Company formation in the United States
Choosing the entity is a tax decision, a liability decision and an administrative decision at the same time. LlamaFilings makes all three at once, files the paperwork, obtains the tax number and then keeps the entity in good standing afterwards.
Five routes in.
Every one of them ends in the same place: a formed entity, a tax number, and a written list of what it now owes and when.
- Not sure which
- Try the entity chooser
- Limited liability companyOne or more owners, profits taxed on the owners' returns by default, and far less annual ceremony than a corporation. The right answer for most consulting firms, agencies, ecommerce sellers, contractors and property holdings.Most common
- CorporationA separate taxpayer with shares, directors and formal records. Necessary if you intend to raise outside investment, issue equity to a team, or take advantage of an S corporation election to reduce self employment tax.Investment and payroll
- Founders living in CanadaA US company for a business run from Canada, including an honest answer about whether the reason you were given actually requires one. We file the US side only.US entity, Canadian owner
- Formation from outside the USThere is no citizenship requirement to own a US company. The complications are the tax number, the registered agent, the bank account and the annual information return, in that order.No SSN required
- Employer identification numberThe federal tax number every US entity needs to open a bank account, hire, or file a return. Same day with an SSN or ITIN. A different route entirely without one.Free from the IRS
Start with the situation, not the entity.
Most articles on this subject compare LLCs and corporations in the abstract. That is not how the decision is actually made.
- What changes the answer
- Where you live, where customers are, whether you take a salary, whether investment is coming
| If this is you | Usually | Because |
|---|---|---|
| One owner, service business, US resident | LLC in your home state | Simplest to run, taxed on your personal return, and forming elsewhere would mean registering in your home state anyway. |
| One owner, living outside the US, selling online | LLC in Wyoming or New Mexico | No physical presence anywhere in the US, so the state is a genuine choice. Low annual cost and no state income tax on the entity. |
| Profitable US business paying the owner over roughly $60,000 | LLC with an S corporation election, or a corporation | Splitting reasonable salary from distributions can reduce self employment tax. The arithmetic has to be run before the election is worth making. |
| Raising venture capital | Delaware C corporation | Investors expect it, the case law is settled, and converting later costs more than starting there. |
| Living in Canada, selling to US customers | A US LLC, usually in a low burden state | No residency requirement to own one. The real questions are the EIN route, Form 5472, and how Canada will treat the entity, which your Canadian accountant has to answer alongside us. |
| Employees working remotely in several states | Form where you are, then qualify in each | The state an employee physically sits in creates obligations regardless of where the company was formed. Choosing an exotic state does not avoid this. |
The first decision is not the entity type.
- Ask first
- Residency, where work happens, payroll, investment
- Ask second
- LLC or corporation
Almost every guide to this subject opens by comparing LLCs and corporations, which is a reasonable place to end and a poor place to start. The comparison only becomes meaningful once four other things are known: where you are resident, where the work is physically performed, whether anyone will be on a payroll, and whether outside money is genuinely coming.
Those four answers usually eliminate most of the options before the entity question is reached. A sole owner resident in Ohio with two remote contractors and no investors does not have six choices to weigh. They have one obvious answer and a couple of elections to consider later.
Where the decision genuinely opens up is when there is no US physical presence at all, because then no state has a prior claim and the choice is real. That is a smaller group than the internet implies, and it happens to be a large share of who we work with.
What a formation includes here.
The filing is the smallest part of it. What matters is that the internal documents, the tax number and the compliance calendar all describe the same company.
- Priced at
- See the pricing page
In every LlamaFilings formation
- Name availability search in the target jurisdiction, with a second choice held in reserve
- Preparation and filing of the formation document, with us named as organizer or incorporator
- Registered agent or registered office for the first year
- Operating agreement or bylaws, drafted for your ownership split rather than a blank template
- Member register or share register and the initial resolutions
- Federal tax number, obtained by whichever route your situation allows
- A written compliance calendar with every filing the entity now owes, with dates
- A twenty minute handover call with the person who prepared the file
Government filing fees are separate, are set by the jurisdiction, and are quoted to you before you pay.
Five mistakes we are hired to undo.
- Already made one
- Reinstatement and catch up filings are routine work for us
Forming in a state you do not live in, for tax reasons that do not apply to you
The most expensive mistake we clean up. If you live and work in California and form a Wyoming LLC, California still taxes you and still expects the company to register as a foreign LLC doing business in California. You now pay two states, keep two registered agents and file two annual reports, in exchange for nothing. The Wyoming advice is genuinely good, but only for people with no physical presence in any US state.
Choosing a corporation because it sounds more serious
A corporation brings directors, officers, annual meetings, minutes, a share register and, if it is a C corporation, a second layer of tax on distributed profit. Those are real costs for a business with one owner and no investors. Seriousness is not a tax attribute.
Assuming the EIN is instant
It is, if a responsible party holds a Social Security number or ITIN. If nobody in the ownership does, the IRS online tool is closed to you and the application goes by fax or mail. Plan for weeks, not minutes, and be sceptical of anyone promising otherwise.
Signing contracts before the entity exists
An agreement signed in a company name that has not yet been formed can bind you personally. If a contract is imminent, tell us at intake and we will prioritise the filing or draft the agreement to be adopted by the company once it exists.
Mixing personal and company money from day one
The limited liability that you paid for depends partly on treating the company as genuinely separate. Paying a personal card from the business account, with no records, is the fact pattern that lets a creditor argue the separation was never real.
Common questions
- Not answered here
- The full question list
Which state should I form in?
If you live in the United States, almost always your home state. Forming elsewhere adds a second set of fees without removing the first. If you have no US physical presence at all, the state becomes a real choice and Wyoming, New Mexico, Ohio and Arizona are usually the most economical to keep alive. We will tell you which applies before you pay, including when the answer is boring.
Can you form the company in a day?
In some states, yes. Wyoming, Delaware and Florida can be same day or next day. Others take one to two weeks in the ordinary queue, with an expedite fee available in some. We tell you the current expectation for your state at intake rather than advertising the fastest one and hoping.
Do I need a registered agent, and can it be me?
Every US entity needs a registered agent with a physical street address in the state of formation, available during business hours. It can be you if you have such an address in that state and do not mind it appearing in the public record. It cannot be a post office box, and it cannot be an address in a different state. Most of our clients use ours.
What if I want to change the entity type later?
It is possible and it is routine, but it is not free. An LLC can elect to be taxed as an S or C corporation with a form. Converting an LLC into an actual corporation is a state filing and sometimes a taxable event. This is exactly why we ask about your plans at intake rather than after.
Do you also handle the accounting afterwards?
Yes, and that is the point of the firm. Bookkeeping, payroll, sales tax and the returns are all in house. Nothing is bundled into the formation by default, and nothing renews without you being told.