step 7: Open a Business Bank Account
A bank account enables to take loans make and cashless payments. To choose a bank, compare the conditions for business accounts and determine the most favorable: interest rates, transaction costs, commissions, fees, and termination fees.
To open an account, you must provide a tax number, company registration document, license, and property agreements. Also, the financial institution may request additional records.
Opening a company in the United States for foreign entrepreneurs is an opportunity to enter a new market and increase their income. You should register the name, submit a request to the local state bodies, obtain a taxpayer number, the necessary licenses and permits, and open a bank account. Until Next Time!
- Article based on personal opinion, experience and research.
- Photos from Unsplash & canva.