Have you ever thought of starting a business in the USA as a non-resident? It is a long road for non-citizens because of the stringent requirements.
Aspects such as choosing what business to start, filing for your Employer Identification Number, and company registration may also be confusing. However, if you have the determination, there’s a possibility of starting a business in the USA because the country has made it easy to register a company.
The USA is a land of opportunity, but breaking into this market is tough. read on to learn how to open a company in the USA as a non-resident.
1. Choose Your Company Structure
The first step in opening a business in the U.S. is to decide which business structure suits you best. The business structure you settle on will influence many other things, including taxes, risks involved, and day-to-day operations.
It is important to understand each business type so you can make the right choice depending on your business goals. There are four company structures that you can choose from, these include, LLC, C-Corporation, S-Corporation, and sole proprietorship. S-Corporation is only recommended to U.S. citizens.
These business types get taxed differently so it is wise you get tax advice from an expert before you make a choice.
LLC – the Best Choice for Non-U.S. Residents
For non-US residents, LLC is the most recommended type of business to start in the USA. The advantage of LLC is that it protects your personal assets from business lawsuits and debts.
This means that should anything happen to your business, your personal assets such as a home, car, personal bank account, etc will be protected. LLCs are also easier to form and they offer cheaper taxation structures.
A C-Corporation is also good for non-U.S residents. It is preferred if you want to own your company shares and expects investors to buy shares from your company.
Investors prefer C-Corporations because they can hold shares privately without worrying about tax consequences until they decide to sell the shares at a later date.
The main disadvantage of C-Corporations is double taxation. When your company earns any income, it will be taxed, and any time you issue dividends, the shareholders (including you) will be taxed on the amounts received.
C-Corporation makes sense if you want a situation where, if you decide not to continue with the business, you can easily transfer your shares to the employees or investors of your company
A sole proprietorship is a very simple business structure and it doesn’t require any formal filings. You’re a sole proprietor if you are running a business but you haven’t registered any other kind of business.
The main drawback of this business structure is that you become personally liable should anything happen in your business. Your personal assets and liabilities are not separate from business assets and liabilities.
Looking at all the business structures above, you can see that LLC is the best option of non-US residents.
2. Get a Registered Agent
Before you register your LLC, it is a requirement that you have a Registered Agent who must have a physical address (not post box address), and the agent must be in the state where you want to open the company.
The agent will be receiving important documents on behalf of your company during normal business hours. These documents may include legal documents and official papers.
The registered agent is like a service that ensures you don’t miss any important documents that might relate to state taxes or lawsuits.
3. Register Your company
Once you have chosen the business structure and have a Registered Agent, the next step is to register your company.
The registration process requires that you do the necessary filings. This process is a little complicated and it requires you to have patience because you may end up making mistakes. It is recommended that you seek the services of a business lawyer to help you in this process; that’s the secret of how to open a company in the USA.
The incorporation process may take anywhere from 1 business day to 4 weeks. Generally, the duration depends on how long the Secretary of State takes to process your documents and also depends on which state your business is to get incorporated.
4. Get an Employer Identification Number (EIN)
It is a requirement in the USA that every business must have EIN (or Tax ID number). This number is issued by the Internal Revenue Service (IRS) and it is used to identify a business.
It is just as important as the social security number, and it is what will allow your business to operate as a legal entity in the U.S. You need the number to:
- Open a U.S. business bank account
- Apply for business permits and licenses
To ensure your EIN application becomes successful, it is recommended that you have a business lawyer to apply for it on your behalf by acting as your third-party designee.
For you to run your business smoothly, you’ll also have to:
- Open a US business bank account
- Open a business merchant account
- Get an Individual Tax Identification Number (ITIN)
Know How to Open a Company in the USA to Achieve Your Dream
Opening a company in the USA is very complicated and the biggest mistake you can make is to try to go it alone without involving a business lawyer. If you do that, you may put your personal assets at risk.
There are many people who can give information on how to open a company in the USA. Seeking the help of a lawyer will however save you a lot in terms of time, administration costs, and taxes.
Your business lawyer will assess the business plan, check the financing issues and the legal issues surrounding the type of business you want to start then give you guidance on how to go about it. Be sure to check out our page for more business tips and advice.