What to Consider as a Non-Resident When Starting a Business in the US?

BusinessSales / Service

  • Author Abdullah Al Mamun
  • Published April 7, 2023
  • Word count 1,472

It is a prevalent misperception that only citizens of America may establish businesses in the United States. On the contrary, it’s simple and inexpensive to set up, run, and maintain a business in the USA while living in another nation.

This article examines how foreign nationals may get involved in the world’s most outstanding economy.

Let’s dive right in.

Why Should You Open Business in the USA?

Nearly every day, foreigners open enterprises in the US, ranging from corporations to small enterprises. Many enterprises worldwide depend on having access to the American market to flourish. The most cost-effective way to access this sector is via a US corporation, which may benefit from the nation’s most prominent and perhaps most diversified global market while paying the least tax rate.

Establishing a business in the USA as a non-resident is hassle-free if you have the support of staff with expertise in company incorporation, visa, shipping, and distribution network.

Some pointers to keep in mind:

It is simpler to trade in the American market regarding customs and taxes.

In the US, securing a work permit is more straightforward (but success is not guaranteed!).

You might be able to reduce your tax liability on earnings generated in the US

In the USA, you may have access to venture money, angel investors, and the stock exchange.

Steps to Start a Business in the United States Without US Citizenship

Have all the required federal permits in hand

Foreign nationals do not require a permanent residency (i.e., green card) to start a business or serve as a director or executive officers of an American corporation and generate profits, as long as they pay taxes.

Applicants must receive authorization from the United States authorities either via an E-2 Treaty Investor Visa or an EB-5 Visa to engage in a firm they have funded.

To be eligible for E-2 Treaty Investor status, a non-immigrant, non-citizen investor should meet the following requirements:

Be a citizen of a nation with whom the United States has a trade and navigation pact.

Invest (or have previously invested) a significant sum of money in a legitimate US firm.

Be present in (or strive to be present in) the USA solely to establish and lead the investment company.

Company Structure

Foreign business people’s ability to organize company formations in the United States is restricted in specific ways. C Corporation and Limited Liability Company (LLC) registered business forms are commonly used because they provide individual liability coverage for entrepreneurs and certain tax flexibility.

A business owner must complete company registration documents in the state where the organization will be run to create either entity.

C Corporations

C Corporations are legal tax entities independent of the business owners (referred to as “shareholders”). As a result, the proprietors’ assets are guarded against the firm’s monetary and legal problems. A tax return is used to disclose the company’s income and liabilities.

External financiers and investors will frequently choose to invest in C Corps compared to other business organizations. This is because of the compliance checks in place to guarantee correct operation. The documentation and dates necessary to keep in compliance, as well as “double taxes,” are potential disadvantages of the C Corporation form.

LLCs

LLCs are treated as independent legal entities from their proprietors (called “members”), offering entrepreneurs individual liability coverage.

Members of Limited Liability Companies can decide whether to tax the firm as either a C Corp or allow its revenues and losses to flow to the proprietors’ tax returns. Limited liability companies, like C Corps, must meet continuing compliance standards, but to a lower scale.

Partnership or Limited Liability Partnership (LLP)

A limited liability partnership (LLP) is a legitimate legislative organization that comprises a partnership agreement specifying roles and liabilities. The distinction between an LLP and an LLC is the selection of a business manager who is personally accountable for the partnership’s conduct. Whenever there are multiple company partners, most business owners choose LLPs.

Company registration

Companies in the USA are formed at a state and local level rather than the federal level, and certain states provide incentives to your company. Delaware and Wyoming, for instance, are recognized as minimal-burden states that attract many international investors.

Here are some of the benefits of registering in Wyoming:

There’s no requirement to have a Wyoming savings account or mailing address in Wyoming.

The business laws of Wyoming are impartial and uniform.

Companies favor Wyoming firms as, unlike in California, stockholders cannot prevent a merger.

The law in Wyoming provides directors with extensive protection, including indemnity for damages incurred due to lawsuits.

Though costs in Wyoming will not change in Delaware additional costs can be added the next time.

Select a Licensed Agent

To receive service of action in place of the company, LLCs and C Corporations should select a representative for each state wherever the incorporation documents have been filed. Court notices, communication from the State secretary, and other formal government announcements are referred to as “service of process.”

The criteria for licensed agents differ from state to state. An agent should typically be above 18 years old, own an actual house in the state, and be accessible at that address throughout regular business hours. Numerous businesses around the world offer licensed agent services.

Get your EIN (Employer Identification Number)

Although an employer identification number (EIN) isn’t required during the start-up phase, you will need one to create a bank account, acquire a company license, receive loans, recruit staff, and pay income tax.

You may register for an EIN simply from the Internal revenue service (IRS) for $0. However, if you’d prefer not to do it alone or find the documents and process complicated, seek a professional to assist you.

Ensure you can create a US savings account prior to proceeding with the formalities of establishing an American business. While this method appears straightforward in documents, as previously said, it may not be easy.

The Patriot Act, enacted in reaction to the 9/11 terrorist attacks, has increased the difficulty for foreigners to create savings accounts in the United States. The Act needs banks to confirm the identification of anybody establishing an account and must pass all statutory anti-money fraud and anti-terrorism procedures.

There are various options for meeting this requirement:

Obtain a visiting visa, fly to the United States, and personally create an account with your preferred bank.

Utilize third-party tools to guide you in creating an account.

If the bank’s regulations permit it, visit a United States bank with a branch in your home country for identification verification.

Advantages of Establishing a Business in the United States as a Non-Resident

Tax advantages

Every firm should think about tax. Taxation in the United States is friendly to businesses, with several legal structures available to grant tax breaks while shielding business people from personal accountability.

Access to the American market and capital

The United States has a varied and rich pool of renowned investment firms. When establishing a company in the United States, you unavoidably acquire accessibility in this deep-pocketed finance world. As a result, tech firms from all over the world have established themselves in the United States.

Unfortunately, not every state runs financially in a similar way. Delaware is the nation’s top state for drawing venture funding. It does have the most corporate-friendly laws. Consider forming a C Corporation if you are developing a significant firm and want to draw venture funding in Delaware.

Economic reputation

The United States has an excellent economic status. The nation seems to have the most significant nominal GDP in the world! The country is proud of its significantly strong economy.

This excellent reputation benefits worldwide enterprises. On a global scale, American enterprises are regarded. Branding is essential when running a company, and the American economic importance is powerful.

Inexpensive setup and upkeep

The USA ranks sixth in the “World Bank 2020 report”. This position was gained by the nation’s minimal setup fees plus simple remote procedures. Individual establishment costs are influenced by the state where the business is established.

In the United States, it is also cost-effective to dissolve a firm. Most states do not charge a fee to terminate a corporate corporation.

Managing a company in the United States is relatively stress-free because it can be 100% owned from oversea and requires yearly reporting costs. There is no requirement for an annual CPA inspection or a nominated local director.

Final Thoughts

You could face more effort and possible complications as a non-citizen. The challenges can turn far from overwhelming when you seek the assistance of reputable specialists to help you navigate the process.

When starting a business on a massive scale, business people worldwide flock to the USA. The country has the most business prospects, prospective investors, and efficient taxation and financial framework.

Business Globalizer is the one-stop solution for entrepreneurs and businesses. We specialize in providing a number of business solutions such as company formation (USA, UK), VAT, Tax Registration, Payment Gateway, Business Tax Preparation, and Tax submission.

Article source: https://articlebiz.com
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