How to Start a Business in the U.S. as a Foreign Citizen

So you’ve just moved to the United States from abroad and you want to start a business. This might seem on the surface like a quite daunting and even an impossible task, especially with the extremely high amount of businesses already in the country, but it doesn’t have to be.

The United States is one of the—if not the most— business-friendly nations in the entire world. If there’s any country that your small business can succeed, it’s in the good ‘ole US of A.

So, read on to find out how you and your small business can make it big in the United States of America.

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What Type of Business Can a Non-Citizen Legally Start?

You might be wondering if a foreigner can even start a business in the United States. The answer is yes, but there are some caveats.

There are two kinds of businesses that entrepreneurs who aren’t currently citizens in the US can start.

  1. A non-citizen can start an LLC or limited liability corporation.
  2. Any foreigner or non-citizen can start a C-Corporation.

These businesses are great because you can offer unlimited stock options to investors, which will bring in many funding possibilities.

The disadvantage of these kinds of companies is that they are taxed twice, once as a business at the corporate level, and once as a tax to the shareholders.

Someone who is not a citizen of the United States, but is a permanent resident, is also able to start an S-Corporation.

An S-Corporation is a company with what is known as a “pass-through tax,” which is a form of taxation that does not require the company to be taxed as an entity, but instead taxes the individual shareholders.

If you are not a citizen and you don’t live in the United States, starting a C-Corporation is your only option, but it is not without its benefits.

What State Is Best for Non-Citizens to Start a Business?

There are 50 states in the United States, each with its own laws regarding taxes, corporations, business transactions, etc.

Read more about the top countries for expats on foreignersfinances.com.

Delaware is by far the most popular choice, as corporations registered in Delaware enjoy great protections for both companies and shareholders, and also enjoy among the lowest corporate tax rates in the country.

However, some states require you to register your business in their state if you plan to do most of your business there. Make sure you know what your business is going to be, and where you want to be selling those goods within the U.S. to know if any of these states would be best for you.

This is a bit of a niche tip, but you also want to pay attention to the legality of your good or service in individual states. States are often allowed to legalize and illegalize goods and services on their own. Make sure the good or service you wish to provide is not illegal in the state you wish to register.

How to Register Your Business

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To begin operation as a company in the United States of America, you’ll first have to register your business with the state you chose earlier. Some states have different requirements, but it mostly goes as follows:

  • Naming the company. Your company has to have a name that is not already held by another company currently registered in the state you are registering in.
  • You must select a registered agent that can receive documents that are addressed to your company. These include private and legal documents.
  • You must fill out a certificate of incorporation, which is a document that has the name of your company, the name of your registered agent, the address of your registered agent, the value of the shares of the company, and the incorporator’s address.

Get an Employer ID Number

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An employer identification number is required for you to hire employees to help run your company, get a license for your business, pay taxes, and open a bank account. You should get your taxpayer identification number personally before you get your business’s employer ID number.

If you want to get an employer identification number without a social security number, it is a bit of a process. The easiest way is to hire legal help to apply for an employer identification number for you. This can help see you through this important and complicated process.

An employer identification number is a form of taxpayer ID, which will be discussed below.

Get an Individual Taxpayer ID Number

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To receive the employer identification number, you’ll first need an individual taxpayer identification number or IDIT. This number is used to identify individuals who need to pay taxes in the United States of America and who do not have a social security number. The employer identification number can serve as both an individual taxpayer number as well.

You will need your individual taxpayer ID number for several things on this list. These include getting your employer ID number, as mentioned before, opening a bank account with any bank in the United States, open an account on Paypal and similar services, file tax returns, getting loans, and many more business operations.

The IDIT number is used to identify in place of where a current citizen’s social security number would identify them. This makes it very important for a lot of things, so once you get it, write it down somewhere safe, and keep it a secret. You do not want it getting into the wrong hands.

Get Business Insurance

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It’s important to have insurance when starting a business in the United States.

Business insurance can cover many things, including natural disasters, legal trouble, accidents, and more. This insurance will give you more protection than you get from registering as an LLC, C-Corporation, or as an S- Corporation.

This is because the protections given to you when you register are personal protections. Business insurance can protect your business from harm. This will allow you to protect your business from any unforeseen setback or catastrophe that might occur.

In some states, it is required by law to purchase business insurance. Make sure you know if this is the case for the state that you have registered your business in, and find out what kinds of insurance you can get in that state.

Get a Mailing Address

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You’ll need somewhere for mail addressed to you and your business to be sent within the United States. This is because most banks in the US require an address in the US to link you to when you are registering a new account, both personal and for your business.

If you already have a business address, this can double as your mailing address for the sake of opening bank accounts, sending mail, and more.

If you do not currently have a business or mailing address, there are avenues you can go through to purchase one. Many companies provide this service. Find the most affordably priced one you can, as there is very little difference in the actual service received from them.

Conclusion

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Although it can sometimes be an exceptionally tedious, difficult, and complicated process, starting a business in the United States can be worth every penny. It is one of if not the most business-friendly nations on the planet and thousands upon thousands of businesses have found success there for good reason.

Follow the steps in the article closely and you will be able to start up your business in no time. It is highly recommended to hire a business lawyer to advise you through the processes of not only getting an employer identification number but also for many of the other processes you’ll need to go through as you apply to become a US business as well.

So if you’re going to get started, you might as well do it sooner rather than later! As with all things of this nature, this process takes time and a little bit of money upfront, so get started early. The rewards can be beyond your wildest dreams.