If you are looking to form a business in a foreign country, you may be surprised to learn that the USA has been known as one of the most foreign-friendly countries to start a business.
On top of this, the United States of America has a consistently strong economy and is a leader for global business and investments. This can be promising for your entrepreneurial endeavors.
How can you start a business in the USA as a non-citizen foreigner? Starting a business in the USA has no citizen or living restrictions. You can use a registered agent service to register your business with an address in the state you are filing in. Starting, buying, or owning a business in the USA does not automatically change your citizenship status, but a green card is not required to begin.
While starting or purchasing a business within the USA can be a relatively easy logistical process, it does come with plenty of challenges. There will be nuances as to types of businesses, as well as laws for working and living, that you will have to navigate. Continue reading to learn more about the types of USA-based businesses you can own as a non-citizen foreigner (both residential or living abroad) and the legal guidelines you will have to follow along the way.
Learn more in our guide: How to Start Your Small Business Legally – Important Legal Requirements
Non-U.S. citizens (whether living abroad or those who are non-citizens residing in the USA) can start a business of any kind in the USA; sole proprietorships, partnerships, limited liability companies (LLCs), or C corporations are all popular choices. However, working for the business and gaining wages will require documentation.
Since you will be able to start any kind of business that you want (assuming you meet the business standards to begin), you will likely want to see the profits from your work. To do this, you will need to gain permission to work and reside in the country through a conditional visa or green card.
That said, the legal requirements for working and residing in the United States vary based on your unique situation. You’ll need to research the type of documentation that you’ll be asked to provide based on how long you plan to stay in the country and any plans for residency or citizenship applications.
If you are living abroad but would like to start a business in the United States, this is possible, too. Since there are no citizenship requirements for starting a business in the country, and you will not be attempting to live or work in the country, then you need to verify the legality of the wages that you will be receiving and the taxation requirements in the U.S. as well as your country of residence.
Choosing the right business entity is a crucial step in starting a business in the U.S. as a foreigner. The two most common business entities for foreign business owners are the limited liability company (LLC) and the C corporation. Both entities offer limited liability protection, but they have different tax implications and requirements.
An LLC is a popular choice for foreign entrepreneurs because it offers flexibility and avoids double taxation. This means that the business itself is not taxed; instead, profits and losses are passed through to the owners’ personal tax returns. This structure can be particularly advantageous for foreign business owners looking to minimize their tax burden. Additionally, even foreign-owned LLCs are relatively easy to manage and provide a straightforward way to protect personal assets from business liabilities.
On the other hand, a C corporation offers more flexibility and security to external investors, making it easier to raise venture capital. However, C corporations are subject to double taxation, where the company’s profits are taxed at both the corporate level and again on the shareholders’ personal tax returns when dividends are distributed. Despite this, the well-established nature of C corporations can make them more attractive to investors and partners, which can be a significant advantage for businesses looking to scale quickly.
Ultimately, the choice between an LLC and a C corporation will depend on your specific business goals, the level of investment you seek, and your tax strategy. Consulting with a legal or financial advisor can help you make the best decision for your new business.
Registering a business in the U.S. as a foreigner involves several key steps. First, you need to choose a unique name for your business that has not been previously registered in the United States. This helps ensure that your business name is distinct and legally protected.
Next, you will need to fill out paperwork, such as the Articles of Incorporation or Articles of Organization, and file it with the state where you plan to conduct business. This step officially registers your business entity and provides it with legal recognition.
It’s also important to consider the state in which you register your business. Some states are known for being particularly business-friendly, offering lower taxes, fewer regulations, or business-friendly court systems. However, it’s essential to consult with a lawyer or accountant to determine the best state for your business based on your specific needs and circumstances.
Obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is another crucial step for most registered businesses. The EIN is a unique number assigned to your business for tax purposes, similar to a Social Security number for individuals. You can apply for an EIN online or by mail, and it is required for various business activities, including opening a business bank account and filing taxes.
There are many reasons that you might want to start a business in the USA. Its economy is usually strong. Its world market integration is vast. It provides an entryway to financial opportunities like investors and venture capital. Plus, you can make a plausible case for residency. But your residential status might cause you to question your business venture.
Technically, there are no requirements for living in the United States to legally register your business entity in the country. However, employment (receiving wages) from your business will require additional legal documentation. You will be required to pay U.S. taxes annually on your U.S.-based business.
The conditions for starting and owning a business in the U.S. vary from person to person and from business to business, as specific situations render different documentation needs. It’s highly recommended that you work with a U.S.-based attorney to help ensure you take all the appropriate legal precautions for your business and your personal residency. That way, you’ll be able to fill out all of the correct paperwork and avoid time-consuming missteps.