Business documents are an integral part of nearly every step you'll take to open a company in the U.S., from setting up operating licenses to opening a bank account. These documents vary depending on the type of business you're registering, where you live, and what you plan to do with your business.
In this article, we'll explore the most common types of business documents you’ll need when launching your company and business bank account, outline the details you’ll need to gather, and suggest ways to keep up with changing requirements.
Choose a business structure
Before you can create any business documents, you'll need to choose a business structure that fits your company’s goals. This structure will determine which documents are required to start the company. Common business structures in the U.S. include:
Sole proprietorships are the default business type and are mostly for small business owners and those operating side hustles. They don't require owners to file formal registration papers (you still have to pay taxes, though). Because they require minimal effort, these business structures are low-risk. Many people launch their startups as sole proprietors before upgrading to more fitting business structures, such as LLCs or corporations. In a sole proprietorship, your business assets and liabilities aren't separated, leaving you personally liable in a lawsuit.
A partnership can be a good option if you're going into business with other people. Partnerships involve two or more people, sometimes friends, family, or old coworkers. These structures often have lower financial burdens than a sole proprietorship because partners can share investments in the company. Like sole proprietorships, partnerships can be low risk—a partnership does not have to be registered with the state and is established as soon as commerce occurs.
Partnerships might also be financially beneficial for some businesses, depending on the stage that your company is at. Unlike a corporation, which pays businesses taxes separate from its owner, partnership taxes are paid on a partner’s personal income tax via pass-through taxation. Depending on the size of your business, this rate can sometimes be lower than corporate taxes.
Partnerships do not provide their owners with limited liability, meaning partners are responsible for any liabilities that their business might incur. Broadly, there are two types of partnerships: general and limited.
A general partnership splits business operations and profits between all partners, including profits, losses, and debts. Limited partnerships feature a general partner who's mostly in charge of the business and has unlimited liability, while the other partners have limited liability. Limited Liability Partnerships (LLPs) offer equal limited liability protection to all partners in the business.
Limited Liability Company (LLC)
LLCs are business structures that are registered with a state government by filing articles of organization. Because LLCs are relatively easy to form, they are often the next step after a sole proprietorship.
If you opt for an LLC, you’ll have to file annual reports and pay fees to launch and keep your business open. Like sole proprietorships and partnerships, LLC business owners can choose to pay taxes on their personal income. However, LLC owners have flexible taxation, and business owners can also opt to be taxed as an S-corporation. Not all states recognize S-corporations.
Forming an LLC creates a business entity separate from yourself, which also creates limited liability. If your business incurs a liability that it can't pay, your personal assets will be partially protected from seizure.
LLCs are also under fewer operational requirements than corporations, which are required to have a board and meet certain compliance checks.
However, if you’re planning a larger business that might eventually need to raise funding, remember that an LLC’s operational flexibility can often be too volatile for investors, who are hoping for predictable returns. Additionally, some investors are legally required to invest only in corporations.
If you're planning a larger business that will eventually need to raise capital, a corporation is the best fit. Corporations are registered with a state government by filing articles of incorporation. Corporations are higher risks than LLCs, sole proprietorships, or partnerships.
Corporations require more upfront and long-term capital to launch and maintain. They come with annual meetings, launch and maintenance fees, and stringent operational requirements, like having a board of directors. You’ll need to keep clear records for compliance checks. Corporations are also more difficult to dissolve than other business structures.
In the long run, however, corporations have the greatest payoff of any business structure. Like LLCs, forming a corporation creates limited liability, meaning your personal assets are partially protected if your business incurs a liability.
Corporations are also considered their own entities, meaning they can perform activities like opening business bank accounts and accepting business loans. They’re governed by corporate laws, which are designed to protect your business.
Corporations pay their own taxes. They can also benefit from corporate tax laws, which include tax credits to reward business creation. For example, you can receive tax credits for hiring employees, because it's considered job creation.
Lastly, corporations are the most attractive structure for investors. In some cases, investors are legally obliged to invest only in corporations and not other business structures. Even when this is not the case, investors prefer corporations. The regulations placed on corporations make them more predictable investments.
S-corporations, commonly referred to as S-corps, work similarly to regular corporations but are limited to smaller company sizes. S-corporations allow business owners to avoid corporate taxes and pay taxes on their personal income.
What documents do you need to open a U.S. business?
Your business needs a birth certificate for official matters. This document will list the basics of your company, including who's in it, the business address, and its registered agent. It will differ based on the type of business you have.
- LLC: articles of organization
- LP: certificate of limited partnership
- LLP: certificate of limited liability partnership
- Corporation: articles of incorporation
An operating agreement lays out how your business actually functions, including who gets to make decisions and who is responsible for major duties. For corporations, this document is commonly referred to as the bylaws or resolutions.
In certain states, an operating agreement is necessary to start a business. Operating agreements can formalize verbal discussions and can be useful to have on record even if your state doesn’t need you to fill one out. Your operating agreement and organizing documents will be the two most important documents required to open your company.
Registered agents are your business’ designated point-of-contact. If there’s a need, the state or federal government will reach out to your registered agent.
You can hire a registered agent from a service for an annual fee. You can also opt to be your own registered agent, which means you'll be the direct contact for all business communications. To act as your own registered agent, you'll need to live in the state where you’ve registered your business. It’s important to ensure that your registered agent can perform their duties—otherwise, you might miss important government documents and put your business in jeopardy.
Federal Tax Identification Number (FTIN)
Just like you have a Social Security Number (SSN), your business also has its own identification number. If you fill out the free Form SS-4, you’ll receive an Employer Identification Number (EIN), also known as a FTIN.
Most business types require an EIN. Even for structures that don’t, like sole proprietorships, using an EIN is a better choice than sharing your personal SSN because your personal information will be protected from potential scammers.
State Tax Identification Number
In addition to your FTIN, you will need a specific number to do business in your state. This number can have different names depending on the state your business is located in. For example, in Washington, it's called a Unified Business Identifier (UBI); in Colorado, it's known as the Colorado Account Number (CAN).
Depending on your line of business, you might need permits from your local, county, state, or federal governments. For example, if you're opening a mail-order nursery and you want to import lucky bamboo plants from China, you'll need a permit from the U.S. Department of Agriculture.
Because it can be tricky to know which permits you’ll need, it’s a good idea to check with each level of government to ensure you’re not missing anything.
In addition to permits, you and your team may need to obtain certain licenses. Figuring out which ones you need can be complicated. It’s worth speaking with the relevant authorities to ensure you’re getting the right ones. For example, many cities and states require a business license before you open up shop. Delivery drivers need to have their own driver's licenses; microbreweries need an alcohol license.
Certificate of Assumed Name
Another important step in creating a business document is choosing a business name. Choose wisely, because you'll be required to use that exact name in your work—unless you file for a Certificate of Assumed Name.
A Certificate of Assumed Name, also known as a doing business as or DBA certificate, is useful if you plan to use a different name than the one listed on your organizing documents.
For example, your business name might be Internet Paper Products, LLC, but you might prefer to do business as ePaper.com. To do so, you'll have to file a Certificate of Assumed Name with your state so that it can link these two distinct business names.
Trademarks are not always required to open a company in the U.S., but they can protect your name, logo, and other assets from copycats. The best way to get a trademark is by filing for a trademark with the U.S. Patent and Trademark Office.
What do you need to open a business bank account?
A will allow you to get paid and accept payments from clients, online merchant services, and credit card processors.
You'll also be able to make payments to yourself, your employees, and the people you do business with, like customers or vendors. Business bank accounts open up access to easier payment methods like debit cards and financing at good interest rates. They can also ensure that your business and personal finances stay separate and that you have a place to store money from loans, angel investors, grants, or other sources of funding.
Each bank has its own requirements for what you'll need to open a business bank account. Here are some of the documents that banks commonly ask for:
- Employer Identification Number (EIN): If you have one, or your SSN if you're a sole proprietor who doesn't
- Business license: You will have received this license from your local or state government
- Organizing documents: Organizing documents might include articles of incorporation, articles of organization, or a certificate of limited partnership, depending on your business structure
- Operating agreements: LLC operating agreement, bylaws, or limited partnership agreement, depending on your business structure
- Personal information: Your personal SSN along with those of the other owners, if it's a partnership
- Certificate of Assumed Name: This document is necessary for businesses operating under a DBA
Tips to maintain your U.S. company
Once you’ve filed the necessary documents to start and operate your company, you’ll need to keep up with paperwork regularly. Put your deadlines on a calendar so that you don't miss them. Here are some common recurring deadlines:
File an annual report
The state where you register your business will require you to file an annual report. This is a fairly simple process. For example, if you own an LLC in Washington, all you have to do is check off a few boxes on an online form and pay the annual filing fee.
Maintain a registered agent
If you have hired a registered agent or operate a corporation or partnership that requires the approval of other people, you’ll need to ensure that your registered agent is in good standing each year.
As a business owner, you’ll need to pay estimated federal taxes to the IRS each quarter. Set aside money in your business savings account so you’re prepared to pay these taxes.
On a state level, your taxes can vary. Not all states have a business income tax, and those that don’t sometimes have extra taxes, like excise taxes on gross revenue. You may also have to pay sales taxes, alcohol taxes, or other types of taxes depending on what you sell.
Keep up with new changes
The rules that govern the documents you need to start a business and keep it running change all the time. New taxes might be voted into existence and old ones might be phased out.
Sign up for your state and local business authorities’ mailing lists to keep up with any changes that might affect your company.
Once you have your business documents prepared, you'll be able to open business banking accounts, pay taxes to the IRS, and take out business loans at the right interest rates. Getting your business documents organized is an important step in ensuring your business is a success.