Business Entity Formation

Once you are authorized to own and operate a business in the United States, and have a solid business plan, you may begin taking steps to start a business in the U.S. Starting a business is exciting, but it can also be daunting. Though this information is intended to provide a general overview of the startup process, you should also consider seeking assistance from a business attorney that can help provide detailed information relating to your specific business goals.

One of the first steps is choosing and forming a business entity. There are several business entity types, including sole proprietorships, general partnerships, limited partnerships, limited liability companies, and corporations. Sole proprietorship and partnerships are unincorporated entities, and are relatively inexpensive to form and maintain. However, they do not provide any liability protection for the owners.

Limited liability companies (LLC’s) and corporations are incorporated business entities. Incorporated businesses are legally recognized as an independent entity that exists separately and apart from its owners. An incorporated business entity may have its own tax ID, bank accounts, and may hold property and other assets just as an individual can.

During the formation process, you can designate the owners of the businesses, the amount of their investments, and their ownership percentages. LLC owners are called members, and corporation owners are called shareholders. In addition you can designate who the officers, managers and directors will be, and their responsibilities.

The process for incorporating a business involves filing the proper formation documents with the state in which the business shall be created. LLCs and corporations each have different procedures and regulations for how they must be managed and operated. Selecting which business entity to use will depend heavily on the owners’ specific business goals and preferences. Before taking any steps to form a business, it is advisable that you consult with a business formation lawyer who can advise you on the advantages and disadvantages for each entity type.

Separate Assets

One of the most important aspects of maintaining an incorporated entity, is ensuring that the business’s assets are kept separate and apart from the owners’ personal assets. Once the business is formed, you can obtain an Employer Identification Number (EIN) from the IRS. This is essentially the social security number for the business. With an EIN you can open a bank account in the company’s name, and the company can hold property and other assets.

Once the business has an EIN and bank account, you should ensure that all future revenues of the company are paid into its bank account, and all contracts entered into by the business are signed in its name. Maintaining separate accounts and assets will help distinguish he owners’ property from the business’s property, and will help maintain the liability protection.

Business License / Permits

Most counties require that any companies doing business within their jurisdiction must file for a basic business license or permit. Doing business in a city generally means that the owners have an office there, regularly do business, there, or regularly meet clients there. Each county and city has its own filing requirements, therefore you should determine where you expect to be conducting business, and research the permit requirements for each area.

Insurance

In addition to a business entity, and business permits, you should also obtain insurance for the business. This will help to protect the general operations of the business, and help pay legal claims and disputes if they arise. There are many companies that provide business insurance. You can call several and request quotes for general liability coverage, as well as any specific coverage that applies to your business.

Employees

One of the requirements of the EB-5 visa is that the business creates new jobs. Though there are ways to hire temporary workers as independent contractors, the EB-5 requires that the jobs be provided to actual employees that are not temporary. Hiring employees requires additional steps, filings and documents to comply with state and federal laws.

There are many services that can help set up a company payroll system, which will pay employees regularly, and withdraw the proper taxes for unemployment, social security and other required payments. With a proper payroll system in place, a business should have the proper documents in place for incoming employees. Such documents include an employee handbook, employee agreement, confidentiality agreement, and other contracts that will help establish the responsibilities of employees, obligations of the business, and help protect the business’s assets.

Taxes

Regardless of the type of business entity or industry, there are extensive tax implications for most companies conducting business within the United States. Whenever forming and operating a U.S. business, it is important that you are aware of your tax obligations. Tax law is an incredibly detailed and specialized area of law, and failing to pay applicable taxes or submit required forms may result in severe monetary penalties. Therefore it is advisable that you retain or consult with a tax attorney or certified public accountant (CPA). Such an individual can help advise on the tax implications of your business, and make sure the business files all of the proper documents with the IRS and applicable state.

Conclusion

Starting a business is a very exciting and potentially lucrative venture. Though there are many formalities and requirements that must be adhered to, proper planning and assistance from a startup business lawyer can help ensure that you form and operate your business properly. Doing so will allow you to focus on running and growing your business, and take full take advantage of the enormous market that the United States has to offer.