Common Mistakes to Avoid When Registering Your U.S. Company

Written by Suzanne Campbell
July 5, 2025
Business, Global Business Expansion, United States

“Forming a company in the U.S. isn’t hard. But one wrong detail, and things get messy fast.” Let’s Get One

“Forming a company in the U.S. isn’t hard. But one wrong detail, and things get messy fast.”

Let’s Get One Thing Clear: It’s Not Complicated, But It’s Precise.

The U.S. is one of the easiest places in the world to launch and grow a business—no fuss, just opportunity. Fast registration, startup-focused tools, clean legal systems.

But it’s also a country where structure matters.

That means you can do it wrong—without even realizing it.

Today, through this blog, I am here to help you avoid the most common mistakes in U.S. company formation—whether you’re forming an LLC, setting up from abroad, or just taking your first step.

Common Mistakes to Avoid When Registering Your U.S. Company

Skip the headaches, legal mess, and surprise costs by avoiding these common mistakes when starting your U.S. business.

Choosing the Wrong Structure

This one’s easy to miss because on the surface, everything looks official.

But LLC, C Corporation, S Corporation, Sole Proprietorship—they’re not interchangeable.

An LLC is flexible, simple, and perfect for most solo founders or remote teams.
A C Corp is better for startups planning to raise capital.
An S Corp isn’t even allowed if you’re a non-resident.
A Sole Proprietorship offers zero liability protection—and isn’t even an option if you don’t live in the U.S.

If you’re still unsure, check out “Difference Between LLC and C Corporation in the U.S.” for a clear comparison.

Registering in the Wrong State

Yes—Delaware, Wyoming, and California all offer different benefits. But picking a state just because it’s popular can backfire.

If you’re physically operating in a different state (say, New York), you might still have to register there as a foreign entity

If you’re a non-resident with no U.S. base, Delaware or Wyoming are great—but only if your business doesn’t trigger physical presence rules

Need help here? “Why Start Your Company in Wyoming” or “Why Many Foreigners Choose Delaware” are solid places to start.

Not Hiring or Assigning a Proper Registered Agent

Your registered agent is your company’s official point of contact. And in the U.S., missing a government notice because your agent failed = big trouble.

Some people try to assign themselves (or a friend), but:

If they miss a mail delivery or aren’t available during business hours, your company can be penalized

If you’re outside the U.S., this simply isn’t on the table.

So, use a professional. It’s affordable. It’s safer.

Skipping the Operating Agreement

Even if your state says it’s optional, you’ll still want to have one.

It’s the internal contract that protects you if:

You bring in a partner
You sell part of your business
Someone questions how profits are distributed

Especially in multi-member LLCs, not having this document can trigger disputes later.

Even for single-member LLCs, banks and platforms may ask to see it.

Delaying the EIN (Tax ID) Process

No EIN = No U.S. bank account.

No EIN = No Stripe or PayPal.

No EIN = You can’t legally operate.

And for non-residents, this process is slower—you’ll have to fax your IRS form (SS-4), and wait a few weeks.

Apply for it early. Don’t wait until after your LLC is formed to start this process.

Thinking You’re Exempt from Taxes Just Because You’re Outside the U.S.

This is one of the biggest errors to avoid in U.S. business registration.

Even if you:

Don’t live in the U.S.
Don’t hire anyone in the U.S.
Don’t physically operate in the U.S.

… you still need to file tax documents every year.

Single-member LLCs owned by foreigners must file Form 5472 + 1120, and sometimes a state tax form.

Mixing Personal and Business Funds in One Bank Account

This is especially common for first-time founders—but it’s a trap.

In the U.S., mixing personal and business finances can “pierce the corporate veil.” That means if you get sued, you lose your liability protection.

Always:

Open a dedicated U.S. business account (Mercury, Relay, etc.)
Separate receipts, spending, and transfers
Use your LLC name for all client invoices and payment setups

Forgetting Annual or Biennial Compliance

Forming the company is just the start. Every U.S. state requires annual reports, franchise tax payments, or other filings.

Examples:

Delaware: $300 franchise tax, due June 1
California: $800 minimum annual franchise tax
Wyoming: $60 annual report

Miss one of these? Your company could fall out of “good standing”—and that can get in the way of your ability to:

Open bank accounts
Renew licenses
Receive payments from platforms like Stripe

Using a Name That’s Already Taken (or Too Similar)

Each state needs your company name to be one of a kind. Some people skip the name availability search, only to have their filing rejected.

Check your state’s Secretary of State website for name availability before filing anything.

Also, consider future trademarks, website domains, and whether your name feels credible on a global platform. U.S. business culture expects thoughtfulness here—even from small companies.

Not Understanding the Long-Term Implications

Many first-time founders form an LLC quickly—then realize:

It doesn’t support outside investors
It lacks stock options or equity flexibility
It doesn’t align with their growth model

If you’re building something small, simple, and bootstrapped, an LLC works.

But if you’re building to raise, hire, or scale? You might need to kick things off with a C Corporation.

See: S Corp vs. C Corp: Which One Should You Choose?

Staying Compliant: A Quick Reminder

Starting your U.S. company is one thing. Keeping it alive—and out of trouble—is another.

Here’s what you’ll need to keep an eye on:

Track your deadlines. Annual reports, franchise taxes, renewal fees—each state has its own rhythm. Missing one can quietly mess things up.

Have your EIN, formation papers, and operating agreement ready to go. You’ll need them when opening a bank account, applying for Stripe, or getting verified by a platform.

Don’t mix business with personal. Not in your bank account, not in your expenses. That protection you got with your LLC? It fades fast if your books look sloppy.

Stick with a real registered agent. Someone who checks the mail, tracks filings, and won’t ghost you when a legal notice shows up.

Open your email. If you get an email from the IRS or your state’s Secretary of State? Don’t brush it off.

A lot of people lose their “good standing” not because they broke a law—but because they missed an email or forgot a simple form.

So stay clean. Stay current. And treat your company like something that deserves to last.

Final Thought: You Only Have to Get It Right Once

Registering a U.S. company is easier than in most countries—but it’s also easier to mess up the foundation if you rush.

Take time to:

Pick the right structure
Register in the right state
Get a real registered agent
File your taxes on time
Separate your finances from day one

Because in the U.S., good structure gets rewarded.

But bad structure? It comes back later—with interest.

FAQ

Can my U.S. company be rejected after filing?

Yes. The most common reasons include:

Choosing a name that’s already taken
Missing or incorrect registered agent details
Filing with the wrong structure
Submitting forms without the required information

Double-check everything before submitting. Why U.S. company formation gets rejected often boils down to avoidable errors.

Do I really need a registered agent in the U.S.?

Yes—100%.

Whether you’re forming an LLC in Delaware, California, or Wyoming, the state won’t approve your company without a registered agent. They’re your official contact for legal and tax documents.

Can I register my company in one state but run it from another?

Technically yes, but legally? It depends.

If you operate physically (office, employees, or revenue) in another state, you may have to register there as a foreign entity—and pay taxes or fees there too.