When someone starts a business, one of the first major decisions they’ll make is choosing a business entity. In the U.S., there are six main types:

• Sole Proprietorship – The simplest structure, owned and run by one person. Easy to set up, but offers no personal liability protection.

• Partnership – Owned by two or more people who share profits, losses, and responsibilities. Can be general (equal responsibility) or limited (different levels of involvement and liability).

• Limited Liability Company (LLC) – Combines the flexibility of a sole proprietorship or partnership with the liability protection of a corporation.

• Corporation (C-Corp) – A separate legal entity from its owners, offering strong liability protection but with more formal requirements and taxes.

• S Corporation (S-Corp) – A special tax status that allows profits to pass through to owners’ tax returns while still providing liability protection.

• Nonprofit Organization – Operates for charitable, educational, or community purposes and may qualify for tax-exempt status.

Each of these is a fully legal way to operate a business, but they differ in how they’re taxed, how ownership works, and — most importantly — how much personal risk the owner takes on.

A key concept here is limited liability. Limited liability means that if something goes wrong in the business, the owner’s personal assets—like their house, car, or bank account—are generally protected. Without it, your personal finances are directly tied to the business’s debts and legal troubles.

For example, imagine a small cleaning business where an employee accidentally leaves a bucket of water in the middle of a customer’s hallway. The customer trips, breaks their arm, and sues. If the business is a sole proprietorship or general partnership without limited liability protection, the owner might have to use their personal savings, sell their car, or even lose their home to cover the costs. But if the business were set up as an LLC or corporation, only the business’s assets would be at risk.

Sometimes, entrepreneurs — especially couples — come in thinking a partnership is the right move. For example, a husband and wife might want to co-own a business so that the wife has 51% ownership and can register it as a woman-owned business. While that can be a smart branding and certification move, it’s important to know that a husband-and-wife partnership cannot be filed as a single-member LLC. In order for both to be owners, they would need to either:

1. Create a Partnership (with shared liability unless they form a limited partnership), or

2. Form a Multi-Member LLC, which gives them limited liability protection while allowing both to be official owners.

Both options still allow for limited liability protection if structured correctly, but they work differently when it comes to taxes, profit-sharing, and risk. As a student consultant, your role is not to tell them which option to choose, but to help them weigh the pros and cons based on their goals and situation.

Finally, it’s worth addressing a common myth: many entrepreneurs think they need to pay thousands of dollars to a lawyer to form an LLC. In reality, registering an LLC in Indiana is straightforward and inexpensive — something they can often complete themselves online in under an hour for around $100–$130. Lawyers are valuable for complex legal advice, but for standard business entity registration, they aren’t needed.

In our programs in the US, the majority of entrepreneurs choose to form a single-member LLC because it is one of the simplest and most affordable ways to establish a business. A single-member LLC offers personal liability protection and flexible tax options. Since an LLC is a separate legal entity, a person’s personal assets are protected if the business is sued or owes money. Additionally, profits can easily be reported on one’s personal tax return. For example, in the state of Indiana, this process is done through InBiz. For the state of Michigan, this process is done through the MiBusiness Registry.

Use this list to find the correct agency and website to register your business in your state.

🧾 List: Business Registration Per State

The business registration process varies significantly across countries, depending on government structure, legal frameworks, and ease-of-doing-business policies. Below is an overview of how the process typically works in different regions, along with examples by country:

General Steps (Common Worldwide)

Most countries share these basic steps — though the names of agencies and documents differ:

1. Choose a Business Structure
   (e.g., sole proprietorship, partnership, LLC, corporation, cooperative)

2. Select and Reserve a Business Name
   Usually checked against a national or regional registry.

3. Register with a Government Authority
   Could be a national registry (like the UK’s Companies House) or local office.

4. Obtain a Tax Identification Number (TIN)
   For paying corporate, VAT, or other taxes.

5. Register for Social Security / Labor Obligations
   If hiring employees.

6. Obtain Licenses or Permits
   Depending on industry (food, import/export, construction, etc.)

7. Open a Business Bank Account

Now, here’s an overview of what to expect and the steps to take in various country.

This overview provides a quick and practical overview of the business registration process across several countries, highlighting key factors such as average processing time, costs, online registration availability, and the main authorities involved. For entrepreneurs, investors, and small business owners, this information is invaluable for planning international expansion, comparing the relative ease and speed of starting a business, and anticipating the administrative and financial requirements in each location.

Additionally, here is a Business Registration Guide. This guide provides a clear overview of the business registration process across multiple countries and U.S. states. It outlines the key steps, required documents, and regulatory authorities entrepreneurs need to engage with to legally start their businesses. Use this as a practical reference to streamline registration and ensure compliance in each location.

In our programs in the US, the majority of entrepreneurs choose to form a single-member LLC because it is one of the simplest and most affordable ways to establish a business. A single-member LLC offers personal liability protection and flexible tax options. Since an LLC is a separate legal entity, a person’s personal assets are protected if the business is sued or owes money. Additionally, profits can easily be reported on one’s personal tax return. For example, in the state of Indiana, this process is done through InBiz. For the state of Michigan, this process is done through the MiBusiness Registry.

Use this list to find the correct agency and website to register your business in your state.

🧾 List: Business Registration Per State

🔍 Guide: Step-by-Step Guide to Register Your Business in Indiana

An Employer Identification Number (EIN) is a unique nine-digit number issued directly by the Internal Revenue Service (IRS) to identify a business for tax purposes. This is a federal process— not something you do through Indiana’s InBiz portal, Michigan’s MiBusiness Registry, or any other state system. Think of it like a Social Security Number, but for your business.

However, you should register the business so you have the registration information when getting the EIN.

The fastest and most common way to get an EIN is by applying online at the IRS application page. Once the application is completed, the number is issued immediately at the end of the process. This makes it ideal for entrepreneurs who need to open a business bank account, start payroll, or complete other steps that require an EIN right away.

The EIN is required for most businesses — especially LLCs, corporations, and partnerships — if they plan to hire employees, open a business bank account, or file certain taxes. Sole proprietors without employees may not be required to have one, but many still choose to get one for banking purposes and to protect their personal Social Security Number. Imagine a local bakery owner in South Bend is ready to open her doors and needs to set up a business checking account. The bank asks for her EIN. By applying online through the IRS link above, she can have her EIN within minutes and open her account the same day—avoiding delays that could slow down her business launch.

Before applying for an EIN, you need the following information:

• Legal name of the business

• Business address

• Type of entity (LLC, corporation, S-Corp, C-corp, nonprofit, etc.)

• Responsible party’s name and Social Security Number or Individual Taxpayer Identification Number

Once you have gathered the required information, you will need to go to the official IRS EIN application page [https://sa.www4.irs.gov/modiein/individual/index.jsp], which is located on the IRS website. Once on the page, click on the “Apply for an EIN” button.

What happens next?

From there, you will be taken to a secure application page and you have to follow the instructions.

Here’s a quick guide to apply for an EIN number.

Formally registering your business is a necessary step in establishing legitimacy. It enables you to obtain an employer identification number, get a business bank account, apply for business credit card and loans, and more. When you register, you have to decide what legal form your business will take. The basic options are:

• Sole proprietor

• Partnership

• ‘S’ Corporation

• ‘C’ Corporation

• Limited Liability Company (LLC)

• Single Member LLC

While this set of selections may seem confusing, the different forms a business can vary primarily on a) how much liability the entrepreneur has, b) the number of owners (including owners of stock in your company) there can be, c) how the business and its owners are taxed, d) how much it costs you to set up each particular form, and e) how simple or complex it is to set up.

The biggest issue is liability protection. Whether this is because your company ran up debts it could not pay or because your company vehicle injured someone, or a customer ate your product and had to be hospitalized, or a client slipped and fell on the steps entering your business, you can be liable. There are a lot of ways that something can go wrong and a customer or some other person is harmed. Even if it was completely unintentional, an accident, or you don’t think you did anything wrong, some lawyer may choose to sue your company and a judge or court will decide you are liable.

The term “limited liability” refers to how you as the entrepreneur can be held liable if the business has losses or financial obligations it cannot pay. This includes judgements when someone is harmed because of your business. It means your company can be held liable, and may have to pay damages, but they cannot go after your personal assets. They cannot go after your personal savings, your house, your car, or other things you personally own. They can go after any and all of the assets of the business. So, it means your liability is limited to whatever the company owns, not what you own.

For most of our entrepreneurs, the choice tends to come down to one of two options: a sole proprietorship or a single member limited liability company (LLC). With these two options, you generally do not need to hire a lawyer and can set the business up yourself. With the other forms, you may want to consult a lawyer who specializes in business registration. The lawyer can help you with legal documents such as operating agreements and partnership agreements.

Sole Proprietorship:

This is simplest form of a business. There is a single business owner (no partners or other owners), and there is no distinction between the business and the business owner. The owner is entitled to all the profits of the business and personally responsible for its debts, losses and liabilities. In effect, you have unlimited liability. You do not need to take any steps to form this type of business in many states and localities. You can simply start doing business. You must claim the income, but you do so on your personal income taxes. However, for many sole proprietors (depending on the product or service you are selling), you may require a permit or licenses. These are usually relatively inexpensive. In those states and localities where the sole proprietorship does need to be registered, it is usually for a nominal fee. Whether this is necessary, or you need any licenses or permits, is easy to check online.

As a sole proprietor, you may just be operating in your own name, but many of these entrepreneurs use what is called a DBA. This stands for “doing business as”. For instance, the entrepreneur starting a plumbing business may decide to do business as “Prestige Plumbing”. To do business under a DBA, you usually have to register the DBA with the state and pay a small fee. Having a DBA makes is possible to open a business bank account.

Another reason you may need to register your sole proprietorship with the government is if you are going to be collecting sales taxes. This depends on what you are selling, and here, again, you must check with the state in which you are based. If you are a home-based business, you may still be required to collect sales taxes when you make sales.

A related issue is whether you need to get an employer identification number or EIN (See STEP 34). No matter what form of business you opt for, if you have employees your will need an EIN. This includes sole proprietors. This means you must register the business with the Internal Revenue Service or federal tax authority. Banks typically require an EIN in order to open a business bank account. However, if you are a DBA and a sole proprietorship, the bank may simply let you use your social security number.

Single Member Limited Liability Company:

Many states have created an option for an entrepreneur to create what is called a single member LLC. This means you have a limited liability company, so you are protected. However, there can only be one owner (no partners and no one else can own a piece of the company—it is just you). If you want other people to have an ownership share in your company, then you would be to opt for a regular LLC. However, for most businesses in our program, the single member LLC makes the most sense, and is preferably to being a sole proprietorship. It usually involves a fairly simple application which can done online with the state authority. The cost is often less than $100. Also, please note that you can start as a single member LLC and later convert the company to a regular LLC or to some of the other forms.

When you register a single member LLC (or a regular LLC) with the state (usually with the Secretary of State’s Office or the State tax authority), it usually allows you to do a name search to see if any other business is using the name that you want to use. If so, you will need to modify the name in some way in order to complete the registration.

The registration process for the single member LLC differs by state, but is generally quite simple and can be done in 15- 20 minutes. You should be prepared with the following information regardless of where you register:

• business name

• business location (address, which could be your home)

• mailing address (could be the same as your business location, but does not have to be)

• social security number of entrepreneur

• ownership, management structure, or directors (this is usually just you)

• registered agent information (YOU are the registered agent).

• research where in your state you must register for an LLC.

Using the State of Indiana as an example, here is the step-by-step process you go through online.

An operating agreement establishes basic decision-making authority, responsibilities, operating rules and guidelines for how your business will operate. This is a living legal document, meaning that it can be altered throughout the lifespan of your business. If you are starting as a single member LLC, you may not need an operating agreement. If you do not have one, the state in which you are registering your business generally has default rules that will apply to your business. However, if you have partners or co-owners in the business, it is important to create an operating agreement.

Think of the operating agreement as a rulebook for your organization. Who owns the organization? Who contributes? How are profits split up or losses allocated? What are the duties and responsibilities of the members? What are the buyout/sell-out rules if you decide to sell the company to a partner? How are decisions made? You will want your operating agreement to address any important issue that may arise operationally throughout the life span of your business venture. Here is a more specific list of fifteen issues commonly addressed in an operating agreement:

1. What percentage of the ownership is held by the members?

2. Who will manage the LLC—is it managed by the “members” who own it or by managers (who may or may not be members)?

3. What are the duties and responsibilities of the members (owners)?

4. What is the process for selecting the management team?

5. How will company books and records be kept?

6. How will major business decisions be made?

7. How frequently will meeting of the members take place?

8. For what kinds of decisions is a vote by the members (the owners) necessary? What percentage of the members must approve a decision?

9. How are profits and losses divided up among the members (owners)?

10. How distributions are allocated among the members?

11. What rights do members have to sell their ownership interest?

12. What is required for a new member (owner) to be added?

13. What is required for a member to voluntarily withdraw from the LLC, and under what conditions and process can other members vote to expel a member?

14. If a member leaves the LLC, whether the other members can or must buy them out?

15. What events will cause the company to be dissolved or shut down?

When looking at many of these questions, the focus is on partnership and member relations. If you have no partners or co-owners (note: they would be called members of the LLC), again you may not need an operating agreement.

It still may be useful to have one. As a single member LLC, an operating agreement shows that your company operates as a real business and that your personal assets are separate from your business assets. This can be helpful when going to banks for money. It can also prevent your state default rules from kicking in should a major legal issue arise with your business. With an operating agreement, you create your own default rules.

To see what one looks like, here is an example of a sample template for an operating agreement provided by Forbes Advisor:

https://www.forbes.com/advisor/business/llc-operating-agreement-template/#:~:text=An%20operating%20agree-ment%2C%20also%20known,that%20reads%20like%20a%20prenup

Though you can create your own operating agreement, it is a good idea to have a lawyer to take a look at it.

An EIN is a 9-digit number used to identify a business for tax purposes. Think of it as a social security number for your business! You get it from the Internal Revenue Service. Any business that has employees or operates as a corporation or partnership needs an EIN. Others just use their personal social security number. However, we recommend that all entrepreneurs get an EIN even if you do not have employees. It makes it easier to open a business bank account and is needed to meet other business requirements (file your taxes, apply for licenses and permits). The sooner you apply for an EIN, the better!

(If you are not sure you must have an EIN, the IRA has a guide that can help you decide: https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-an-ein)

Once you register your single member LLC (or a regular LLC) with the state you can use the information you receive when the registration is complete to apply for your EIN. Here is how you can apply for an EIN:

Go to Internal Revenue Service (IRS) website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

This link will take you to a page that provides the steps to applying for an EIN. We suggest reading these directions carefully before clicking “APPLY NOW”. Clicking the “APPLY NOW” button will take you to a page that allows you to begin the application.

The application differs slightly depending on the legal structure and type of business or organization you have. You should know the answers to the following before applying for an EIN. Are you a:

• Sole proprietor

• Partnership

• Corporation

• Limited Liability Company

• Tax exempt organization

Based on our recommendation in STEP 28, you will probably be indicating you are a Limited Liability Company. But depending on what you indicate, the application will require you to answer different questions. However, all questions will fall under the categories of:

• Identify

• Authenticate

• Addresses

• Details

• EIN confirmation

Overall, this application is short and painless and should not take more than 15 minutes. Once completed, you will receive an EIN (sent to you electronically) almost immediately!