First things first
1. Before the legal setup: product, market, and model
A business is far more likely to succeed when it answers a clear need. Rushing
into the legal setup before nailing down your offer, distribution, and cash
flow leads to needless costs (filing fees, accounting, compliance) with no
customers.
The legal setup in the U.S. is often more flexible than in France on
paper: there's usually no required paid-in capital like the traditional French
model. But that flexibility removes certain guardrails, so financial and
contractual discipline becomes your first responsibility.
2. Federal vs. states: who decides what?
The U.S. combines a federal framework (the IRS for the EIN, many federal tax
rules, employment law for covered employers) with 50 separate state frameworks
for entity registration, certain income taxes, sales taxes, franchise taxes,
industry licenses, and local business law. Cities and counties add licenses,
local taxes, and zoning. Your path depends on the state where you form the
entity and the states where you earn revenue (the concept of nexus).
Legal structures
3. Sole proprietorship
A sole proprietor is generally one and the same as the business: there's no
separate legal entity. Formalities are often light outside regulated
professions, but profits typically flow onto your personal return, and
self-employment tax may apply. Liability is usually unlimited for business
obligations. For a small test project, that may be enough; once you have
contracts, employees, or real risk, a limited-liability entity is often the
better choice.
4. Partnerships (GP, LP, LLP)
A general partnership can arise in practice between partners; contractual and
tax obligations follow specific rules (profit allocation, with a partnership
agreement strongly recommended). The LP (limited partnership) and LLP (limited
liability partnership) forms add distinctions in roles and liability;
availability depends on the state. A written partnership agreement sharply
reduces disputes.
5. Limited Liability Company (LLC)
The LLC generally combines limited liability with management flexibility (an
operating agreement). For federal taxes, it can often be treated as a
disregarded entity for a single member, as a partnership for multiple members,
or it can elect corporate taxation under the IRS "check-the-box" rules. Verify
each option with a tax professional, since state treatment varies. Keep clean
separation between personal and business accounts to preserve the liability
shield.
6. C-corporation
The C-corp is a stock corporation taxed at the entity level; dividend
distributions can then be taxed at the shareholder level, creating possible
economic double taxation (there's no dividend tax credit in the U.S.). It
remains common for fundraising, stock options, certain institutional investors,
and reinvested-earnings strategies. Note: bankruptcy doesn't automatically wipe
out payroll trust-fund taxes or personal guarantees, and a court may, in some
cases, pursue the liability of officers or shareholders.
7. S-corporation
The S-corp is a tax election (Form 2553) subject to conditions: an eligible
domestic corporation, allowed shareholder types, a single class of stock, a
limited number of shareholders, and more. Income can pass through to personal
returns (Schedule K-1) without entity-level tax, provided reasonable salaries
are paid to shareholder-employees. Not every state treats the "S" election the
same way: verify both federal and state obligations.
At a glance
8. Comparison table of common forms
Indicative reading: every state and industry changes the balance. Use this
table to frame a discussion with your advisors, not as a final decision.
Steps
9. Business name: DBA / fictitious business name
Operating under a name other than your official legal name usually means filing
a Doing Business As (DBA), also called a fictitious business
name, published at the county level or per state rules. A notice in an
approved local newspaper may be required for several consecutive weeks; fees and
timelines vary (often a few dozen dollars). With that document, you can
generally open a bank account under the name. Note: a DBA does not replace a
registered trademark (filed with the USPTO): it clarifies local use of the name,
not exclusive federal IP rights.
10. Employer Identification Number (EIN)
The EIN is the entity's federal identifier with the IRS (Form SS-4, or the
online application when you're eligible). It's required for banking, payroll,
many tax forms, and opening business accounts. Identify the responsible party
correctly, keep the IRS confirmation notice, then move on to state registrations
for employment withholding and related taxes.
Apply for an EIN, official IRS site
11. State registration, registered agent, records
Formation generally happens with the Secretary of State (or equivalent) of your
chosen state: articles of organization / incorporation, filing fees, and often
a registered agent with a physical address in that state. Keep your decision
records, member or board meetings (per your governing documents), and periodic
filings (annual report / franchise tax) up to date. Amounts owed vary: some
states impose an annual minimum when the entity operates there. Always check the
relevant state's official site for the current schedule.
12. Local, industry, and zoning licenses
Beyond the entity: city permits, public-health rules for food service,
professional licenses (attorneys, doctors, real estate depending on the state),
transportation, alcohol, and environmental rules. Check zoning before signing a
commercial lease: a prohibited use can block your activity even with a validly
formed company.
Compliance
13. Taxes: an overview (not exhaustive)
Depending on the structure: federal income tax, state and local taxes, payroll
taxes (FICA, FUTA, state withholding), sales and use taxes, franchise taxes,
business property taxes, and information returns (1099, W-2). Foreign-owned
entities or cross-border flows can trigger special rules (FATCA / FBAR, among
others), where a CPA's help is essential. Compliance is time-sensitive: follow
IRS and state calendars.
14. Hiring, payroll, and compliance
Hiring an employee requires the EIN, federal and state withholding
registrations, work-authorization verification (a compliant I-9 process),
mandatory workplace postings, workers' compensation coverage depending on the
state, and often an anti-discrimination policy. Misclassifying employees as
independent contractors exposes you to reclassification and penalties. E-Verify
obligations and minimum wages change: check federal and state sources.
15. Retail sales: seller's permit and nexus
If you sell goods (or certain taxable services), you generally must register
with the relevant state tax agency, collect sales tax where required, and remit
it on the required schedule. Nexus (economic presence) can extend beyond your
formation state once you ship to other states: mapping these obligations has
grown more complex with e-commerce. Tip: project reasonable revenue and lean on
tools and experts to track thresholds.
16. Banking, insurance, account separation
Banks typically require your formation documents, the EIN, signers' IDs, and
sometimes internal agreements. Never mix personal and business spending: it
weakens your liability protection and complicates taxes. Carry insurance suited
to your activity (professional liability, cyber, property, general liability).
17. SBA, SCORE, and support
The Small Business Administration (sba.gov) centralizes guides, guaranteed
loans, and local partners. SCORE workshops and mentoring help shape your
business plan and projections. Prepare financial statements, up-to-date tax
returns, and a clear identification of owners for any financing request.
Going further
18. Immigration and strategy (E-2 visa link)
A U.S. legal form does not replace immigration law: a non-citizen founder must
align the company's structure, investment, and role with the applicable visa
categories. For nationals of treaty countries, the E-2
visa path is often explored alongside forming an LLC or corporation. See our
dedicated guide for the substantial-investment and active-direction criteria.
Frequently asked
19. FAQ
Should I incorporate in Delaware by default?
Delaware is common for some funded companies or venture structures, but a
small local business often does better registering in its operating state
to reduce complexity (foreign qualification). Compare fees, taxes, and
applicable law with an advisor.
Can I open a bank account without an EIN?
Usually not for entities: banks typically require the EIN and formation
documents. Check your bank's policy and prepare signed paperwork.
What is an annual report?
Many states require a periodic filing (annual or biennial) to keep the
company in good standing; a delay can lead to administrative dissolution or
penalties.
Is there a minimum share capital?
Many forms don't assume a minimum capital like the French model. But
undercapitalization raises business risk and can complicate banking or
credit.
LLC or C-corp for a foreign investor?
Both are possible; the LLC offers flexibility, the C-corp eases bringing in
investors. The right choice depends on personal taxes, country of
residence, and financing strategy: have it validated by a CPA and an
attorney.
20. Official links
France (.gouv.fr and public bodies)
Take it with you
21. PDF summary
Download our one-page summary (legal forms, comparison table, EIN, banking and
insurance, E-2 visa link, FAQ, and official U.S. links), in the site's colors.
Indicative document: always verify the official source at the time you act.
