How to Set Up an Entity in the United States

The United States remains one of the most attractive jurisdictions in the world for company formation, thanks to its large consumer market, strong investor protections, and globally recognized corporate structures. Many international businesses choose the US to access customers, raise capital, and establish credibility with partners and financial institutions.

Opening an entity in the United States is generally straightforward compared to many other major economies, particularly because incorporation is handled at the state level and can often be completed online. However, complexity arises from choosing the right state, understanding federal versus state tax obligations, and maintaining ongoing compliance. The main benefits include operational flexibility, full control over business activities, and access to the US financial system, while the main challenges involve multi-layered tax reporting, regulatory differences between states, and employment compliance.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in the United States?

Opening an entity in the United States means legally forming a business under state law, registering it with the relevant state authority, and obtaining federal and state tax registrations. This process gives the company legal personality, the ability to enter into contracts, hire employees, and operate commercially in the US. Foreign businesses typically choose between forming a US subsidiary, registering a branch, or incorporating a standalone US company.

Entity overview in the United States

Here is a summary of the key features of company formation in the United States:

Step-by-step guide: How to open an entity in the United States

Step 1: Choose the right structure

The two most common entity types are LLCs and C Corporations. LLCs offer flexible taxation and simplified governance, making them popular for small to mid-sized businesses. C Corporations are often preferred by startups seeking venture capital, as they support multiple share classes and are widely recognized by investors.

Step 2: Verify business name availability

Business name availability is checked through the Secretary of State’s business registry in the chosen state. A name search tool can typically be found on the state or county website. Names must be distinguishable from existing entities and include required identifiers such as “LLC” or “Inc.”

Step 3: Prepare incorporation documents

The required documents depend on the entity type and state, but typically include the following, which are filed with the state authority:

• Articles of Incorporation (for corporations) or Articles of Organization (for LLCs)
• Registered agent appointment
• Operating Agreement (LLC) or Corporate Bylaws (corporation)
• Initial director or manager information

In addition, while not always required for the state filing itself, businesses typically need the following documents shortly after incorporation to operate legally, open bank accounts, and hire employees:

• Proof of identity for owners, directors, or authorized signatories (such as a passport or government-issued ID)
• Employer Identification Number (EIN) issued by the Internal Revenue Service (IRS)
• DBA (Doing Business As, also known as a trade name or fictitious business name) registration, if operating under a name different from the legal entity name
• Proof of business address, which may be required by banks, tax authorities, or licensing bodies
• State or local licenses and permits, depending on the nature of the business activity

Standard formation forms are available directly from state authorities, with additional registrations completed through federal, state, or local agencies as applicable.

Step 4: Register with the Secretary of State

Incorporation is completed by filing the required documents online or by mail with the Secretary of State of the selected state. Once approved, the company receives a certificate of formation or incorporation, which confirms its legal existence.

Step 5: Register for tax and social security

All US entities must obtain an EIN from the IRS, which functions as the federal tax ID. Depending on the state and business activity, companies may also need to register for state income tax, sales tax, and employer withholding with the relevant state tax authority.

Step 6: Open a corporate bank account

Opening a US corporate bank account requires the certificate of incorporation, EIN, governing documents, and identification for directors or signatories. Many banks require at least one in-person visit, and KYC reviews can take several weeks, particularly for foreign-owned companies.

Step 7: Set up payroll and employment compliance

Before hiring employees, companies must register as an employer with federal and state authorities, set up payroll withholding, and comply with wage, benefits, and reporting obligations. Employment contracts must align with federal and state labor laws, including minimum wage, overtime, and benefits requirements.

Discover how Elemental Enzymes accelerated regulatory approvals and market entry with Deel.

Post-registration obligations

After incorporation, companies in the United States must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File federal corporate income tax returns annually with the Internal Revenue Service and state tax returns with the relevant state authority. Sales tax filings are typically monthly or quarterly, depending on volume, and financial records must follow US GAAP
• Corporate registers: Maintain up-to-date records of directors, officers, and shareholders or members, and report changes to the Secretary of State as required, often through annual or biennial reports
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a compliance calendar or automated reminder system to avoid penalties and late fees
• Licenses and renewals: Renew state and local business licenses with the relevant state, county, or municipal authority based on their renewal cycles
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least 3–7 years, depending on the record type, in line with federal and state requirements
• Employment law compliance: Adhere to federal and state labor, benefits, payroll tax, and data-protection regulations, including timely payroll filings and insurance coverage, as enforced by the US Department of Labor

Taxes and financial considerations

Key financial obligations for US entities include:

• Corporate income tax: 21% federal rate, filed annually, with additional state corporate taxes depending on the state
• VAT/GST: Not applicable; instead, state and local sales taxes apply, with registration thresholds varying by state
• Payroll/social contributions: Employers must contribute to Social Security and Medicare (7.65% employer share) and pay federal and state unemployment taxes
• Accounting standards: US GAAP is required for statutory reporting

Discover how Climate-KIC navigated complex restructuring with Deel.

Expand your operations with Deel

Whether you’re setting up your own US entity or looking for the right partner to manage payroll, HR, and compliance, Deel gives you everything you need to grow confidently in the US market. From your first hire to full-scale operations, Deel makes expansion simple, compliant, and scalable.

With Deel, you can:

• Launch your US entity with Deel Entity Setup: Our experts handle every step, from incorporation and tax registration to local compliance and ongoing support
• Centralize compliance and records with Deel Entity Management: Automate filings, stay on top of deadlines, and gain full oversight across every entity
• Grow your US team with Deel PEO: Scale nationwide under a co-employment model, outsourcing payroll, enhancing employee benefits, and strengthening compliance management
• Hire teams without establishing an entity: Use Deel Employer of Record to test the US market, hire employees compliantly, and transition smoothly to your own entity later

With Deel, you can start small and scale fast—testing the US market through EOR, then moving to a fully owned entity and growing across states with PEO when you’re ready. Deel ensures compliance, efficiency, and continuity at every stage of your U.S. expansion.

FAQs

How long does it take to open an entity in the United States?
Typically 1–2 weeks, depending on the state and entity type. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
No minimum capital is required.

Can foreign companies own 100% of an entity in the United States?
Yes. The United States allows 100% foreign ownership with no local shareholder requirements.

Do I need a local director or representative?
No. There are no residency or nationality requirements for directors or officers.

How much does it cost to register an entity?
Government filing fees typically range from USD 100 to USD 800, depending on the state, plus registered agent and professional service fees. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in the United States?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.