United States (US)
The United States is a federation of 50 states and the District of Columbia spanning six time zones from the Atlantic to the Pacific, plus Alaska and Hawaii.
Capital: Washington, D.C.
Region: Americas
Language: English
Currency: USD ($)
Cost of living: Expensive (index 75)
Emergency: 911
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Business Setup
Start a business or go freelance in United States.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 1. Choose your structure: Sole Proprietorship (immediate, no filing required, unlimited personal liability) or Single-Member LLC (limited liability, ~$50–$500 state filing fee). Most freelancers benefit from the LLC for liability protection.
- 2 2. Get an EIN (Employer Identification Number): apply free at IRS.gov/ein — takes 15 minutes online. Allows you to avoid using your SSN on client W-9 forms and invoices.
- 3 3. File a DBA ("Doing Business As") if operating under a brand name: at your county clerk's office ($10–$100). Required to open a business bank account in a non-personal name.
- 4 4. Open a business bank account: separates personal and business finances (required to preserve LLC liability protection). Chase Business, Mercury, or Relay are popular freelancer-friendly options.
- 5 5. Understand self-employment tax: 15.3% on net self-employment income (12.4% Social Security + 2.9% Medicare). You pay both employer and employee shares. Deduct half of SE tax on your personal return.
- 6 6. Make quarterly estimated tax payments: due April 15, June 15, September 15, January 15. Pay at IRS Direct Pay (free at irs.gov/payments). Safe harbor: pay 100% of prior year total tax.
- 7 7. Track deductible business expenses: home office (actual expenses or $5/sq ft simplified method), equipment, software, internet, professional development, health insurance premiums, and retirement contributions.
- 8 8. Set up retirement savings: SEP-IRA (up to 25% of net SE income, max $69,000 in 2026) or Solo 401(k) (higher limits, Roth option available). Both reduce your taxable income immediately.
Tax registration
IRS.gov — register for EIN online (free, instant). State business registration at your Secretary of State website. No federal VAT in the US — sales tax on products varies by state; most services are exempt.
VAT threshold
The US has no federal VAT. State sales tax applies to tangible goods and some digital/services — rules vary by state. Economic nexus thresholds (typically $100,000/year in sales or 200 transactions) trigger sales tax obligations in each state.
Invoicing
US invoice requirements are minimal: your name/business name, client name, invoice number, date, service description, amount, payment terms, and payment details. No VAT/tax number required on invoices for services. Clients paying $600+ per year must issue a Form 1099-NEC — provide them a completed W-9 form upfront.
Social security
Self-employed individuals pay self-employment tax of 15.3% on net income (Social Security 12.4% + Medicare 2.9%). Deduct half on Form 1040. No unemployment insurance for self-employed. Purchase health insurance via ACA Marketplace (healthcare.gov) — 100% of premiums are deductible from income.
💡 Consider an S-Corp election if annual net self-employment income exceeds $80,000 — it allows splitting income between salary (subject to SE tax) and distributions (not subject to SE tax), saving 7–15% in SE tax on the distribution portion. This requires running payroll for yourself at a "reasonable salary." Consult a CPA experienced with self-employed clients before electing S-Corp status.
🏢 Business Structures
Sole Proprietorship · Sole Proprietorship
Sole Proprietorship
None / No minimum
Min. capital
Immediate — begin operating under your legal name. 1 day if filing a DBA.
Setup time
Liability: Unlimited personal liability — owner personally responsible for all business debts, lawsuits, and obligations. Personal assets are at risk.
Setup cost: $0–$100 (no formal formation; may need a local business licence $50–$400 depending on city/county)
Best for: Freelancers, consultants, solo side businesses, and low-risk individual ventures. Simplest business form — no formation paperwork. Business income is reported on Schedule C of personal tax return (Form 1040). Self-employment tax (15.3%) applies to net profits. Not recommended for any venture with meaningful liability risk.
LLC · Limited Liability Company
Limited Liability Company (LLC)
None / No minimum
Min. capital
1–2 weeks (varies by state — Delaware and Wyoming: instant; California: 2–4 weeks)
Setup time
Liability: Limited liability — owners (called "members") are not personally liable for business debts or lawsuits. Personal assets protected (subject to piercing-the-corporate-veil doctrine if formalities are not observed).
Setup cost: $50–$500 state filing fee + registered agent ($100–$300/year) + optional operating agreement template ($50–$200). California: $800/year minimum franchise tax.
Best for: Most popular small-business structure in the US. Ideal for small businesses, real estate investors, consultants, e-commerce businesses, and professional practices. Pass-through taxation by default (profits flow to members' personal returns); can elect S Corp or C Corp taxation. Flexible ownership and management structure. Delaware, Wyoming, and Nevada are popular formation states for their business-friendly laws.
S Corporation · S Corporation (Subchapter S)
Small Business Corporation with pass-through taxation
None / No minimum
Min. capital
2–4 weeks to incorporate + file Form 2553 within 75 days of incorporation (or March 15 for existing entities)
Setup time
Liability: Limited liability — shareholders not personally liable for corporate debts.
Setup cost: $100–$800 state incorporation fee + IRS Form 2553 S-election filing (no fee) + ongoing corporate compliance costs ($500–$2,000/year for accountant)
Best for: Small businesses where owners actively work in the business and want to save on self-employment tax by splitting income between "reasonable salary" (subject to payroll tax) and distributions (not subject to self-employment tax). Limited to 100 shareholders, all must be US citizens/residents. Single class of stock only. Popular for profitable service businesses earning $80,000+/year in net profit.
C Corporation · C Corporation (Subchapter C)
Standard Corporation / Public Limited Company
None / No minimum
Min. capital
1–3 weeks (Delaware: 1 day)
Setup time
Liability: Limited liability — shareholders not personally liable for corporate debts. Strongest corporate protection.
Setup cost: $100–$800 state incorporation fee + registered agent + ongoing compliance costs ($1,000–$5,000/year for accountant and legal)
Best for: Venture-capital-backed startups, companies planning an IPO, businesses seeking institutional investors, and companies reinvesting profits rather than distributing them. Flat 21% federal corporate tax rate (2026). "Double taxation" — corporate profits taxed, then dividends taxed to shareholders. Can have unlimited shareholders of any type (including foreign investors). Delaware is the dominant formation state for VC-backed companies (60%+ of Fortune 500 incorporated there).
General Partnership · General Partnership (GP)
General Partnership
None / No minimum
Min. capital
Immediate — partnership exists when two or more people conduct business together with intent to share profits
Setup time
Liability: Unlimited joint and several personal liability for all partners — each partner fully liable for partnership debts and other partners' actions.
Setup cost: $0–$100 (no formal formation required in most states; partnership agreement recommended $200–$2,000 if drafted by attorney)
Best for: Professional service partnerships (law firms, accounting firms) where partners accept shared liability. Rarely optimal choice — most professional service firms now use LLP, PLLC, or LLC structures for liability protection. Pass-through taxation (profits flow to partners' personal returns). Partnership files Form 1065 informational return; partners receive K-1.
Limited Partnership · Limited Partnership (LP)
Limited Partnership
None / No minimum
Min. capital
1–2 weeks
Setup time
Liability: General partners: unlimited personal liability. Limited partners: liability limited to their investment (provided they do not participate in management).
Setup cost: $100–$300 state filing fee + partnership agreement ($500–$3,000) + registered agent
Best for: Real estate syndications, private equity funds, hedge funds, and investment partnerships where passive investors (limited partners) provide capital while general partners manage operations. Largely superseded by LLCs for most operating businesses, but still dominant in fund structures.
DBA · Doing Business As (Fictitious Business Name)
Trading Name / Business Alias
None / No minimum
Min. capital
1–4 weeks (depending on jurisdiction and any required publication period)
Setup time
Liability: No separate liability protection — DBA is not a business entity, just a registered name. Liability follows the underlying entity (sole prop, LLC, corp, etc.).
Setup cost: $10–$100 filing fee with county or state; some jurisdictions require newspaper publication ($50–$200)
Best for: Sole proprietors wanting to operate under a business name different from their legal name, or LLCs/corporations operating additional brands. Required in most states if you operate under any name other than your legal personal name or registered entity name. Banks require DBA registration to open a business account in the trading name.
Business Setup
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