Starting a Business: LLC and Basics
Sole proprietor, LLC or corporation?. The first legal steps of a US small business: choosing a structure, registering an LLC, getting an EIN, separating money and staying compliant.
A neighbourhood storefront, Chicago: w_lemay, CC BY-SA 2.0
Choosing a structure
A sole proprietorship is the default if you start selling on your own: simple, but you are personally liable for business debts. A limited liability company, or LLC, separates business liabilities from your personal assets in most cases and by default passes profits through to your personal tax return. Corporations, S corps and C corps, involve more formalities and different tax treatment, and are common when raising outside investment.
Registering an LLC
You form an LLC by filing articles of organisation with your state, usually online, and paying a state fee that varies widely. Many states also require an annual report and fee. You need a registered agent, a person or service that accepts legal papers. Writing an operating agreement, even for a one-person LLC, records who owns what and how decisions are made.
Tax ID, licences and banking
An Employer Identification Number, or EIN, is free from the IRS website, and you need one to hire staff and usually to open a business bank account. Check city, county and state licences and permits, and sales tax registration if you sell taxable goods. Keep business and personal money in separate accounts, which makes bookkeeping and taxes far easier and helps protect your liability shield.
Key takeaways
Pick a structure that fits your risk and plans; an LLC is common for small businesses. Register with your state, get a free EIN and check local licences. Open a separate business bank account from day one. Keep simple, accurate books and set aside money for taxes. Ask SBA resources or a professional when you are unsure.
Next steps
Write a simple one-page business plan: who your customer is, what you sell, how you reach customers and how you make money. Set up bookkeeping from day one. Use our startup checklist and break-even calculator to test your numbers. The US Small Business Administration and free SCORE mentors offer guides and advice.
This page is general education, not financial, tax or legal advice. Everyone's situation is different, so check official sources and consider talking to a licensed professional before big decisions.
- A neighbourhood storefront, Chicago: w_lemay, CC BY-SA 2.0
Text written by Biggest Bossman.
