A Step-by-Step Guide to Registering a Sole Proprietorship in the U.S. - Turn Your Entrepreneurial Dream into Reality!

Registering a Company in the U.S. as a Sole Entrepreneur

For many entrepreneurs, registering a company in the United States as a sole proprietor is the first step toward realizing their dreams. In recent years, with the rise of remote work and an improved global entrepreneurial environment, more and more people are choosing to register businesses in the U.S., even if they do not reside there. According to a 2025 statistic, the number of newly registered businesses in the U.S. continues to grow, especially in the fields of technology, e-commerce, and consulting services, where solo entrepreneurs have become a driving force.

Understanding and mastering the entire registration process not only helps ensure legal and compliant business operations but also lays a solid foundation for future business expansion.

1. Determine the Company Structure Choose the Right Legal Entity

The first step in registering a U.S. company is to determine the appropriate business structure. Common options include Sole Proprietorship, Limited Liability Company LLC, S Corporation, and C Corporation.

Among these, the LLC is one of the most popular choices for individual entrepreneurs. It combines the advantages of a partnership and a corporation. Owners, known as members, enjoy limited liability protection, while also benefiting from pass-through taxation. This means the company itself does not pay corporate income tax; profits are passed through to the individual’s personal tax return.

For example, a 2025 report from the U.S. Small Business Administration SBA showed that the number of LLCs increased by nearly 30% over the past five years, particularly among freelancers and remote workers. This indicates that the LLC structure is highly attractive due to its flexibility and tax advantages.

2. Choose a State for Registration Not Necessarily Your Home State

Company registration in the U.S. is handled at the state level, so entrepreneurs can choose to register in any state. While many naturally choose their home state, others opt for states like Delaware, Wyoming, or Nevada due to favorable tax policies and legal environments.

Take Wyoming as an example. It does not impose corporate income tax, personal income tax, or franchise tax. Additionally, it has minimal requirements for shareholder disclosure, making it ideal for entrepreneurs who value privacy. The annual reporting fee is also relatively low, around $50. These factors have made Wyoming a popular choice for non-residents registering companies.

However, it’s important to note that if your company operates in a state other than where it’s registered, you may need to go through a process called Foreign Qualification, which can add administrative burden and cost. When choosing a registration state, consider tax implications, business scope, and legal environment comprehensively.

3. Registration Process From Company Name to Business License

Although the registration process varies slightly by state, the general steps are similar

1. Name Search and Registration

Choose a unique name and check its availability on the Secretary of State’s website. The name typically must include terms like LLC or Inc. to indicate its legal structure.

2. File Registration Documents

Usually, you need to submit the Articles of Organization, which include the company name, registered address, Registered Agent information, and business purpose. A Registered Agent must be a resident of the state or a registered agent service, responsible for receiving legal documents.

3. Draft an Operating Agreement

Although not required in most states, this internal governance document is crucial, especially for multi-member LLCs. Even for single-member LLCs, having an Operating Agreement helps protect limited liability in legal disputes.

4. Apply for an EIN Employer Identification Number

If the company has employees or plans to open a bank account, you must apply for an EIN from the IRS. Non-U.S. residents can also apply online.

5. Open a Bank Account

Some U.S. banks require in-person visits, but others allow remote account opening, especially for international clients. International or digital banks may also provide support.

6. Apply for Licenses and Permits

Depending on the business type and location, additional licenses or permits may be required. For instance, businesses in food service, healthcare, or education often need specific approvals.

4. Tax and Compliance A Critical Step

Operating a company in the U.S., regardless of residency status, requires understanding and complying with tax regulations. An LLC can choose to be taxed as a sole proprietorship, partnership, or corporation, a decision made during the EIN application.

For non-residents, if the income is effectively connected with a U.S. trade or business Effectively Connected Income, federal income tax may apply. State tax policies should also be considered. For example, California imposes an annual franchise tax on LLCs earning over a certain income threshold.

To ensure compliance, entrepreneurs should file annual reports regularly, maintain accurate financial records, and consider hiring a professional accountant or attorney to assist with tax and legal matters.

5. Feasibility and Convenience of Remote Registration

With the development of digital technology, registering a U.S. company no longer requires being physically present. Many states offer online registration services, allowing entrepreneurs to complete name searches, file documents, and pay fees through the Secretary of State’s website.

Registered agent services also offer one-stop solutions, including company registration, address rental, and document handling-ideal for non-residents.

For example, a 2025 Forbes article reported that more international entrepreneurs are registering U.S. companies through digital platforms and using remote banking and digital payment tools to run global businesses. This borderless entrepreneurship model is becoming a growing trend.

Conclusion

Registering a company in the U.S. as a sole entrepreneur is not complicated. By understanding the process, selecting the right business structure and registration state, and ensuring tax and legal compliance, anyone can turn their entrepreneurial dream into reality. Whether you're a freelancer, remote worker, or international entrepreneur looking to expand into the U.S. market, the country’s mature business environment and flexible registration system offer a strong foundation for launching your business journey.