Start your business the right way

Which entity type should you choose?

The right entity is decided by three things: how you want to be taxed, who owns the business, and whether you plan to raise outside investment. Everything else is detail.

An LLC is the default for most small operating businesses. It is simple to run, protects personal assets, and is taxed as a pass-through by default, so profits are reported on the owners’ personal returns. An S-Corporation is an LLC or corporation that has elected a different tax treatment; it can reduce self-employment tax once profit is consistently above roughly the level of a reasonable salary, but it adds a payroll requirement and a separate return. A C-Corporation pays tax at the entity level and is the structure venture investors expect. A sole proprietorship requires no filing at all, and gives no liability protection, which is why we rarely recommend staying in one.

We give the recommendation in writing, with the tax consequence of each option, before anything is filed.

Which state should you incorporate in?

For most operating businesses, the state you actually do business in. Incorporating in Delaware or Wyoming to save tax is the most common piece of bad advice founders receive.

The reason is foreign qualification. If your company is formed in Wyoming but operates from Texas, Texas still requires you to register there as a foreign entity, so you pay two sets of fees, file two annual reports, and maintain two registered agents. Delaware genuinely helps in specific cases, mainly companies raising institutional venture capital, because investors are familiar with its corporate law. Outside that case it usually adds cost without adding protection.

Can a non-resident form a US company?

Yes. There is no US residency or citizenship requirement to own a US LLC or corporation, and no requirement to hold a visa.

The part that takes longer is the EIN. Applicants without a Social Security Number cannot use the IRS online system and must apply by fax or mail, which adds several weeks. Banking is the other real constraint: some US banks will not open an account for an entity whose owners are all non-resident and have never visited. We tell you which route is realistic for your situation before you file, rather than after.