How to Start a Business in the U.S. as a Foreigner– 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. Learning English is a basic requirement if you plan on doing business with Americans, but other aspects such as filing for your Employer Identification Number (EIN), and choosing which type of company you want to be, can make matters more confusing.
Also Read – 20 High Profit Business Ideas in USA – Low To High Investment
Business in the U.S – (Choose Your Company Structure )
Most foreign nationals, says Schwartz International tax advisor and lawyer Richard Hartnig, choose to establish a C corporation, which can expand by offering unlimited stock and is typically more attractive to outside investors, even though its profits are taxed twice, first at the corporate level, and then as dividends to shareholders.
For corporate shareholders, the advantages are usually clear: Corporate shareholders typically qualify for a lower dividend rate. And so long as the U.S. company doesn’t primarily hold real estate, the corporate parent won’t pay capital gains when it sells the U.S. affiliate. Even individual foreign owners are probably best off with a C corporation, says Hartnig, since the structure will shield them from direct IRS scrutiny. “Foreign individuals are very, very hesitant to put their names on the U.S. tax rolls,” he says.
Of course, C corporation owners pay more for that shield as a result of the double tax. But in many cases, tax planners can use salaries, pension costs, and other expenses to reduce corporate income and eliminate much of the double taxation.
All that said, in some cases–usually depending on the particulars of one’s native tax laws–a limited partnership may be the best business structure. In a limited partnership, partners without management control have limited liability, and profits are passed through to the members, who pay income tax on their individual tax return.
Choose a State to Register Your Company In
The company’s business should determine where it locates. If one state dominates its market, it’s best off incorporating there–there’s no way to avoid obligations of doing business in, say, California, a famously high-cost jurisdiction, by registering in Nevada or Delaware, two famously low-burden states. On the other hand, if the business will not be concentrated in any particular state, most advisors will probably recommend Delaware incorporation, followed by Nevada.
This is in part because of Delaware’s “flexible” corporate law that offers generous protections to shareholders and directors, and also due to its outsider-friendly rules. (Besides not requiring either a local physical address or bank account, Delaware makes its corporate law website available in 10 languages.) It’s also, at least in part, a matter of inertia: Tax advisors are so familiar with Delaware’s welcoming ways that many haven’t bothered to learn the requirements of more far-flung states.
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.2
Obtain an Employer Identification Number
An Employer Identification Number (EIN) is 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.”3
Once you have obtained an EIN, you should consider comparison shopping to find a business bank account that fulfills your specific needs. Some key factors to review include rewards, access to brick-and-mortar and online services, the convenience of making cash deposits, and the ability to earn attractive interest rates on your deposits.
The Bottom Line
In most cases, foreigners with Business in the U.S or investments in the United States should set up a domestic corporation. Consult with experts on tax law in both your home country and the U.S. before taking the plunge, as the rules for foreign nationals can be more complex than if you were a citizen.
Compete Risk Free with $100,000 in Virtual Cash
Good post made here. One thing I would like to say is always that most professional domains consider the Bachelors Degree as the entry level requirement for an online college diploma. Even though Associate Certification are a great way to get started on, completing the Bachelors uncovers many opportunities to various jobs, there are numerous online Bachelor Diploma Programs available by institutions like The University of Phoenix, Intercontinental University Online and Kaplan. Another thing is that many brick and mortar institutions present Online variants of their diplomas but usually for a extensively higher charge than the organizations that specialize in online course programs.
Howdy! Do you know if they make any plugins to help with SEO? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good results. If you know of any please share. Kudos!
I just could not depart your web site before suggesting that I really enjoyed the standard information a person provide for your visitors? Is gonna be back often in order to check up on new posts
Pretty nice post. I just stumbled upon your weblog and wished to say that I’ve really enjoyed surfing around your blog posts. After all I抣l be subscribing to your rss feed and I hope you write again very soon!
I have been exploring for a bit for any high quality articles or weblog posts in this sort of space . Exploring in Yahoo I ultimately stumbled upon this site. Reading this info So i抦 happy to convey that I have a very just right uncanny feeling I came upon exactly what I needed. I such a lot unquestionably will make sure to do not forget this site and provides it a glance on a constant basis.
Top site ,.. amazaing post ! Just keep the work on !
Thanks for the unique tips discussed on this site. I have realized that many insurance providers offer customers generous special discounts if they elect to insure more and more cars with them. A significant amount of households have several cars or trucks these days, specifically those with older teenage kids still located at home, as well as the savings in policies can soon mount up. So it pays to look for a good deal.
I know this if off topic but I’m looking into starting my own blog and was curious what all is required to get set up? I’m assuming having a blog like yours would cost a pretty penny? I’m not very web savvy so I’m not 100 sure. Any suggestions or advice would be greatly appreciated. Thank you
Of course, what a splendid site and illuminating posts, I will bookmark your website.Best Regards!
Good ?I should definitely pronounce, impressed with your web site. I had no trouble navigating through all tabs as well as related information ended up being truly easy to do to access. I recently found what I hoped for before you know it in the least. Reasonably unusual. Is likely to appreciate it for those who add forums or something, website theme . a tones way for your client to communicate. Nice task..
Thank you for the good writeup. It in fact was a amusement account it. Look advanced to more added agreeable from you! By the way, how could we communicate?
you can communicate me by my email id – email@example.com
You made some decent factors there. I looked on the web for the problem and found most individuals will associate with with your website.
F*ckin?amazing things here. I am very glad to see your article. Thanks a lot and i’m looking forward to contact you. Will you please drop me a mail?
It抯 really a nice and helpful piece of info. I抦 glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.
Today, I went to the beach front with my children. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is entirely off topic but I had to tell someone!
I was suggested this web site by my cousin. I am not sure whether this post is written by him as no one else know such detailed about my difficulty. You are wonderful! Thanks!
I have come to understand that costs for internet degree gurus tend to be an awesome value. Like a full Bachelor’s Degree in Communication with the University of Phoenix Online consists of Sixty credits at $515/credit or $30,900. Also American Intercontinental University Online provides a Bachelors of Business Administration with a complete study course element of 180 units and a tuition fee of $30,560. Online degree learning has made getting the college diploma far more easy because you can certainly earn your current degree in the comfort of your home and when you finish from work. Thanks for other tips I have certainly learned through the web site.