As a foreigner, starting a business in the United States might be a complex process, but the country makes it simple to register your firm and get it up and running. To conduct business in the United States, you must learn English. Still, additional steps must be taken, such as applying for an Employer Identification Number (EIN) and deciding what sort of company you want to be.
Can a Foreigner Open a Business in the United States?
Yes, without a doubt. This is just as applicable to large corporations as small businesses. Even though it's difficult to estimate the exact percentage of US firms owned by foreigners, several foreign-owned US businesses operate in the United States and overseas. As a foreigner, you have to go through a few more hoops, although they aren't very demanding, as you'll see below. Only US residents may create S-Corps, but as you'll see below, that's not an issue for the vast majority of us.
Your Company's Organizational Structure
Even though its profits are taxed twice, once as a corporate income tax, and then as dividends paid out to shareholders, Schwartz International tax advisor and lawyer Richard Hartnig says that most foreign nationals choose to form a C corporation. THEREFORE, a C corporation can expand by issuing an unlimited number of shares and is more appealing to outside investors.
As a publicly-traded company shareholder, your dividends are likely smaller than those paid to other shareholders. Because real estate is a prohibited asset in the United States, the parent firm will not be required to pay capital gains taxes on the sale of its American subsidiary.
Register Your Company In A State
Where a firm should be located should be determined by the nature of its operations. Suppose a single state has a monopoly on the market. In that case, it's advisable to incorporate there rather than registering in Nevada or Delaware, two known jurisdictions for their low-cost company regulations. Delaware and Nevada are the most popular options for incorporation for businesses that will not be centered in a single state.
Obtain a Federal Tax Identification Number (EIN)
To open a bank account, pay taxes, or obtain a company license, you need an Employer Identification Number (EIN). To get an EIN, a US company's principal officer (referred to by the IRS as the "responsible party") must first obtain a separate Taxpayer Identification Number from the agency. If this is not the case, it must apply for an EIN online by mail or FAX and enter "foreign/none" in the Taxpayer Identification Number field.
Why Do Foreigners Start Businesses in the US?
Many people from all walks of life have reached out to me since I published my article on where to incorporate an internet business if you can't do it in your native country. Here are some of the most popular reasons people provide for starting a business in the United States rather than in their own country.
Banking
Low-cost, bank account with rapid transactions to virtually any place and a stable currency. There's a lot to enjoy about US banking, even if it's not ideal. Most digital banking products and rewards credit cards are based in the United States.
Fees
If you're from a place where starting a business is inexpensive and straightforward, you may not give this much attention. Every time you want to form a new company or modify the one you've already established, you'll be hit with additional costs. My acquaintance, for example, had grand plans to open a tourist firm in Spain. There would be a €140,000 registration charge and a bond deposit of €180,000 for the start-up firm.
Reputation
Someone from Nigeria got in touch with me recently. Using his digital agency, he creates and distributes content for other companies. This has cost him more money in missed sales than he'd care to admit, despite the quality of his service. Through his Wyoming LLC (Limited Liability Company), he may now take advantage of the American business reputation and trust.
Payment Processing
Meanwhile, a colleague in Nepal has been hard at work on implementing an online software application. Locally, they can't track down payment processing that's both low-cost and straightforward to incorporate. They may use Stripe, which is widely regarded as the gold standard in payment processing because they transact with a US corporation.
The Ease of Use
As a company owner in certain countries, you are expected to spend a significant amount of time filling out forms. Getting papers done in a language other than your own may be a substantial hassle if you don't speak the original tongue. To run a US LLC in Wyoming as a non-resident, non-citizen, you're unlikely to spend more than a few days a year thinking about your entire operational organization.
Taxes
A US LLC may be beneficial if you live in a low-tax nation like many online entrepreneurs. Instead, it should be paid on a per-capita basis by every individual in the country. Having more legal deductions may also be advantageous. Although they may make a few dollars from their business, many people find that their firm provides them with several perks, which allows them to pay less in taxes.
The Verdict
Set up a domestic corporation in the United States if you're doing business here. The laws for non-citizens might be more complicated than for citizens, so get advice from tax law specialists in both your home country and the United States before making a move.
