Starting a business is no easy task. While some people are destined to be entrepreneurs, others may have to work harder and have a driving force behind them to be successful businessmen.
However, despite all the challenges and risks you may face in the process, owning a business actually brings a lot of benefits. From working your own hours and setting your own rules to getting recognized and building a personal brand, the beauty of entrepreneurship is that you can control your destiny.
If you are a foreign national, one of the best places where you can start your own business is in the United States. It is a diverse cultural country that welcomes free enterprise and embraces innovation and new ideas. And as a new investor, it will be entirely up to you to decide how you would like to form your business.
From choosing your corporate entity to getting certified translation of your documents and getting a work visa, here is everything you need to know about starting your entrepreneurial journey in the United States.
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Table of Contents
Pick a location of your company
The first thing you must do is choose the location of your company. This means considering the demographics of your business, paying attention to the competition and most importantly understanding the state laws and taxes. The last one is especially important to know because each state has its own set of incorporation laws and other regulations.
There are three US states that are the most popular for foreigners to start a business in and these are Wyoming, Delaware and Nevada.
Wyoming, for example, was the first state in the country to allow individuals to form a business. It has foreigner-friendly laws and it is cheaper to set up and start from scratch. Also, this state doesn’t collect personal, corporate or capital gains taxes except for manufacturing equipment and similar purchases.
Choose your business structure
As a foreigner, you can choose one of the two types of corporate entities for your business: limited liability company (LLC) or a corporation (C-Corp).
Choosing an LLC entity is the most common option if you are a small business owner. The registration is fast and simple and you can even do it without an attorney. The biggest advantage of this corporate entity is that you will be able to protect your assets against any lawsuits or company debts.
On the other hand, by choosing the C-Corp business structure you will be protected from the involvement of the IRS and will have greater tax advantages due to the ability to expand by selling shares of stock. This also means that you can have an unlimited number of shareholders.
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Register your company
Once you have chosen the type of corporate entity and state for your business, the next step is registering your company. This includes:
- Picking out a name for your business that must be unique so no other company is incorporated with the same name in the same state
- Choosing a registered agent with a physical address within the state of your company who will be responsible for receiving legal information on the company’s behalf
- Filing Certificate of Incorporation indicating you have formally registered your company in that state and which identifies your company’s name, the official information of your registered agent and the names of other shareholders or members
- Apostille or Certificate of Authentication which refers only if you intend to open a bank account in your home country
Obtain an Employer Identification Number
The Employer Identification Number is basically the tax ID for your company assigned by the Internal Revenue Service. It is necessary so you can hire workers, open bank accounts, pay taxes and get a business license.
In reality, the process of obtaining your company’s tax ID is a bit more complicated since you are a foreign individual and don’t have a Social Security Number. In this case, you must apply for an Individual Taxpayer Identification Number (ITIN) which allows you to use the online IRS forms to fill out the application for your EIN.
Just make sure that your ITIN is renewed every year in order to prevent potential delays in the processing of your tax returns.
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Get a work visa
Although you don’t need a visa to start a business in the United States, you must get one if you plan to live and work in the United States.
The L-1 work visa is the most popular option among foreign investors. It allows you to move specialized personnel from companies abroad to your company in the US. This document must include information about the physical office of your business and how you plan to support the personnel in the States for at least a year.
The second popular option is obtaining the E-2 work visa which includes your business plan and how you will support your new business in the US. To get this visa, your home country must have a Treaty of Friendship, Commerce and Navigation with the States.
After formation checklist
There are a few final steps before officially starting your business.
The first thing you should do is open a US bank account. This is useful if you want to accept US payments, open a US merchant account or a physical branch office. Also, if you want, you can even open a bank account in your home country only if you obtain the Apostille or Certificate of Authentication.
Next, if you would like to receive emails regarding your business, then you should arrange a US physical business address or virtual office. This is usually necessary if the bank where you have opened your account requires you to have a separate US physical address.
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Final thoughts
The truth is the process of starting a new business in the United States can be quite complicated especially to a foreign citizen. Due to the complex regulatory scheme of the country, there is a lot of paperwork that needs to be filed. However, if you prepare well and follow the right steps, you will open your business in no time. So, in order to help you with your entrepreneurial journey, make sure you refer back to this brief guide and set up your company in the US successfully.
About Carson Derrow
