There’s a common misconception that only American citizens can launch businesses in the United States. In reality, it’s both simple and affordable to establish, operate, and maintain a business in the US while residing in another country.
This article explores how foreign nationals can tap into the world’s most dynamic economy.
Why Open a Business in the US?
Every day, entrepreneurs from around the globe start businesses in the US, from large corporations to small ventures. Many international companies thrive by accessing the American market. The most efficient way to enter this landscape is by forming a US corporation, benefiting from the country’s extensive and diverse market while enjoying competitive tax rates.
Launching a business in the US as a non-resident can be straightforward, especially with the assistance of professionals experienced in company formation, visas, shipping, and distribution networks.
Key Points to Consider:
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Trading in the US market is generally easier concerning customs and taxes.
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Obtaining a work permit in the US can be more accessible (though not guaranteed).
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You may have opportunities to reduce your tax liability on US-generated income.
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There’s access to venture capital, angel investors, and stock markets in the US.
Steps to Start a Business in the United States Without Citizenship
1. Obtain Required Federal Permits
Foreign nationals do not need a permanent residency (green card) to establish a business or serve as directors or executive officers of an American corporation and generate profits, provided they pay taxes.
To engage in a funded business, applicants need authorization from US authorities, either through an E-2 Treaty Investor Visa or an EB-5 Visa.
Eligibility for the E-2 Treaty Investor Visa includes:
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Being a citizen of a country with a trade agreement with the US.
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Investing or having previously invested a substantial sum in a legitimate US business.
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Intending to be present in the US to establish and manage the investment enterprise.
2. Choose the Appropriate Business Structure
Foreign entrepreneurs can choose from various business formations in the US, with C Corporations and Limited Liability Companies (LLCs) being the most common due to their liability protection and tax flexibility.
C Corporations
C Corporations are independent legal entities separate from their owners (shareholders). This structure protects personal assets from business liabilities. Investors often prefer C Corps because of their compliance requirements, although they may face double taxation.
LLCs
LLCs also provide liability protection and allow members to choose whether to be taxed as a C Corp or to pass income and losses through to their personal tax returns. They require less stringent compliance compared to C Corps.
Partnerships or Limited Liability Partnerships (LLPs)
An LLP is a legal structure involving a partnership agreement that outlines roles and responsibilities. Unlike LLCs, an LLP designates one partner as personally accountable for the partnership’s actions, making it a popular choice among business partners.
3. Register Your Business
Businesses in the US are registered at the state level, with some states offering incentives to attract international investors. Delaware and Wyoming are known for their business-friendly environments.
Benefits of Registering in Wyoming:
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No requirement for a local bank account or mailing address.
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Consistent and equitable business laws.
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Stockholders in Wyoming cannot block mergers, unlike in some other states.
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Strong protections for directors against personal liability.
4. Select a Registered Agent
LLCs and C Corporations must designate a registered agent in each state where incorporation documents are filed. This agent handles legal documents, court notices, and government communications.
Requirements for registered agents vary by state but generally include being over 18, residing in the state, and being available during business hours.
5. Obtain an Employer Identification Number (EIN)
While an EIN isn’t mandatory during startup, it is essential for opening a bank account, obtaining business licenses, securing loans, hiring employees, and paying taxes. You can apply for an EIN at no cost through the IRS, or enlist a professional for assistance if needed.
6. Open a US Bank Account
Establishing a US bank account can be challenging for non-residents due to strict identification requirements under the Patriot Act. To open an account:
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Travel to the US on a valid visa to create an account in person.
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Use third-party services to assist in the process.
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Check if your bank has branches in the US that can help with identification verification.
Advantages of Establishing a Business in the US as a Non-Resident
Tax Benefits
The US tax system is generally favorable for businesses, offering various legal structures that provide tax advantages while protecting owners from personal liability.
Access to American Market and Capital
The US hosts a diverse array of investment firms, giving businesses valuable access to funding. Not all states are financially equal, though—Delaware is particularly attractive for securing venture funding due to its corporate-friendly laws.
Strong Economic Reputation
The US has a robust economic standing, boasting the largest nominal GDP worldwide. This reputation benefits international businesses and enhances branding, as American companies are often viewed favorably on a global scale.
Affordable Setup and Maintenance
The US ranks highly for ease of doing business, with minimal setup fees and straightforward processes. Additionally, dissolving a business is often cost-effective, with many states not charging fees for termination.
Managing a business in the US is relatively uncomplicated, as it can be entirely foreign-owned, requiring minimal annual reporting and no local director.
Final Thoughts
While non-citizens may encounter challenges when starting a business in the US, these hurdles can be effectively managed with the right guidance. Entrepreneurs from around the world are drawn to the US for its vast opportunities, potential investors, and efficient financial framework. Seeking assistance from knowledgeable professionals can help streamline the process and set you on the path to success.
Embarking on your American business journey is within reach!
