Starting a Small Business in the US

More Korean Americans are starting their own businesses every year — nail salons, dry cleaners, restaurants, online shops, IT freelancing, you name it. But for many people, the very first question stops them cold: Where do I even begin? In the U.S., setting up a business involves four overlapping layers — federal, state, county, and city — and each layer has its own paperwork, fees, and timelines.

This guide reflects general conditions as of 2025–2026. Rules vary significantly by state, so before you take any concrete steps, verify the specifics on your state's Secretary of State website and consult a licensed CPA or immigration attorney. All figures cited are typical ranges and subject to change.

Step 1: Check Your Immigration Status First

Here's something a lot of people don't realize: registering a business entity is technically separate from your visa status — almost anyone can file paperwork. But earning income and actively working in that business is a different story, and that part is very much tied to your visa category.

F-1 student visa holders are generally prohibited from self-employment in the U.S. H-1B holders can only work for their sponsoring employer. On the other hand, E-2 treaty investor visa holders, EB-5 investors, green card holders, and U.S. citizens face few restrictions on running their own business. If you're still working toward permanent residency, check out our green card category overview for a breakdown of your options.

There are real cases of people who launched businesses without thinking through their visa situation and ended up jeopardizing their immigration status. Before you do anything else, schedule a consultation with an immigration attorney — initial consultations typically run $150–$300 — to confirm what you're actually allowed to do. You can also review work authorization rules by visa type at uscis.gov.

Step 2: Choose Your Business Structure

The legal structure you choose affects your taxes, personal liability, startup costs, and long-term flexibility. Here are the main options:

• Sole Proprietorship: No formal registration required in most states. Cheapest to start. The downside: you're personally liable for all business debts. Best for freelancers or anyone testing the waters on a small scale.
• LLC (Limited Liability Company): By far the most popular choice among Korean American small business owners. An LLC shields your personal assets from business liabilities and offers flexible tax treatment. State filing fees typically range from $50–$500, plus ongoing costs like annual reports, which vary by state.
• S-Corp / C-Corp: Worth considering if you plan to hire multiple employees or bring in outside investors. That said, the setup and accounting complexity make corporations overkill for most early-stage small businesses.

For most Korean American entrepreneurs starting small, an LLC is the practical starting point. Just keep in mind that costs vary widely by state. In California, for example, forming an LLC costs $70 to file, plus a minimum annual franchise tax of $800 (as of 2025). Texas charges $300 to file but has no state income tax. Always go directly to your state's Secretary of State website for current numbers.

Step 3: Register Your Business — What, Where, and How

Using an LLC as the model, here's what the registration process actually looks like:

• Name search and reservation: Check your state's Secretary of State website to make sure your desired business name isn't already taken. Usually free.
• File Articles of Organization: This is the official document that creates your LLC with the state. You can file online or by mail. Fees run $50–$500 depending on the state; standard processing takes 1–3 weeks, with expedited options available in 1–3 business days for an additional fee.
• Designate a Registered Agent: This is the person or service authorized to receive legal documents on behalf of your business. You can serve as your own, or hire a registered agent service for around $50–$150 per year.
• Draft an Operating Agreement: Not legally required in every state, but highly recommended — even for single-member LLCs. You can use a template without hiring an attorney.
• Get an EIN (Employer Identification Number): Apply online at irs.gov — it's free and you'll receive your EIN immediately. You'll need it to open a business bank account and file taxes.
• Register a DBA (Doing Business As): If you want to operate under a name different from your LLC's legal name, register a DBA with your county or state. Fees are typically $10–$100.

From start to finish — paperwork through EIN — expect the process to take roughly two to four weeks, with baseline costs in the range of $150–$700 depending on your state, business type, and whether you expedite anything.

Step 4: Get Your Licenses and Permits

Registering your business entity does not mean you're legally allowed to open your doors. Depending on your industry and location, you'll need additional permits before you can operate.

• General Business License: Most cities and counties require one. Apply through your City Hall or county website. Fees typically run $25–$200 per year.
• Industry-specific licenses: Restaurants need a Health Permit and Food Handler Certificates. Nail salons and hair salons require licensure through the State Board of Cosmetology, which involves coursework and an exam. Real estate agents need a state Real Estate License. These aren't optional — they require real prep time.
• Seller's Permit: If you're selling physical goods, you'll need to register with your state's tax agency (in California, that's the CDTFA) to collect sales tax. Generally free to obtain.
• Zoning clearance: Planning to run the business from home? Check your local zoning ordinances first. Some residential zones have strict limits on home-based businesses.

To get a consolidated list of what permits apply to your specific business, use the SBA's Business License & Permit search tool at sba.gov, or look for your state's One-Stop Business Portal.

Step 5: Set Up Your Tax Structure and Business Banking

Once you have your EIN, open a dedicated business bank account — this is non-negotiable. Mixing personal and business finances creates a nightmare at tax time and can actually void the liability protection your LLC is supposed to provide. Several banks with Korean-speaking staff and small business account options serve Korean American communities well, including Hanmi Bank, Woori America Bank, and Bank of Hope.

On the tax side, LLCs default to pass-through taxation, meaning business income flows through to your personal tax return (Form 1040, via Schedule C or Schedule E). As a self-employed person, you'll also owe Self-Employment Tax (roughly 15.3%) on top of regular income tax, and you'll need to make quarterly estimated tax payments using Form 1040-ES. In your first year especially, sitting down with a Korean American CPA to map out your tax structure is one of the best investments you can make.

Common Mistakes to Avoid

• Starting a business without checking your visa status: As noted above, registering a business is not the same as being authorized to earn income from it. The act of working in and profiting from the business is what triggers visa restrictions — not the paperwork itself.
• Operating without the right permits: Business registration and operating licenses are two completely separate things. Running without required permits can result in fines or forced closure. Food and cosmetology businesses are especially closely monitored.
• Mixing personal and business finances: It feels like extra work upfront, but keeping separate accounts and saving every receipt pays off enormously at tax time. Reconstructing months of transactions after the fact costs you twice as much — in both time and accounting fees.

Resources That Are Especially Useful for Korean Americans

Don't go it alone when there are organizations specifically set up to help. KAGRO (Korean American Grocers Association) and local Korean American chambers of commerce — including KACCLA in Los Angeles and the Korean American Chamber of Commerce of New York — offer startup workshops, mentorship programs, and information on small business lending.

Also worth noting: if you're planning to open in a Korean American hub like LA's Koreatown, Flushing in Queens, or Annandale in Virginia, the competitive landscape, rental costs, and customer demographics are very different from other areas. Even within the same industry, location can make or break profitability. Spend at least two to three months observing the local market before you commit.

Here's a quick action checklist to get you started right now:

• ✅ Confirm with an immigration attorney that your visa status allows self-employment
• ✅ Search your desired business name on your state's Secretary of State website
• ✅ Compare LLC vs. Sole Proprietorship on the SBA's Business Structure page at sba.gov
• ✅ Contact your local Korean American chamber of commerce or SCORE for a free consultation
• ✅ Book initial consultations with one or two Korean American CPAs to discuss your tax setup

Starting a business is half preparation. The process looks complicated at first glance, but broken into steps, most of it is manageable on your own. And when you do hit a wall, getting professional help early is almost always cheaper than fixing problems later.