How to Register a Company in the USA | EntityFlo

How to Register a Company in the USA | EntityFlo

Company registration in the USA is done at the state level , not federally. Each state has its own rules, fees, and filing requirements. Delaware is where most serious companies incorporate. Here's what you need to know to choose the right state, the right structure, and get it done correctly.

The Fundamental Difference: State Level Registration

Unlike Australia, New Zealand, and the UK — where there is one national registry — the USA has 50 state registries. You incorporate in one state, but you can operate in all 50. If you operate in a state you're not incorporated in, you may need to "foreign qualify" (register as a foreign entity) in that state too.

The two most important decisions: 1. Which state to incorporate in 2. Which entity structure to use

Delaware: The Default for Startups and Investors

Delaware is the most popular state for incorporation — not because most companies operate there, but because of its legal and governance advantages:

Court of Chancery: Delaware's specialist business court has centuries of corporate case law. Predictable, sophisticated, business friendly rulings. Investor preference: VCs, angels, and institutional investors overwhelmingly prefer Delaware C Corps. If you're raising venture capital, incorporate in Delaware. Flexible corporate law: Delaware's General Corporation Law gives significant flexibility in structuring governance, share classes, and director/shareholder rights. No income tax on out of state revenue: Delaware doesn't tax companies that are incorporated there but conduct no business in the state.

Delaware formation costs: LLC: $90 filing fee C Corp: $89+ (depends on authorised shares) Annual Franchise Tax: $300 (LLC) or $400–$200,000+ (C Corp, based on share structure — significant consideration)

Wyoming is increasingly popular for LLCs, particularly for: Strong asset protection and charging order protection No state income tax No franchise tax Low annual fees ($60/year) Strong privacy — Wyoming allows nominee members and managers

Wyoming is best for: LLCs where you want maximum privacy and asset protection, and aren't raising venture capital.

If you're operating locally and not raising VC, incorporating in your home state is often simplest. You avoid the need to "foreign qualify" in your home state (which you'd have to do anyway if you incorporated in Delaware but operate in, say, California). It simplifies taxes and reduces ongoing compliance costs.

The catch: if you later raise VC or sell the company, investors may require you to redomicile to Delaware. Redomiciling is possible but adds cost and complexity.

This is arguably the most important decision you'll make.

The LLC is America's most flexible business structure:

Pass through taxation by default: profits and losses pass through to members (owners) and are taxed at the individual level — no entity level federal income tax (unless you elect otherwise) Flexible governance: governed by an Operating Agreement, which you largely write yourself No formal meeting requirements (unlike corporations) Ideal for: small businesses, real estate, professional services, non VC backed startups

Multi member LLC taxation: reported on Schedule K 1; members pay self employment tax.

Single member LLC taxation: disregarded entity by default — reported on the member's personal return (Schedule C). Can elect to be taxed as a corporation (S Corp or C Corp).

Double taxation warning: C Corps pay corporate federal income tax on profits, and shareholders pay personal income tax on dividends. This is the "double taxation" problem. But: C Corps are the only structure VCs will invest in. This is non negotiable in venture capital. QSBS (Qualified Small Business Stock): C Corp shareholders may qualify for significant capital gains tax exclusions on exit — up to $10M or 10x the adjusted basis, tax free. Huge advantage for founders and early investors. Employee stock options: C Corps issue ISOs (Incentive Stock Options) — the preferred option type for employees because of favourable tax treatment. Ideal for: venture backed startups, companies planning to raise institutional capital or IPO

Delaware C Corp is the overwhelmingly standard structure for VC backed startups.

S Corps are a tax election, not a separate legal entity — a C Corp or LLC can elect S Corp status with the IRS:

Pass through taxation (like an LLC) — no double tax Restrictions: max 100 shareholders, US citizens/residents only, one class of stock Key advantage over LLC: S Corp owners who work in the business can split income between salary and distributions, potentially reducing self employment taxes Ideal for: profitable small businesses where the owner is the primary worker, not raising VC

Based on the above — Delaware C Corp for VC backed startups, Wyoming or home state LLC for most other businesses.

Search your state's Secretary of State database. Every state has one. Names must be unique within the state.

LLC: File Articles of Organization with the state Corporation: File Articles of Incorporation (also called Certificate of Incorporation in Delaware)

Delaware filing: Submit to the Delaware Division of Corporations Wyoming filing: Submit to the Wyoming Secretary of State

Most states have online portals. Delaware is entirely online.

This is mandatory in every US state. A registered agent is a person or entity with a physical address in the state of formation who: Receives official legal documents (service of process, subpoenas) Receives state correspondence

If you're not physically present in Delaware (or wherever you're incorporating), you must hire a registered agent service. Costs range from $50–$300/year. Popular providers: Northwest Registered Agent, CT Corporation, Registered Agents Inc.

LLC: Draft an Operating Agreement (even single member LLCs should have one — it's your internal rulebook) Corporation: Draft Bylaws and hold an Organizational Meeting to adopt them, elect officers, and issue shares

These don't need to be filed with the state (except in some states for LLCs), but they're legally important — especially if you ever face a dispute.

For C Corps, issue founder shares immediately after incorporation. Issue them for minimal consideration (e.g., $0.001/share) — this is standard practice. The shares will be subject to a vesting schedule (typically 4 years with a 1 year cliff) if you have co founders.

83(b) election: File within 30 days of share issuance if shares are subject to vesting. This is critical — missing the 83(b) deadline is an expensive mistake. The election tells the IRS you want to be taxed on the value of the shares now (when they're worth almost nothing) rather than as they vest (when they may be worth a lot more).

An Employer Identification Number (EIN) is your company's federal tax identification number — like an SSN but for a business. You need it to: Open a US business bank account Hire employees File federal tax returns Apply for business licenses

Apply for free at IRS.gov. Processed immediately for online applications.

Most US banks require a physical presence to open a business account. Options for non US residents: Mercury (popular with startups, remote friendly) Relay Brex (for VC backed startups) Wise Business

Every state where you're incorporated (or foreign qualified) requires annual filings:

Delaware: LLC: $300 flat annual tax, due June 1 C Corp: Annual franchise tax calculated one of two ways: Authorised Shares Method: can be very high for companies with many authorised shares (which includes most VC backed startups) Assumed Par Value Capital Method: usually much lower — always request this calculation Annual report fee: $50 Due: March 1

Wyoming: $60/year minimum, 0.0002% of assets in Wyoming if over $300,000

California (if you operate there): $800/year minimum franchise tax — even if your LLC has no income. This is a notorious pain point for Wyoming/Delaware LLCs that operate in California.

LLC (disregarded): Schedule C on personal return LLC (partnership): Form 1065 partnership return + K 1s to members C Corp: Form 1120 corporate return S Corp: Form 1120 S + K 1s to shareholders