Starting a Business in the US: What It Involves and What It Costs

Forming a US company is usually the cheapest part of starting a business. The SBA says state registration costs less than $300 in most cases. The IRS charges nothing for an EIN. The real costs come after the filing, once the company starts to work and has to stay in good standing.

Starting a business in the US comes down to a handful of tasks, and the state filing is the smallest of them. In practice, you'll deal with these tasks:

• decide what you'll sell and to whom
• choose a legal structure and register the company with your state
• get a free EIN (federal tax ID) from the IRS
• get the licenses your work needs
• open a business bank account and buy the insurance you need
• set up the places where customers can find you online

These pieces overlap, and your budget depends on the type of business, the state and how much you buy at the start.

How to start a business: the pieces every company needs

So you sit down with a notebook and try to put it all in order. Every new business starts with the same basic pieces, whatever it sells. First, you need a customer who'll pay for something and a rough idea of what the launch will cost.

Then you'll pick a legal structure: a sole proprietorship, an LLC, a partnership or a corporation. Anything other than a sole proprietorship files with the state business office. In most states that's the Secretary of State.

Once the company is registered, most owners also need:

1. a registered agent
2. an EIN
3. the licenses and permits for their activity and location
4. a bank account
5. insurance
6. some kind of online presence

Very little of this follows a fixed order. While the state reviews your filing, you can already check licenses, write your offer and prepare your online pages. Only three things really wait for each other, and getting them wrong causes delays:

1. The IRS says to form an LLC or corporation with the state before you apply for the EIN. Otherwise the application may be delayed.
2. Banks typically ask for an EIN, formation documents, ownership agreements and a business license. A sole proprietor can use an SSN instead of an EIN.
3. Customers can find your Google Business Profile on Google only after it's verified.

Deciding what kind of company you'll be

The first real decision is the structure. It decides who's responsible for the business's debts and how the profit is taxed.

If you do business without registering any other type, you're a sole proprietor automatically. It's the cheapest option. But you can be held personally liable for the business's debts.

An LLC (limited liability company) generally protects your personal assets. Its members pay self-employment tax on their share of the profit. A corporation is a separate legal entity with its own rules. It can choose S corp tax status by filing Form 2553 with the IRS, and an S corp can have 100 owners or fewer. If you're torn between the two, LLC vs Corporation compares them in detail.

Picking a state and filing the papers to start a business

With a structure chosen, you now need the state to accept it. An LLC, a corporation and a partnership exist only after the state accepts their filing. Each type files its own document:

• An LLC files articles of organization. The SBA recommends an operating agreement as well.
• A corporation files articles of incorporation and usually adopts bylaws.
• Limited partnerships and limited liability partnerships file their own certificates.

You'll also run into the term registered agent. That's a person or company in the state of registration who receives official mail and legal papers for the business. LLCs, corporations, partnerships and nonprofit corporations must usually name one. If you later operate in another state, you register there as a foreign company with a Certificate of Authority. Many states also ask for a Certificate of Good Standing from your home state.

This is the moment many owners spend too long on, comparing states. Most of our clients form in the state where they live. The main reason is the bank: it may refuse an account or ask for more documents when the company comes from another state. Some clients do choose another state for tax reasons, and that can work if they understand what changes.

The SBA says the total cost to register is less than $300 in most cases. These are the official LLC fees in four large states:

The table shows filing fees only. The California and Texas franchise taxes are separate, and they have their own articles.

Your filing also starts a calendar. The SBA says state tax boards typically want initial reports within 30 to 90 days after you register. Some states add regular reports after that, like the ones in the table above.

Filing the form yourself is realistic if you know your state and your structure. The harder part is the choices around the form: the state, the structure, the registered agent and the activity description. Owners who form from abroad have more to track. So do owners in states with extra rules, such as New York. That's usually where outside help pays for itself.

The waiting weeks: where launches stall

You've sent the filing, and now you wait. Some of that waiting is outside your control, even when you plan well. In our work with new companies, the most common delay is the state itself.

In Florida we've seen filings come back in about five business days, and we've seen them take a month. Filings we sent in December 2025 came back in January 2026. New York is much faster: online filings often come back the same day.

When a state rejects a filing, the reason is usually the business activity description. Owners write something vague or incomplete. The examiner sends it back, and the waiting starts again. So write a clear, specific description of what the company does, and you skip that round trip.

The second delay is the domain name, and only for some owners. An aged domain is one that has existed for years. People often buy one at auction, and that can take several weeks. If your launch date matters, plan for that time or pick a new domain.

Using the wait for the plan and the budget

Those weeks are a good time to work on the money side. A business plan doesn't have to be long. The SBA describes two formats. A traditional plan runs to dozens of pages, and if you're asking for funding, its projections should cover the next five years. A lean plan is typically one page and can take as little as an hour.

For the budget, the SBA lists the usual cost categories:

• office space
• equipment and supplies
• communications and utilities
• licenses and permits
• insurance
• a lawyer and an accountant
• inventory and salaries
• advertising, marketing and market research
• printed materials and website creation

The SBA suggests splitting them into two groups. One-time costs include equipment, logo design, permits and fees. Monthly costs include salaries, rent and utilities. Plan for at least one year, ideally five, and add about 10% for costs you can't predict.

The break-even point tells you how many sales you need before you stop losing money. The SBA gives a formula for it. Take your fixed costs and divide them by the price per unit minus the variable cost per unit.

The approval arrives: getting your EIN

Then the state approves the company, and the next number comes from the IRS. An EIN (Employer Identification Number) is the company's federal tax ID. The IRS says you never have to pay a fee for it. The SBA advises avoiding websites that charge for one, and it recommends getting the EIN right after you register with the state.

You need an EIN if you pay employees or operate as a corporation or partnership. You also need one to file certain excise or other tax returns.

The online application gives you the EIN immediately if it's approved. It's open to entities formed in the US or a US territory, with their principal place of business there too. The applicant needs the responsible party's SSN or ITIN. The IRS also allows only one EIN per responsible party per day.

The IRS checklist for new businesses adds a few more tasks around this time. You choose a tax year and pay business taxes. If you hire, you collect Form I-9 and Form W-4 from employees. More about the number itself is in What Is an EIN (Employer Identification Number)?.

Before the first job: licenses and permits

Your company is now official, and the first customer wants to book you. But a registered company is only allowed to exist. That doesn't mean it's allowed to do every kind of work.

Federal licenses apply to regulated activities like these:

1. alcohol (TTB)
2. aviation (FAA)
3. firearms (ATF)
4. broadcasting (FCC)
5. oversize vehicles (DOT)

States and cities commonly license many trades too. The trades they license include auctions, construction and restaurants, as well as retail and vending. Some licenses expire and must be renewed. In practice you check three levels: your city or county, your state's rules for your industry, and any federal rule that covers your activity.

The first payment: a bank account and business credit

When that first customer pays, you'll want the money kept apart from your own. A separate bank account does that, and it makes your records and taxes much clearer. When you compare banks, the SBA suggests looking at three costs: transaction fees, the monthly minimum balance and early termination fees. Some banks also ask for an opening deposit, so check each bank's terms.

Your new company has no credit history of its own. Lenders typically decide on a new business's loan based on the owner's personal credit score. You can check your personal reports for free at AnnualCreditReport.com. The SBA also mentions the DUNS number. Dun & Bradstreet assigns this nine-digit ID to each physical location of a business.

Thinking about what could go wrong: insurance

A bank account keeps your records clean. Insurance covers the business when something goes wrong, and some of it is required by law.

If you hire people, you need workers' compensation, unemployment insurance and disability insurance. Most states require workers' compensation for employees, and some require more. So check your state's rules.

The SBA lists six common types of business insurance:

• general liability
• product liability
• professional liability
• commercial property
• home-based business insurance
• a business owner's policy, which bundles several types into one package

Getting found: your online presence

With the paperwork in place, customers still need a way to find you and check you. For a small business, an online presence usually includes:

• a Google Business Profile (the business listing on Google Search and Maps)
• listings in directories
• a landing page or website
• social media pages
• sometimes a press release about the launch

Google sets a few rules that matter most for a new business. Customers see a profile only after it's verified. Google allows one profile per business per metro area, and several profiles for the same business in one area may lead to suspension. A business without a storefront must hide its address. It can list up to 20 service areas, and the area shouldn't extend beyond about two hours of driving from the business location.

Most of the time here goes into waiting for verification, approvals and corrections. The setup itself is the smaller part. If you have the time and read the rules carefully, you can do it yourself.

Owners who are busy with their first customers often hire help. So do owners who live outside the US. This is the part our team does for new owners. We set up and verify the Google profile, build directory listings and make a landing page. A duplicate profile or a wrongly shown address can end in suspension. Nobody can promise you a particular position on Google. Careful setup gives the business more chances to be found. The full picture is in What Is an Online Presence and What Does a Small Business Need.

Adding it all up: what it costs to start a business

At some point you'll want to see every cost side by side. There's no official average cost of starting a US business. A single figure quoted without a source is an estimate. A few items have fixed official prices, and most depend on your choices.

We added up the required state fees ourselves from the official tables above. In the four states from the first row, forming an LLC costs:

1. California: $90 ($70 plus the $20 Statement of Information)
2. Florida: $125 ($100 plus the $25 registered agent designation)
3. New York: $250 ($200 plus the $50 Certificate of Publication), before newspaper fees
4. Texas: $300, or about $307 by card ($300 plus $0.25 plus 2.25%, which is $6.75)

In all four states the filing fees are a small part of the total budget. A longer breakdown is in How Much Does It Cost to Start a Business? A Startup Costs Overview.

If you're starting with very little money

Say you run a service business on your own as a sole proprietor. You can start with almost no fixed costs, because there's no state entity filing and the EIN is free. But you're personally liable for the business's debts. And any license or insurance your work needs still has to be paid for.

A budget of $1,000 covers the LLC filing fees in any of the four states in the table. Whether it also covers licenses, insurance, a landing page and marketing depends on the business. The SBA cost categories, a twelve-month plan and the 10% reserve give you a more honest answer than any general figure.

If you're doing all this from outside the US

Maybe you live in another country and are building this company from there. Most of the process is the same for you. A few differences carry real consequences:

• If the principal place of business is outside the US, you can't use the online EIN application. You request the EIN by phone, fax or mail.
• A US single-member LLC wholly owned by a foreign person must file Form 5472 with a pro forma Form 1120. That applies if it had a reportable transaction with a related party.
• Money the owner puts into the company counts as such a transaction.
• The penalty for not filing Form 5472 on time or correctly is $25,000.
• If the failure continues more than 90 days after an IRS notice, another $25,000 is added for each 30-day period.
• For these companies, Form 5472 can't be filed electronically. It goes to the IRS by fax or mail.

A US LLC owned by a foreign person is still a company formed in the US. So it doesn't file a BOI report. More detail is in Can a Non-US Resident Own a US LLC? What It Involves.

The BOI warning you'll still find online

While you read around, you'll probably see warnings about a filing that no longer applies to most new companies. Many guides still tell new owners to file a beneficial ownership information (BOI) report with FinCEN. A current SBA page does too, and it mentions a March 21, 2025 deadline. That advice is out of date.

FinCEN issued a final rule on August 11, 2026. It took effect on August 14, 2026, and it exempts companies formed in the US. Only companies formed in another country and registered to do business in a US state still report.

Funding a new business with savings, investors and loans

Once you know the costs, you'll start thinking about where the money comes from. USA.gov says there are no federal grants for starting a business. The usual sources are your own money, investors and small business loans.

The SBA doesn't lend directly. You apply for an SBA 7(a) loan, which goes up to $5 million, through a participating lender. To qualify, the business must meet four conditions:

• It's for-profit.
• It's located in the US.
• It meets the size requirements.
• It can't get credit elsewhere on reasonable terms.

Free advice is available too. SCORE offers free volunteer mentors. Small Business Development Centers provide one-on-one counseling and low-cost training.

How many new businesses survive five and ten years

Before you put money in, you'll probably think about your chances. You've likely heard that 90% of new businesses fail. Government data doesn't support it. The Bureau of Labor Statistics followed private-sector establishments that opened in March 2013:

By industry, the ten-year rate ranged from 24.5% in mining to 50.5% in agriculture. BLS counts establishments (single business locations), not companies. A closed location isn't always a failed business. The group also started before the pandemic. Even so, about half of these establishments were still operating after five years.

Mistakes that cost new owners money early

Your odds get better when you avoid the slips that cost money in the first months. The same few mistakes come up again and again, and each one has a clear cost:

1. Applying for the EIN before the state has approved the LLC or corporation. The IRS says this can delay the application.
2. Describing the business activity vaguely on the state filing. In our experience this is the usual reason a filing is rejected.
3. Forgetting Form 5472 for a foreign-owned LLC. The penalty starts at $25,000.
4. Filing state reports late. In Florida the LLC annual report rises from $138.75 to $538.75 after May 1.
5. Running business money through a personal account. Then it's hard to show which income and costs belong to the business.
6. Planning a budget with no reserve. The SBA suggests adding about 10% for unexpected costs.

What to do this month

Start with the choices that are hardest to change later: the structure and the state. Write a clear activity description, because a vague one is the usual reason a filing comes back. Put your state report dates in a calendar as soon as the company is approved.

If you live outside the US or your state has extra rules, like New York, outside help often saves time. For the tasks that come once the company is registered, see New Business Checklist: What to Do After Forming Your LLC.