Which state should you register your company in USA

Which State Should I Register My Business in the USA?

Choosing the right state to register your business in the USA is crucial for legal compliance and operational efficiency. The general rule of thumb is to register in the state where you are doing business. But what does “doing business” in a state actually mean? Let’s break it down.

What Does “Doing Business” in a State Mean?

You are considered to be doing business in a state if you meet one or more of the following criteria:

  1. Physical Presence: This includes having an office, store, warehouse, or any other physical location in the state.
  2. Employees: Hiring employees who work in the state.
  3. Property: Owning or leasing property (real or personal) in the state.
  4. Sales: Generating significant sales or revenue from customers within the state.

Example: Doing Business in California

California has specific rules to determine if a business is considered to be operating within the state. You will be considered to be doing business in California if you meet any of the above criteria. Additionally, California has an economic nexus threshold:

Economic Nexus Threshold: If your sales into California exceed $500,000 in a year, you are considered to be doing business in the state, even if you have no physical presence, employees, or property there.

Detailed Criteria

  • Physical Presence

Example: You open a branch office in Los Angeles to serve local clients. This physical presence means you are doing business in California and need to register there.

  • Employees

Example: You hire a sales representative who works remotely from San Francisco. Having an employee based in the state means you are doing business in California

  • Property

Example: You lease a warehouse in Sacramento to store products before distribution. Leasing property in California qualifies as doing business in the state.

  • Sales

Example: Your service business or e-commerce has clients in California, and your total sales to California customers exceed $500,000 in a year. This economic nexus means you are doing business in California, regardless of physical presence or employees.

Why Register in the State Where You Are Doing Business?

  1. Legal Compliance: Each state has its own regulations and requirements. Registering where you do business ensures you are compliant with local laws.
  2. Tax Obligations: States can impose income, sales, and franchise taxes on businesses operating within their jurisdiction. Registering ensures you meet all tax obligations.
  3. Local Benefits: Being registered in the state where you operate can provide access to local resources, incentives, and business networks.


When deciding where to register your business in the USA, the primary consideration should be where you are doing business. Assess your physical presence, employees, property, and sales in each state to determine your registration requirements. For example, if your business activities meet any of the criteria for doing business in California, you should register there to ensure compliance with state regulations and tax laws.

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