First you will need to decide which type of company (also known as an entity) will best suit your business needs. If you incorporate in the USA, you will be forming a Corporation. If you form an LLC, you will be forming a Limited Liability Company (LLC). Each entity has its advantages and there is no restriction on which country the owners are from or how many owners there are. However, your home country might have its own restrictions on which type of entity can operate in that country so you will need to check your local laws and possibly contact an attorney for more information.

Once you’ve decided whether to incorporate in the US or form an LLC, you will need to decide the state where you will start a USA company. You can choose any of the 50 states or Washington, D.C. The state you choose will depend on why you are starting the company. Some states like Delaware, Nevada and Wyoming are more “business-friendly” and “international-friendly” than other states, and if you are only starting a US company because you need to open a US bank account and will not have a physical office, you might want to choose one of these states. In fact, the banks in Delaware, Nevada and Wyoming are familiar with international clients who don’t have a local office and dealing with them will most likely be easiest. If you are opening a US office when you start a USA company, you might want to incorporate or form an LLC in the state where you will open an office or operate with a home-based employee. You can still form the company in another state like Delaware if you like, but please note that you will need to “re-register” the company in your state of operation and will have to pay additional fees – this is called a “foreign qualification” and we can handle this for you as well.

After you’ve decided to incorporate or form an LLC, and chosen the state where you will start the company, you will need to choose a company name and provide a registered agent. A registered agent must be a person or company that has a physical address in your state of formation, is available during business hours and agrees to accept and sign for official legal and state documents on behalf of your company. MyNewCompany.com can provide the registered agent in any state for $99/year. Please note that in addition to your registered agent name and address, some states will require you to provide the names and addresses of your company owners and any people involved with the company such as directors or shareholders. Also, it should be noted that a registered agent is not a mail forwarding service.

There might be some additional items you will need to complete before you can legally operate your company in the United States such as setting up a physical or virtual office and obtaining a Federal Tax ID, but completing these basic steps gets you started. By choosing to incorporate in the USA or form an LLC, you have added credibility to your company and can now put your services or products in front of US investors and the US market. These are just some of the reasons to start a USA company.

For more information, please view our resource page with step-by-step instructions: “How to Start a Company in the USA“.

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To receive this discount:

1. Place an order for a Corporation or an LLC.
2. On the final step of checkout, click the “Offer Code” link, enter offer code 15NOW.
3. Make sure to click “Apply” and 15% will automatically be deducted from your total.
4. Submit your order.

This is a one-time tax-season special so please act now!

IMPORTANT: the offer code must be applied before submitting an order and is not applicable to orders after they are submitted.

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So let’s take a closer look at these “incorporate for free” and “form an LLC for free” offers. After reviewing a few sites that are offering this, I found:

• Obviously this does not include state fees or publication fees. State fees can range from $20 to over $500. These companies conveniently don’t mention this in their advertising (except as a disclaimer).
• Most are embedding significant fees within the state fee. For example, the state fee in California is $70 for an LLC and $100 for a corporation – most I checked were charging anywhere from $85 to $115 for the LLC and $115 to $140 for the corporation. This is simply dishonest.
• They are all going to attempt to upsell you – they wouldn’t offer this without the potential to get actual money from you. Get ready for aggressive sales calls, emails and attempts to get you to buy things you don’t need (for example, a professional Registered Agent Service is not required if you live in the state where you form the company and are available during business hours). I would bet that most people who form a “free” company end up paying more than people who go with a company that tells the truth, is upfront and charges reasonable fees.
• None of them offered personalized Corporation Bylaws or an LLC Operating Agreement. Not having these documents is dangerous, exposing you to lawsuits, owner disputes and general lack of proper organization.
• Most are charging outrageous shipping fees which are conveniently not included in the “free” package. $29.95 for “Priority Mail” in one case. Priority Mail from the USPS is usually around $5 for corporate documents.
• Most are charging really outrageous “Rush” or “Expedite” fees. Some are $150 or more when I know for a fact that all they are doing is overnighting the documents to and from the state (typically around $50 – $60 in real costs).

So what’s the alternative? Obviously this article is written to convince you to try our services. We believe in being honest and here’s what we’ll offer you:

• Our service starts at only $79 + state fees.
• We only charge the real state fee which you can view on our online order forms.
• We never attempt to upsell you.
• Even our basic service includes personalized Corporate Bylaws or an LLC Operating Agreement.
• Shipping is always free, you can add overnight for $25.
• We don’t make money on “Rush” or “Expedite” fees. If it costs $25 to expedite a filing with the state, that’s what we charge you.
• Most importantly, we tell the truth. We would never offer a “free corporation” or “free LLC” as a sales tactic. We would never hide fees in the state fee. We never say “incorporate in 10 minutes” or other gimmicks – we tell you how long it will take to form your company right on Step 1 of our order forms.

I invite you to compare us to our competitors and decide for yourself.

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Compare this to the standard processing time of select US Secretary of States (as of June 2010):

• California Secretary of State: 70 Days
• Maryland Department of State: 75 Days
• Nevada Secretary of State: 45 Days
• New York Secretary of State: 20 Days
• Washington D.C. DCRA: 40 Days

So if you want to file a DBA, incorporate a business or form an LLC in the United States, you will almost certainly have to wait longer than your entrepreneurial equivalent in Rwanda. This should be a wake up call to each US Secretary of State’s filing office: in the largest, most powerful economy in the world, we are now falling behind 3rd world countries (recovering from a brutal civil war) in the time it takes to register a business.

The number of new business registrations is an important indicator of the overall health of an economy and US State governments should make upgrading their systems a priority not only to make business startups faster, but to improve and streamline the internal operations of their own offices.

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However, many entrepreneurs and startup advisors believe that this should not be the primary concern. For example, if you incorporate in California when you start out, you can then “re-incorporate” in Delaware later should your investors require this. Or if you don’t authorize enough shares, then you can amend your original articles of incorporation later to reflect more shares, or different classes of shares (common shares vs. preferred shares).

There may be an exception in regards to the LLC – sometimes this entity is more difficult to modify for a venture capitalists needs – VC’s almost always prefer to work with the C-Corporation.

So, in essence, many companies start out in one structure, based in one state and eventually end up being changed considerably later. Instead, it might be advisable to work on working on your product or service, getting the company going in whatever form and then worry about these corporate formalities later – if you are at the point where they are modifying your company, you will probably receiving significant funding and these formalities will be handled by seasoned lawyers.

If you want to do the Delaware option at startup, see how a lawyer would set up a Delaware company now if were a startup. Almost always this is a Delaware C-Corporation.

If you’d like to see some of the typical venture capital agreements or how they typically modify the articles of incorporation, then view these “Model Series Seed Agreements“. This includes documents like Investors Rights and a “Term Sheet”.

Long story short, it’s ultimately up to you how you want to structure your company in the beginning, but the links mentioned above will show how a VC or startup lawyer might eventually structure your corporation.

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• Incorporating in Delaware as a C-Corporation.
• Authorizing 10,000,000 shares of common stock at $0.0001 par value.

He details other issues like the appropriate amount of stock he would issue to the founders, vesting schedules and even how he would raise capital. Highly recommended.

The only thing I would add is that a startup doesn’t have to start by issuing that many shares, you can save money by starting with a smaller amount, for example, one thousand shares and then if you get to the point where you need to raise money or venture capital, you can amend your “Articles of Incorporation” for higher share amounts later.

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You will need to select a state in which to incorporate a business whether it be for profit or nonprofit. Most often, small business owners will incorporate a business in their home state or the state where the business will be operate and be physically located. It might be of some benefit to your particular business to incorporate out-of-state, but virtually every state requires that an out-of-state company also incorporate in its home state, so make sure you have done your research prior to choosing your state to avoid paying  more money than necessary.

In addition to choosing your state, you will need to choose a unique name for your business. The name will need to be available in your state and you should also know that some states have their own guidelines for business naming, so it is a good idea to have a few names picked out in case your first choice is not available for whatever reason.

You will need to wait until you have received the filing paperwork back from your state before your company is officially incorporated, but there are things you can do while you wait such as prepare a business plan for operating your business. Your business plan can be simple or comprehensive depending on the complexity of what your company will do and the requirements of your bank, if you are applying for a business loan. Other things to do while you incorporate a business include opening your company bank account, leasing office space, obtaining any permits or special licenses you will need and hiring employees.

Your corporation will be structured with Shareholders owning the company stock. Often, a small business owner operates a company on his or her own so exists as the company’s only Shareholder. It is also common for a small business owner to be the corporation’s one Director and hold all Officer positions (President, Secretary, Treasurer, etc.). A corporation is operated by rules set forth in the Corporate Bylaws, which are completed after you incorporate a business and can be modified in time as the business changes or grows. Operating a corporation requires, at the minimum, holding an annual Shareholders and Directors meeting, keeping written minutes of any decisions affecting the company and following general corporate rules as dictated in your Corporate Bylaws.

By completing the steps outlined to incorporate a business, your business idea will become a reality. An good online incorporation service will charge reasonable fees and assist you through the process of starting your own company.

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You will want to start by choosing the state in which to incorporate. You will most likely want to incorporate in your home state or the state where your business will be physically located. While there may be advantages for you to incorporate in a business-friendly state such as Delaware, Nevada or Wyoming, virtually every state requires that an out-of-state corporation “re-register” in the state where they are actually doing business; so you will more than likely still have to pay the necessary taxes and fees in your state if you choose to incorporate elsewhere.

To legally become an existing corporation in your state, you will need to file Articles of Incorporation and complete Corporate Bylaws, which will be the rules for operating your corporation on a day-to-day basis. How to incorporate also requires that you choose a name for your business. You will need to make sure the name is available by checking with your state’s corporate filing office, usually the Secretary of State. An online filing service can check for name availability on your behalf.

Because a corporation exists as its own entity, it requires its own identification number just as an individual has a Social Security Number. A company’s identification number is known as a Federal Tax I.D. Number or FEIN or EIN. An online incorporation service can obtain your corporation’s FEIN during the incorporation process or you can obtain one yourself from the IRS.

Incorporating as a corporation also requires a certain management structure of your company. Corporations are structured with Shareholders owning the company stock. Shareholders elect the Directors, also known as the “Board of Directors,” and the Directors appoint the corporation’s Officers (President, Secretary, Treasurer, etc.) to operate the company on a daily basis. A corporation’s Shareholders can also serve as its Directors and Officers, so if you intend to operate your company on your own or will hire only a small number of employees, you will most likely be the only Shareholder, Director and also hold all the Officer positions.

Once you’ve completed the legal steps of how to incorporate, you will need to follow other steps to successfully operate your business. Some of these steps might be to open your company bank account, lease office space and ultimately, figure out how you will finance your business until you start earning income. The important thing is that you can become incorporated fairly quickly, depending on the filing processing time in your state, freeing yourself up to see your business idea become a legitimate business.

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Once you’re certain that your idea is one you will want to follow through with, and is realistic for you as an individual—someone who doesn’t like children would not want to open a daycare, for instance—you will need to prepare a business plan. A business plan will help you figure out a step-by-step process for growing your business from a simple idea to a successful enterprise. A business plan might sound complicated but doesn’t have to be. You can start a company with a simple business plan that you’ve outlined yourself on a piece of paper. However, if you plan to apply for a business loan to start a company, you will need a more comprehensive business plan to satisfy the requirements of your lender. There are many books and online services available to help you create a comprehensive business plan.

In addition to outlining the structure of your business and your business goals, your business plan should determine the costs involved in starting a company. Many small business owners start a company with very little capital and rely on credit cards or the help of friends and family. Some small business owners will also seek investors to help them finance the company during the start-up phase. If your business will require a large amount of money to lease office space or buy special equipment, you will probably need to apply for a small business loan or a bank loan. You can learn more about your loan options by visiting the website of the Small Business Administration or visiting your bank.

In addition to writing your business plan and working out how to finance your business, you will need to follow the required legal process to start a company. Choose a name for your company and select the legal structure that will work best for your business, such as a incorporating as corporation or an LLC. You will need to obtain a Federal Tax I.D. Number, also known as a FEIN or EIN, which is a company’s identification number much like an individual’s Social Security Number. A FEIN can be obtained through the Internal Revenue Service or through an online incorporation service when you start a company. An online incorporation service will also help you start a company by guiding you through the official formation process and assisting with the necessary paperwork.

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Incorporation makes it possible to purchase real estate, enter into contracts and shield individual assets and equity from business-related debt collection and any potential legal disputes, because a corporation is its own entity separate from its owner(s). Essentially, incorporation creates a legitimate legal entity separate from its owner(s); similar to a new “person” with its own name and identification number. A company’s identification number is known as a Federal Tax I.D. Number or FEIN or EIN. An online incorporation service can assist you in obtaining your company’s FEIN at the time of your company formation or you can obtain one yourself from the IRS.

A corporation is structured with Shareholders who own the stock of the corporation. A corporation’s Shareholders then elect Directors, known as a corporation’s “Board of Directors,” who make many of the major decisions affecting the corporation and usually with the Shareholders’ best interests in mind. The Directors then appoint the corporation’s Officers (President, Secretary, Treasurer, etc.) and the Officers operate the company on a day-to-day basis. In many cases, a corporation’s Shareholders will also serve as its Directors and Officers and it is common for the owner of a small business to be its only Shareholder, its sole Director and hold all Officer positions.

The rules for operating your corporation are set forth in the Corporate Bylaws. The Corporate Bylaws are established during the incorporation process and can be modified as the business evolves from the start-up phase. Operating your corporation requires, at the minimum, holding an annual Shareholders and Directors meeting, keeping written minutes of major company decisions and following general corporate rules as dictated in your Corporate Bylaws.

Incorporation provides additional benefits in that a corporation’s Shareholder(s) can deduct business expenses such as employee healthcare programs and annual meeting costs, and income is reported on the corporation’s own tax return. However, new small corporations will often choose to elect “S-Corporation Status” after formation to avoid “double taxation.” An s-corporation is taxed with the corporation’s profits and losses added to the personal tax returns of its Shareholders to avoid having to pay taxes on profits once, then again when the profits are given back to the Shareholders as dividends. Electing “S-Corporation Status” requires only (besides US Citizenship and fewer than 100 shareholders) that the appropriate resolution be adopted and Form 2553 be submitted to the Internal Revenue Service with some states requiring their own version. New business owners should know that while there are benefits to electing “S-Corporation Status,” the s-corporation has more restrictions than a regular corporation and does not allow for the deduction of certain business expenses such as healthcare.

Incorporation requires that you choose a state in which to form your corporation, which will usually be your home state to avoid paying additional fees. Your corporation might benefit from the friendly business laws of Delaware, Nevada or Wyoming, but virtually every state requires a corporation to “re-register” as a “foreign corporation” if formed in a state other than its physical location. For instance, a corporation that is formed in Nevada, but is physically located and operated in the state of Texas, will have to register in Texas as a foreign corporation in addition to original formation in the state of Nevada.

If you would like to start a business but aren’t sure how to incorporate, an online incorporation service can assist you with all the necessary paperwork you will need to file with your company’s state to become incorporated. Additionally, an online incorporation service should be able to guide you through the process and provide other services that may be of help to you such as obtaining your FEIN and obtaining your Corporate Bylaws.

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