How Do I Start a Company | Lovie — US Company Formation

Starting a company is an exciting journey, but it requires careful planning and execution. Whether you envision a small local shop or a nationwide corporation, the foundational steps involve legal registration and operational setup. Understanding these initial requirements is crucial for building a legitimate and sustainable business. From choosing the right business structure to securing essential documentation, each step contributes to your company's success and compliance. This guide breaks down the process of starting a company into manageable steps. We'll cover everything from initial idea validation to formalizing your business entity with the state and federal governments. Lovie is here to simplify this complex process, offering resources and services to help entrepreneurs like you launch their ventures with confidence across all 50 US states.

Define Your Business Idea and Plan

The very first step in starting a company is to clearly define your business idea. What problem does your product or service solve? Who is your target audience? Thorough market research is essential to validate your concept and understand your competitive landscape. This research should include analyzing potential customers, identifying competitors, and assessing market demand. A well-defined business plan is your roadmap to success. It doesn't need to be a lengthy, formal document for internal

Clearly define your product or service and the problem it solves.
Conduct thorough market research to validate your idea and understand your audience.
Develop a business plan outlining goals, strategies, and financial projections.

Choose the Right Business Structure

Selecting the appropriate legal structure is a critical decision that impacts your company's taxes, liability, and administrative requirements. The most common structures for new businesses in the US include Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation (S Corp or C Corp). Each has distinct advantages and disadvantages. A Sole Proprietorship is the simplest structure, where the business is owned and run by one individual, and there is no legal distinction be

Understand the differences between Sole Proprietorship, Partnership, LLC, and Corporation.
LLCs and Corporations offer personal liability protection.
Consider tax implications, administrative complexity, and future growth when choosing.

Register Your Business Name

Once you've chosen a business structure, you need to select and register a name for your company. If you're operating as a Sole Proprietorship or Partnership under your own name (e.g., Jane Doe Photography), you may not need to register a business name. However, if you plan to use a name different from your legal name (a 'fictitious name' or 'doing business as' or DBA), you must register it. This DBA registration is typically done at the state or county level, depending on your location. For exa

Register a 'Doing Business As' (DBA) name if operating under a fictitious name.
Ensure your chosen LLC or Corporation name is unique and available in your state of formation.
Consider trademarking your business name and logo for broader brand protection.

Obtain an Employer Identification Number (EIN) and Licenses

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for tax purposes. You'll generally need an EIN if you plan to hire employees, operate your business as a corporation or partnership, file tax returns for excise, alcohol, tobacco, or firearms, or operate certain types of trusts. Applying for an EIN is free and can be done direct

Apply for a free EIN from the IRS if you plan to hire employees or operate as an LLC/Corporation.
Research federal, state, and local licenses and permits required for your specific industry and location.
Ensure all registrations, licenses, and permits are obtained before commencing business operations.

Set Up Business Banking and Accounting

Opening a dedicated business bank account is essential for maintaining financial clarity and legal separation between your personal and business finances. This is particularly important for LLCs and Corporations to uphold the liability protection they offer. Mixing personal and business funds can 'pierce the corporate veil,' making your personal assets vulnerable. When opening an account, you'll typically need your formation documents (like Articles of Organization or Incorporation), your EIN, a

Open a separate business bank account to protect personal assets and maintain financial clarity.
Choose accounting software or hire a professional to track income, expenses, and prepare for taxes.
Maintain accurate financial records to understand business performance and ensure tax compliance.

Understand Ongoing Compliance Requirements

Launching your company is just the beginning; ongoing compliance is crucial for maintaining its legal standing and avoiding penalties. For LLCs and Corporations, this often includes filing annual reports with the state where your business is registered. For example, in Delaware, LLCs must pay an annual tax, and corporations must file an annual report and pay franchise tax. The fees vary significantly by state; for instance, California requires LLCs to pay an annual minimum franchise tax of $800,

File annual reports and pay state fees to maintain your business entity's good standing.
Maintain a Registered Agent in your state of formation and any states where you operate as a foreign entity.
Stay current with federal, state, and local tax obligations and deadlines.

Frequently Asked Questions

What is the cheapest way to start a company?: The cheapest way to start a company is often as a sole proprietorship or general partnership, as these structures typically have minimal filing fees. However, they offer no personal liability protection. Forming an LLC is generally more expensive due to state filing fees (e.g., $70 in California, $90 in Delaware) and potential registered agent costs, but provides crucial liability protection.
Do I need a lawyer to start a company?: While not always legally required, consulting a lawyer can be beneficial for complex business structures or unique situations. For standard LLCs or Corporations, services like Lovie can handle the formation process efficiently and affordably, often making legal counsel unnecessary for basic setup.
How long does it take to start a company?: The timeframe varies greatly by state and business structure. Basic sole proprietorships can be operational almost immediately. Forming an LLC or Corporation typically takes anywhere from a few days to several weeks, depending on the state's processing times (e.g., Delaware is often quick, while some states can take longer).
What's the difference between an LLC and a Corporation?: An LLC offers pass-through taxation and less formal operating requirements, while still providing liability protection. A Corporation (C Corp or S Corp) is a more complex legal entity, offering strong liability protection but with more stringent compliance rules and potential for double taxation (for C Corps).
Do I need an EIN if I'm a sole proprietor with no employees?: Generally, no. If you are a sole proprietor operating under your own name with no employees and no intention of forming a corporation or partnership, you do not need an EIN. You can use your Social Security Number for tax purposes. However, opening a business bank account might still require an EIN, so it's often recommended.

Start your formation with Lovie — $20/month, everything included.