Non-U.S Citizen Can Establish Business In USA is not a false statement, it can only be difficult if due process is not followed.
Starting a U.S.-based business as a foreigner can be a long road, but the country makes it easy to register your company and open your business.
The complexity of how Non-U.S Citizen Can Establish Business In USA can be overwhelming. Most especially when considering the long legal process and the changes constantly happening in the political and economic climate in the US.
However, the United States is very safe environment for any businesses and they has always welcomed foreign innovation, businesses for decades.
The first requirements to this effect is learning English language if you plan on doing business with Americans, but other aspects such as residence permit, filing for your Employer Identification Number, and choosing which type of company you want to be, can make matters more confusing.
The second step proposed to answer the question on how Non-U.S Citizen Can Establish Business In USA is to incorporate your business as a non citizen.
The good news is that the steps to incorporating as a non-citizen are fairly simple, and we would provide you with available guide to help you along the way. This guide will help break down the complexities of how Non-U.S Citizen Can Establish Business In USA.
Tip: Determine what exactly you want to do, where and how you want to do it, how much it will cost and whether or not you have the budget.
USA Corporate Entities For Non-Resident
At the moment, there are two types of corporate entities non-citizens can open in the US:
- Limited Liability Company (LLC)
- Corporation (C-Corp)
While foreigners are often recommended to form a C-Corp, there are some distinct advantages to incorporating as an LLC.
The most obvious of these is limited liability- meaning members are protected from personal liability for business decisions or actions, and personal assets are safe if the company incurs debt or is sued. You can form an LLC in Texas, Georgia, California, Delaware, or another state that is not on the list of OFAC-restricted countries.
LLCs are also free from the strict recordkeeping necessary for C and S-Corps, and have almost no restrictions on profit sharing between members.
That being said, many new businesses choose the C-Corp business structure. The advantages of forming as such are significant, with the most often-cited reason being the ability to expand by offering unlimited stock: a feature that is often attractive to investors.
Foreign owners also find solace in the C-Corporation structure for its ability to protect them from close I.R.S. involvement.
That shield, of course, comes with the price of double tax- but that financial damage is often avoided through careful tax planning, which can be structured to cancel out most of the double taxation.
How Non-U.S Citizen Can Establish Business In USA
Here’s the four reliable steps through which a Non-U.S Citizen Can Establish Business In USA and operate conveniently;
Step 1: Choosing a Business Location
If you are planning to set up a business in the US, choosing a business location is perhaps the most critical decision you will make.
It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more. Luckily, you do not have to incorporate your business in the same state in which it is physically located.
When a US resident plans to set up a new business, they will likely end up setting up where they live. The non-resident looking to come to the US to set up a business has the ability to set up a business in any state they desire. How to choose a state in which to start can be complicated.
When people refer to the United States of America, they mainly refer to the 50 States, plus the District of Columbia.
For an entrepreneur or business coming to the US, it is best to think in terms of states, since to set up a business here you must choose a state in which to set up the business, and a state in which to incorporate the company.
The states are quite a mix, ranging in size from tiny Rhode Island to massive Alaska, in population from California (highest, with almost 40,000,000) to Wyoming (smallest, with less than 600,000).
This selection should be one that fulfills business objectives in the most cost effective way, and as such is a trade off between cost and quality factors.
At the outset, a company needs to identify which factors are the key drivers in the location choice – is it access to market? Availability of skilled labor? Transport infrastructure? Most likely it is a combination of all these, and others.
By working through this issues, a set of quantitative and qualitative data points can be developed.
Benefit Enjoyed By Non-Resident-Owned US Company
1: Easy access to international flights
2: Healthy market for expansion (population, education levels, access to banking services and capital, infrastructure)
3 Innovation and business birth rates are high while there is a lack of entrenched economic dominance
4: Incorporation fees are low to moderate, fast set up time, minimal information requirements
5: Administrative burdens on a company are relatively low
Furthermore, a non-resident-owned US company will want to avoid:
- Lack of or poorly-maintained infrastructure
- Excessive cost of living
- Bad environment
- Historical Baggage
- Anti-Immigrant prejudice
Step 2: Incorporate Your US Business
Once you have chosen your location to set up your business, the next step is choosing a state of incorporation.
You can incorporate in the state where you are doing business, or you can incorporate in another state.
Incorporating in the same state as your business is cheaper. Sometimes incorporating in another state has more benefits, but will always cost more.
You are not required to incorporate in the state where your business operates; you have the freedom to choose from any one of the 50 states in USA.
The key thing to know is that you must be registered to do business in the state where your business is located. If you incorporate in the same state where your business is located, then this is automatic.
If you incorporate in a different state, you will have to register your company to do business in the state where your business is located.
How To Incorporate Business In United States
Company incorporation in the United States is administered at the state level —not the federal level — for both foreign nationals and U.S. citizens.
The process will differ from state to state but is generally comprised of two steps: 1.) applying to register in that specific state and 2.) establishing a registered agent with a valid, physical address in the selected state.
A registered agent can be either the business owner or another designated person who is authorized to receive legal documents on behalf of the business during standard business hours.
To incorporate a company as an LLC or corporation, formation documents must be filed with the appropriate state agency, which is most often the Secretary of State.
Required filing fees must also be paid. A corporation’s formation document is typically referenced as the Articles of Incorporation or Certificate of Incorporation, depending on the state.
The Articles of Organization or Certificate of Organization often refer to the LLC’s formation document. Formation paperwork is used to advise the state and the public of specific details relating to the company.
Formation documents serve as a formal record of reference of the corporation’s or LLC’s existence.
LLCs and corporations must offer certain information in their formation documents. The mandatory disclosures vary minimally by state.
Step 3: Register Your Business
The forms and other requirements for forming a business entity vary somewhat by state. Here’s how incorporation works in Delaware, which serves as a simplified model for many states:
- The company principals choose a unique name.
- They select a registered agent that is able to receive legal documents for the company. (A company with a physical address in the state can serve as its own agent, but this is not true in other states, like California.)
- The company fills out a one-page certificate of incorporation that identifies the corporate name; the name and address of its registered agent; the total amount and par value of the shares the corporation is authorized to issue and the name and mailing address of the incorporator. Fees start at $89 and increase principally based on the amount of stock issued or capital raised.12
Once the business is incorporated, it must file a report ($50) and pay franchise tax (from $175) annually.
Though many online services exist to help with entity formation for a separate fee that can reach several hundred dollars, the paperwork is generally fairly straightforward, and states (usually through their secretary of state) normally provide guidance online to help individuals file the proper paperwork
Step 4: Obtain Employers Right
Employers Right is an Identification Number necessary not just to hire workers, but to open a bank account, pay taxes or often to get a business license.
Apply for the EIN for free directly with the IRS, and avoid the many online services with government-sounding internet addresses that charge for this service.
But unless the U.S. company’s principal officer (who the IRS calls the “responsible party”) has already obtained a separate Taxpayer Identification Number from the agency, it can’t apply for an EIN online–it must apply by mail or FAX, and where the form asks for the Taxpayer Identification Number, enter “foreign/none.
How To Get a US LLC (Step by Step)
You do not need to be a US citizen, or a US company before you can form a US LLC. Anyone can form a Limited Liability Company (LLC) in the USA; Foreign citizens and foreign companies can form an LLC in the USA.
To form your US LLC and start doing business in the US, you must:
- Choose a state
- Give your LLC a Name
- Get a Registered Agent Service
- File your LLC
- Form an LLC Agreement
- Get US Mailing Address
- Open a US Bank Account.
1. Choose a state
It is usually advisable to form an LLC in a state without state taxes, so you only have to handle US Federal Taxes.
However, for the purpose of your business, if you need to open offices, or have a physical presence in a particular state, you will need to form an LLC in that state.
When choosing the state to form your US LLC in, it is usually best to first consider if you will have a physical office or presence like employees or a job site in a specific state.
If this is the case, it is best to form your LLC in that state.
2. Give your LLC a Name
Every state has its own rules about what kinds of names are allowed for LLCs. In general, you will need to observe these guidelines:
- Your name must include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
- Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don’t plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
3. Get a Registered Agent Service
A registered agent is a person or business that sends and receives legal papers on your behalf.
You also need a Registered Agent. A registered agent is required to be elected to form an LLC in most US States, and is designated when forming your LLC.
Most states require every LLC to nominate a registered agent. Your registered agent must be a resident of the state you’re doing business in, or a corporation authorized to conduct business in that state.
4. File your LLC
To officially file an LLC, you will need to file your documents with the state.
The most common name for this document is Articles of Organization. It is also known as Certificate of Formation or Certificate of Organization. Your LLC formation document outlines the organizational structure of your business.
5. Form an LLC Agreement
An operating agreement is a legal document outlining the ownership and operating procedures of an LLC
An operating agreement is not required in most states, but it’s a good practice to have one.
6. Get US Mailing Address
You need a physical address in the state you choose, this is necessary to open a bank account in that state.
One way to get a mailing address in the US is to establish a physical office in the state you’re going to form and do business in, if this is required for your business.
However, if you do not need to open a physical office in the US, you will still need a US mailing address in your LLC’s state.
7. Open a US Bank Account.
Opening a US Bank account for your LLC will be the most complicated part of the process.
It is the most complicated because you will need to visit the bank.
Due to US money laundering laws, banks are required to know their clients.
This will mean you will need to travel to the US, and obtain visas to do so.
Opening a Business Bank account for your company can be done once you’ve formed the LLC, and received your EIN.
