How to start a Software Business in the US


If you’re thinking about starting a software business, you’re probably already thinking about the technical aspects. What programming languages will you use? How will your website be built? But there are also legal and financial considerations to make before you can set up shop. In this post, we’ll go over how to get all of the necessary licenses and permits so that your company is ready to launch on day one in its new home country or state.

Do your Research

To start your business, you need to do your research.

  • Research the market: What is working right now in your industry? Are there any new products or services that are trending? Are there any problems that haven’t been solved yet?
  • Research the competition: Who else is offering similar products and services as yours? How are they different from each other, and what sets them apart from yours (if anything)? What pricing strategies are they using—are they more expensive than you, or less expensive than you? How much traffic does each website get per month on average? What channels of communication do these businesses use most often when communicating with customers (e-mail blasts vs social media updates vs phone calls vs text messages)?

Choose the right Legal Structure for your Business

Choosing the right legal structure for your business is important, and the structure you choose will affect how much you pay in taxes and how much personal liability you have. There are three types of structures available:

1. Sole Proprietorship

2. Limited Liability Company (LLC)

3. Corporation

There are a few things to consider when choosing an LLC:

  • An LLC can provide tax benefits to its owners by allowing them to deduct their losses as well as their income.
  • Owners in an LLC can also receive salaries that aren’t taxed until they are withdrawn from the business, possibly resulting in lower overall taxes paid than with other business structures. If the owner wants to sell his or her share of the company at any time, he or she doesn’t have to disclose it publicly until after he or she does so. An LLC may incur high startup costs compared with other entities because it has more paperwork requirements before being registered with state agencies like Secretary of State’s offices and Department of Revenue Services (DRS).

Get a Business License or Permit

In order to do business in the USA, you will need a business license. Some states require a permit instead of a license (for example, California requires you to apply for an alcoholic beverage license).

The process of applying for your license or permit is similar across states with some minor differences. First, you must register your business with the state government which means that they know who owns and operates it.

You will then be required to obtain a tax ID number from the IRS – this can take anywhere from 1-3 weeks depending on how quickly you respond after filing the necessary paperwork. After getting your tax ID number, file for an Employer Identification Number (EIN) through the IRS website by clicking on “Start A Business” and then filling out Form SS4 using your personal information as well as those of your company (this form should be submitted even if there are no employees). Finally submit all relevant forms via mail or fax along with payment in order for them to review them prior making sure everything is up-to-date before issuing anything further towards approval stage.

Register With Your State Tax Authority

You will need to file your taxes as an independent contractor if you are not an employee of a company. To do this, you will need to register with the state tax authority in which you live. The process is fairly straightforward and can be done online if you have access to your Social Security number, birth certificate and other personal details that are required when registering with the local government office where you live.

The same applies if you have decided to set up your own firm or corporation instead of being self-employed as an independent contractor. In this case too, contacting your local government office will enable them to help you through everything from incorporating your business entity all the way through registering for sales tax permits and other licenses necessary for starting off in this field of work

Create a Business Bank Account

  • Open a business bank account.
  • Apply for a business credit card.
  • Establish a good credit rating by paying your bills on time, and not using the credit card to make personal purchases.

Create a Website for your Software Business

The first step in creating a software business is to create a website for your software business. You will need to register the domain name and host it with a service provider.

A domain name should be memorable, easy to spell and type, descriptive, unique, and available without restrictions. You can do this by selecting one that fits into one of these categories:

  • Top-level domains (TLDs) are popular choices because they’re very recognizable in most parts of the world and have been around for decades. If you don’t have any ideas for one of these TLDs yourself, there are plenty available on websites where you can search through their list before buying one that suits your needs best.
  • Subdomains are also popular because they’re shorter than full URLs.


A successful software development business begins with the correct planning and preparation. You should start by doing your research. You need to select the right legal structure for your business, which will help you to understand what kind of tax returns you will have to file each year and whether or not you need a license or permit from local government. Once this is done, it’s time for your business bank account and credit card applications. You’ll also want to get acquainted with state laws regarding incorporation by registering with your state tax authority. To protect yourself from liability issues, register as an LLC or corporation as soon as possible.


Starting a software business can be a daunting task, but it doesn’t need to be. With the right planning and preparation, you’ll be able to start your own company with minimal hassle.

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