Want to Start a Business in the U.S.? Must-Know Tax Reg Processes!

Essential Tax Registration Procedures for Starting a Company in the United States

In recent years, as globalization has accelerated, more entrepreneurs and small business owners have turned their attention to overseas markets-especially the United States, one of the world’s most dynamic economies. According to data released by the U.S. Department of Commerce in 2025, the number of foreign companies registering in the U.S. has grown by an average of over 12% annually in the past three years, with particularly notable growth from companies originating in Asian countries.

For investors planning to establish a business in the U.S., understanding and completing the tax registration process is a crucial step toward legal and compliant operations.

1. Basic Tax Registration Process for U.S. Companies

Registering a company in the United States is not a one-step process-it involves multiple stages, with tax registration being one of the most important. After incorporating a business e.g., as an LLC, C Corporation, or S Corporation, companies must apply to the Internal Revenue Service IRS for an Employer Identification Number EIN, which functions as the company’s tax ID. The EIN is essential for opening a business bank account, filing taxes, hiring employees, and conducting nearly all business activities.

The EIN application process is relatively straightforward and can typically be completed online via the IRS website, with confirmation usually received within minutes. However, non-U.S. residents must apply by phone or mail, which can be more time-consuming.

2. Tax Obligations Based on Company Structure

Choosing the right business structure is crucial, as it directly affects how a company is taxed in the U.S.

2.1 Limited Liability Company LLC

An LLC is one of the most popular business structures due to its limited liability protection and tax flexibility. A single-member LLC is treated as a disregarded entity for tax purposes, meaning business income is reported on the owner’s personal tax return. A multi-member LLC is generally treated as a partnership and must file a partnership tax return. However, LLCs may also elect to be taxed as an S Corporation or C Corporation by filing IRS Form 8832.

2.2 S Corporation S Corp

An S Corporation is a pass-through entity, meaning the company itself does not pay federal income tax. Instead, profits and losses are passed through to shareholders, who report them on their individual tax returns. This structure helps avoid double taxation and is popular among small and medium-sized businesses. However, S Corporations have strict eligibility requirements, such as a maximum of 100 shareholders, all of whom must be U.S. citizens or residents.

2.3 C Corporation C Corp

A C Corporation is a separate tax-paying entity. It must pay corporate income tax, and shareholders are also taxed on dividends they receive, resulting in double taxation. Despite this, C Corporations are often preferred for raising capital, going public, or attracting foreign investment. For companies planning long-term growth and access to capital markets, a C Corporation is a common choice.

3. Dual Filing Obligations Federal and State Taxes

The U.S. operates a dual tax system of federal and state taxation. After completing federal tax registration, companies must also register for state taxes based on their location.

For example, California imposes a corporate tax rate of 8.84% on C Corporations and requires all businesses operating in the state to register for state taxes. In contrast, states like Texas and Florida do not impose a corporate income tax, making them attractive for business formation.

Sales tax regulations also vary by state. New York State has a base sales tax rate of 4%, which can rise above 8% when local taxes are included. Meanwhile, New Hampshire has no sales tax at all.

When choosing a business location, companies must carefully consider both tax costs and market conditions.

4. Key Considerations for International Companies

International companies, especially those from China, India, and other countries, should keep the following in mind when registering in the U.S.

4.1 Leveraging Tax Treaties

The U.S. has signed over 60 tax treaties with countries around the world, including China, to avoid double taxation. Under the U.S.-China tax treaty, for instance, qualifying foreign companies may benefit from reduced withholding tax rates. For example, the U.S. may reduce the withholding tax on dividends, interest, and royalties paid to Chinese residents to 5% or 10%. Companies should strategically use these provisions to optimize their tax structure.

4.2 Impact of the Foreign Account Tax Compliance Act FATCA

FATCA requires global financial institutions to report information about financial accounts held by U.S. taxpayers to the IRS, aiming to prevent offshore tax evasion. This means international companies opening accounts or making investments in the U.S. must provide more detailed tax information and may face stricter scrutiny.

4.3 Risk of Permanent Establishment PE

If a foreign company maintains a fixed place of business or conducts long-term operations through an agent in the U.S., it may be classified as having a permanent establishment. This could trigger U.S. corporate income tax obligations. Businesses should carefully evaluate their operational model before launching activities in the U.S. to avoid unintended tax liabilities.

5. The Importance of Professional Services

Given the complexity of the U.S. tax system and the frequent changes in regulations, many companies choose to hire professional accountants or legal advisors during the registration and tax registration process. According to a 2025 survey by the American Institute of CPAs AICPA, over 70% of new businesses reported that hiring a professional tax advisor helped them save time and reduce tax costs.

With increasing regulatory scrutiny, such as the 2025 implementation of the Corporate Transparency Act CTA, which requires most companies to disclose beneficial ownership information to the Financial Crimes Enforcement Network FinCEN, professional support is more critical than ever for ensuring compliance.

Conclusion

The United States remains one of the most attractive destinations for global investment, offering a mature legal framework and an open market environment that supports business growth. However, tax registration is a vital component of legal and compliant business operations. From selecting the right business structure and obtaining an EIN, to registering for state taxes and understanding international tax rules-each step plays a key role in a company’s long-term success.

Only by fully understanding and properly managing tax matters can a business launch smoothly and grow steadily in the U.S.