How to Start a Business in Guam

If you don’t register your business with the Government of Guam and simply start selling your wares to Guamanians, you’re a sole proprietor by default. If you’re doing business with a partner—or two—you’re operating a general partnership. The only problem with that is, in the eyes of the law, you and your business are one in the same. If your business gets sued or defaults on a debt, your personal assets (including your life savings, car, or house) are up for grabs.

In order to protect your personal assets, you need a business with limited liability protection, which means you have to make your business a separate legal entity. Business entities with liability protection have their own assets, debts, and liability, legally separate from that of their owners. The most common entities with limited liability protection are LLCs and corporations.

Guam Limited Liability Company (LLC)

LLCs haven’t been around for as long as corporations, but they’ve become a popular entity choice for small businesses because of their flexibility and strong liability protection. LLC owners have a lot of freedom in how they choose to structure and manage their business. Plus, LLCs can be taxed either as corporations or pass-through entities. If you want to start a Guam LLC, you must file paperwork with the Guam Department of Revenue and Taxation (DRT).

Guam Corporation

Corporations have strict rules for how the need to function: shareholders appoint a board of directors, and the board elects officers who manage the daily operations of the company. Regular meetings are a requirement, and there’s a lot of paperwork involved. Because corporations are required to be so organized, investors tend to prefer them over LLCs. To start a Guam corporation, you’ll file paperwork with the DRT.

Choosing a business name is one of the first major decisions you’ll make as a business owner, so choose wisely. If you’re operating as a sole proprietor, your legal business name is your first and last name. So if you don’t want to call your landscaping business “John Cruz,” you’ll need to register a “doing business as” name (DBA). Then you can use something more creative, like Lawns by John.

Guam LLCs and corporations need to follow Guam’s legal naming requirements:

• Must be distinguishable from any other Guam business name.
• For LLCs, must contain the words “limited liability company,” “limited company,” or the abbreviation “LLC” or “LC.”
• For corporations, must contain “corporation,” “incorporated,” “company,” or “limited,” or an abbreviation thereof, such as “corp.”

Guam doesn’t have a convenient online search tool to find out if a business name is in use. Instead, to find out if your preferred name is available, you can either call the DRT General Licensing and Registration Branch or file an application to reserve your business name. If your application is accepted, you’ll know your name is available.

This is the step that officially forms your LLC or corporation. (Sole proprietors and general partnerships can skip this step. However, they will still need a Guam business license.)

Guam LLCs and corporations need to file formation documents with the Department of Revenue and Taxation. Filing this paperwork officially brings your business entity into existence.

• To start your Guam LLC, file Guam LLC Articles of Organization.
• To form your Guam corporation, file Guam Articles of Incorporation.

Before you fill out your formation paperwork, you’ll need to appoint a Guam registered agent to accept legal mail on your business’s behalf. When you’re ready to submit your articles, you can do so by mail or in person.

Note: The names and addresses you share on these forms go onto the public record, meaning anyone will be able to find this information online when they search for your business.

So far in this guide, we’ve dealt with public forms that you’ve had to file with the Guam Department of Revenue and Taxation. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.

Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.

Here are the major internal documents you need to organize for LLCs and corporations:

Guam LLC Operating Agreement

This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.

Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Guam LLC Operating Agreement template that you can use as a solid foundation.

Guam Corporate Bylaws

Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in Guam (see 18 Guam Code §28204).

As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted a Guam Corporate Bylaws template you can use to get started.

Starting a nonprofit? Learn about Guam nonprofit bylaws. 

Everyone doing business in Guam needs a business license, including sole proprietors. Here are the most common licenses Guam businesses need:

Guam Business License

Almost every Guam business owner needs to apply for a general business license from the DRT General Licensing and Registration Branch. The exception are professions that require a more specialized license—such as for certified public accountants, doctors, and attorneys. Once your application has been approved, you’ll receive your business license. At the top of your license you’ll see your Gross Receipts Tax (GRT) number, which you’ll need to file your business taxes.

Learn How to Obtain a Business License on Guam.

Professional Business Licenses

Professions that require advanced education or training typically require a professional business license. This includes medicine, law, engineering, accountancy, and social work, among others. Professional licenses are issued by the board that regulates that industry. For example, optometrists in Guam need a license from the Guam Board of Examiners for Optometry.

Learn more about How to Get a Business License.

The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.

Open a Business Bank Account

To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.

Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.

Set up Payroll

If you’re planning on hiring employees or independent contractors, you’ll need to set up payroll. Here’s how:

• get an EIN
• Get a GRT number by applying for a business license
• determine whether you’re hiring employees or independent contractors
• prepare the forms your employees will fill out
• choose a payroll service or software
• decide on a payroll schedule

Most business owners use a payroll software or professional service to help them set up payroll. A good payroll software will automatically withhold payroll taxes, file tax returns on your business’s behalf, and pay your employees via check or direct deposit (employer’s choice).

Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.

How do you know if you need business insurance? Ask yourself what risks are inherent to your business and how willing you are to take those risks. If you have clients who could potentially injure themselves at your place of business, it’s a good idea to get liability insurance. If you own a commercial building or work with expensive equipment, you probably want commercial property insurance.

Here are the most common types of business insurance:

Workers’ Compensation Insurance

All businesses with employees in Guam need to purchase workers’ compensation insurance. The only exception is for employers of domestic workers, who aren’t required to purchase this insurance. The purpose of workers’ comp insurance is to pay out benefits to workers who are injured or become ill on the job. Guam doesn’t have a government-run workers’ compensation fund, so you will need to purchase this insurance from a private company.

Liability Insurance

This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.

As a US territory, Guam is a separate taxing jurisdiction from the United States. The tax laws in Guam mirror the laws in the United States, and Guam has the same income tax rates as the US federal tax rates. If you’re a full-time resident of Guam and only receive income from Guam sources, you will only need to pay taxes to the Government of Guam—with the exception of taxes for Medicare and Social Security, which you’ll still pay to the US.

However, if you’re receiving any income from the States, you’ll need to pay US federal taxes.

Federal Taxes

• LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-Corp instead.
• Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate.

To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.

Guam Business Privilege Tax

Guam LLCs and corporations are subject to a business privilege tax called the Gross Receipts Tax (GRT), which is a 5% flat tax on gross income. Businesses must pay this tax every month to the Department of Revenue and Taxation. The GRT tax return can only be filed online.

LLCs and corporations in Guam need to file the Guam Sworn Annual Report with the DRT every year. This report asks for basic information about your business, including contact info for the members/managers or directors/officers and registered agent information. Corporations also need report the number of shares authorized, their class, and their par value.

The report must be filed between July 1st and September 1st every year, starting the year following the formation of the business. The filing fee is $100.

Read more about How to File the Guam Sworn Annual Report.

If you want Guamanians to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:

• Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
• Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
• SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
• Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.

A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.

You can apply to register your trademark with the territory of Guam or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Guam is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Guam.

You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.

Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.