The rules a US business lives by: what Washington regulates, what your state regulates, and what changed in 2025 and 2026

Europeans often expect American business law to be a thicket, and then find it surprisingly light. There is no chamber of commerce membership, no trade register fee every year to a guild, and in Texas no general business license at all. What the US does have is three layers of government that each regulate a different slice of your company. Once you know which layer owns which question, compliance becomes a calendar rather than a mystery.

Three layers, three sets of questions

The United States is a federation in the full sense. The states existed before the federal government, and they kept most of the power over everyday commercial life: company law, contracts, most licensing, consumer law in the shop, employment beyond the federal floor. Washington regulates what crosses state lines or national borders, plus a long list of specific industries. Counties and cities handle the ground under your feet: zoning, building permits, health inspections and local business permits.

The practical consequence for a European founder: there is no single office that tells you everything. Each layer expects you to come to it. Our overview of the bureaucratic hurdles of US market entry shows how short the list usually is for a trading or services company.

The company itself: state law, plus one federal registry for foreign entities

A US company is created by a state, not by Washington. You file a certificate of formation (Texas) or a certificate of formation or articles of organization (most other states) with the Secretary of State, appoint a registered agent with an address in that state, and from then on keep the company in good standing with whatever annual or periodic report that state requires. If the company does business in a second state, it usually registers there too, a step called foreign qualification.

The federal side starts with the EIN, the company's tax number from the IRS, which every company with employees or a bank account will need in practice.

Beneficial ownership reporting under the Corporate Transparency Act has narrowed dramatically. FinCEN published an interim final rule on 26 March 2025 that took US companies out of the reporting duty, and a final rule effective 14 August 2026 made those exemptions permanent. A reporting company now means an entity formed under the law of a foreign country and registered to do business in a US state. So:

• A Texas or Delaware LLC owned by a family in Lyon or Milan files no BOI report.
• A French SAS or Irish limited company that registers itself to do business in Texas, for example to run a branch, does file, within 30 calendar days after its registration becomes effective, unless an exemption applies.

Our page on the US beneficial ownership register covers the exemptions and the content of the report.

Licenses and permits: activity by activity

The US does not license a business as such. It licenses specific activities. The Office of the Governor puts it plainly for Texas: a general business license is not required. What you need depends on what you do and where you do it.

Federal licenses

The SBA lists the activities that need a federal license or permit. The ones our European clients meet most often:

• Importing or making alcoholic beverages: the Alcohol and Tobacco Tax and Trade Bureau.
• Importing or transporting animals, animal products, plants or biologics across state lines: the Department of Agriculture.
• Manufacturing, selling or importing firearms, ammunition or explosives: ATF.
• Commercial aviation, broadcasting, maritime transport, commercial fishing, nuclear materials and drilling on federal land, each with its own agency.

A software company, a consultancy or an online shop for clothing needs none of these.

State and local licenses

States license far more than Washington does: contractors, electricians, real estate agents, insurance agents, cosmetologists, health professions and many more. Cities add their own layer for restaurants, food trucks, signage and the use of a building. In Texas, sole proprietors and partnerships that trade under an assumed name register it with their county clerk.

Make one list at the start, by activity and by location, and to put every renewal date in the company calendar. Renewing is easy. Reapplying after a lapse is not.

Tax registrations that follow from the company

Tax is where the three layers overlap most. The federal income tax return depends on how the company is classified: a single-member LLC owned from abroad files the Form 5472 information return with a pro forma Form 1120 every year, a corporation files its own Form 1120.

Sales tax is purely a state and local matter, and it changed fundamentally in 2018. In South Dakota v. Wayfair, decided on 21 June 2018, the Supreme Court dropped the old physical presence rule. Since then a state may require a seller with no office or warehouse there to collect its sales tax once sales into the state pass a threshold. South Dakota's law, the one the Court upheld, used $100,000 of sales or 200 separate transactions a year. Texas uses $500,000 of total Texas revenue in the preceding twelve calendar months; a remote seller above that line must hold a Texas permit and collect from the first day of the fourth month after it crossed. Thresholds differ in every state, so check our table of sales tax nexus thresholds by state.

Then there is the state's own tax on the company. Texas has no personal income tax, but it has a franchise tax and an annual information report; our guide to the Texas franchise tax explains why most small companies owe nothing and still file.

The day you hire your first employee

Employment is where Europeans are most often surprised, in both directions. US law gives employers more freedom on hiring and termination than any European system. In exchange, the paperwork around hiring is strict and has short deadlines.

1. Form I-9. The new employee completes Section 1 at the time of hire. The employer completes Section 2, inspecting the identity and work authorization documents, within three business days. You keep the form for three years after the hire or one year after employment ends, whichever is later.
2. New hire reporting. Federal law requires every employer to report a new hire to the state directory of new hires no later than 20 days after the hire date. States may set a shorter period.
3. Minimum wage. The federal minimum wage is $7.25 an hour and has been since 24 July 2009. Many states and some cities set a higher one, and the employer pays whichever is higher. Texas law contains no dollar minimum of its own, so in Texas the federal $7.25 applies.
4. Overtime. Non-exempt employees earn time and a half over 40 hours a week. To treat an executive, administrative or professional employee as exempt, the regulation in force requires a salary of at least $684 a week, in addition to the duties test.
5. Workplace safety. OSHA must be told within eight hours of a work-related death, and within 24 hours of an in-patient hospitalization, an amputation or the loss of an eye.

Payroll taxes, state unemployment insurance accounts and withholding sit on top of this.

Selling goods: product, food and customs rules

Selling to American consumers brings in federal agencies that a pure services company never meets.

Consumer product safety. Manufacturers, distributors and retailers of consumer products must inform the Consumer Product Safety Commission immediately when they learn that a product fails a safety rule, has a defect that could create a substantial hazard, or creates an unreasonable risk of serious injury or death. The Commission's regulation defines immediately as within 24 hours. The duty reaches the importer and the retailer as well as the factory in Europe. Our page on product liability, CPSC compliance and recalls goes further.

Food. Every facility that manufactures, processes, packs or holds food for consumption in the US must register with the FDA before it starts, and that includes facilities abroad. Registrations are renewed every other year between 1 October and 31 December of each even-numbered year. 2026 is a renewal year, so a European food producer exporting to the US has a deadline at the end of this December.

Customs. Since 29 August 2025 the duty-free de minimis treatment for low-value shipments, long the backbone of direct-to-consumer shipping from Europe, has been suspended for goods from every country. An executive order of 20 February 2026 continued the suspension. Every parcel now goes through a customs entry and pays duty.

Advertising and sales practices fall to the Federal Trade Commission and to each state's consumer protection law; our guide to US consumer protection law for sellers covers them in detail.

Reporting foreign ownership

Two federal regimes exist specifically because the owner is foreign.

The BE-13 survey of the Bureau of Economic Analysis records new foreign direct investment. A US business enterprise files when a foreign direct investment relationship is created, for example when a European parent forms or buys a US company, and when an existing US affiliate establishes a new facility or expands. The form is due 45 calendar days after the event. A company that falls below the reporting thresholds, including the $40 million threshold, files a claim for exemption instead.

The second is CFIUS, the interagency committee that reviews foreign investments for national security. For the typical European trading or services company it never comes up, but it can apply to investments in US businesses that develop critical technologies, perform functions for critical infrastructure or hold sensitive personal data of US citizens, and to certain real estate transactions by foreign persons. If your target or your product touches those areas, read our page on the CFIUS review before you sign.

What changed in 2025 and 2026

The last two years removed more federal rules than they added. A short timeline of the changes we discuss with clients most often:

• 26 March 2025: FinCEN's interim final rule exempts US companies and US beneficial owners from BOI reporting. The final rule takes effect on 14 August 2026.
• 4 July 2025: the One Big Beautiful Bill Act becomes law, with wide changes to business taxation; our tax pages cover its effects.
• 8 July 2025: the Eighth Circuit vacates the FTC's negative option rule, the so-called click to cancel rule, six days before the July 14, 2025 compliance date the FTC had set. The older federal statute on online subscriptions, the Restore Online Shoppers' Confidence Act, still applies, alongside state consumer law.
• 29 August 2025: duty-free de minimis treatment ends for all countries, continued by executive order in February 2026.
• 5 September 2025: the FTC votes to drop its appeals and accept the court decision vacating its nationwide ban on non-compete clauses. Non-competes are again governed by state law, which varies widely, and the FTC can still challenge individual agreements under its general powers.

A rule that was announced, challenged and then vacated leaves a trail of outdated advice on the internet. When a European client sends us an article about a new federal duty, the first thing we check is whether it ever took effect.

A compliance calendar instead of a compliance department

For a small foreign-owned company the whole system fits on one page. We set it up with clients in four columns:

That is the real shape of American regulation for most small businesses: a handful of filings with fixed dates, and agencies that are predictable once you know them. The rules are demanding where safety, workers and consumers are concerned, and light almost everywhere else. We find that combination very good for business.