When non-residents start a business in the United States

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Can non-US residents start a business here in the US?

While the answer to my question is definitely a resounding “yes”, few foreigners realize it, especially those from the middle class. They tend to think that in order to start a business here, they have to be US citizens.

Were you also thinking of the same thing? Did you also want to open a business here in the United States but ultimately didn’t pursue your desire because you thought you had to be a U.S. citizen?

If you answered “yes” then it is high time you pulled yourself together. I am going to share with you four very important points that you should take into account when starting a business here.

Before that, let me share with you some of the benefits that you can enjoy when starting a business in the USA:

  • Tax Benefits: The possibility that US-source income will be taxed less.
  • Ease of selling in the US market (from a tax and customs point of view): access to US investors, venture capital financing and public markets.
  • Improved corporate reputation with customers in the United States and other parts of the world.
  • When the company goes public, it can be listed on the US stock market.
  • Liability protection.

The warning

While non-residents are expected to go through the same process as those who live in the United States when setting up a business, there are conditions and limitations specific to foreigners that you should be aware of. For example, setting up a bank account, obtaining a visa, and international tax regulations are three of the procedures that non-residents find the most complicated.

Now that you’ve got a rough idea of ​​the good (and bad) things to expect, let’s get right to the nitty-gritty. The four points you need to consider when opening a business here in the United States are:

1. Company structure

Foreigners can form either a Limited Liability Company (LLC) or a Company (C). However, S Company is for US citizens or residents only).

Richard Hartnig, tax advisor and lawyer for Schwartz International, quoted in a Investopedia article, says that a C company is attractive to foreign nationals despite the double taxation of its profits; at the corporate level and as dividends to shareholders.

Miguel de Vega Rodrigo, a serial entrepreneur who has successfully established businesses in the United States as a non-resident also recommends choosing a C corporation for the following reasons:

  • C companies are more scalable and can be made public.
  • If you want your business funded, investors prefer a C company.

2. Citizenship by investment

Citizenship by investmentIs when an individual acquires the nationality of another country by investing a large sum of money in that country. Many countries offer this program, including Austria, Cyprus and Russia. In the United States, a form of citizenship by investment is also available, which is an option to consider if you plan to eventually make a living and that of your family in the United States. “Green card by investmentAs the United States Citizenship and Immigration Services (USCIS) call it.

Foreign investors who invest $ 1 million or a minimum of $ 500,000 in areas of high unemployment may be granted conditional permanent residence by USCIS, along with their spouses and unmarried children under the age of 21. . A maximum of 10,000 visas per fiscal year can be granted to qualified entrepreneurs.

3. Business registration

American companies are incorporated at the state level rather than the federal level. Delaware and Nevada are known as low load states, which makes them extremely attractive to many foreign investors.

However, Hartnig cautions that incorporating a business in either of these jurisdictions does not exempt you from business obligations in high-cost states like California. Therefore, you had better register your business in the state that you plan to dominate. Otherwise, Delaware comes highly recommended. Next is Nevada.

Besides the low tax rates, de Vega Rodrigo suggests integrating in Delaware for the following reasons:

  • No need for a Delaware bank account or a Delaware physical address
  • No state income tax is imposed on Delaware corporations not operating in the state
  • Delaware corporate laws are fair, consistent and well understood
  • Investors prefer Delaware entities because, unlike California, common shareholders cannot block a merger, among other things.
  • Delaware laws provide generous protection for directors, including compensation for losses resulting from lawsuit

Your US business can be registered online. There are online business start-up specialists who can function as your registered agent to make the process easier.

4. Bank accounts

Although not required during the business registration phase, an Employer Identification Number (EIN) is required to open a bank account, obtain a business license, obtain loans, hire employees. and paying taxes, a necessity, therefore, in the overall scheme of things.

An EIN can be requested directly from the IRS for free, but if you’d rather not do it yourself or find the forms and procedure confusing, look for a business start-up specialist who can help you with the process. process. Before you embark on starting a business in the United States, make sure that you can actually open a bank account in the United States. While it looks simple on paper, as mentioned earlier, this process can be quite tricky.

The Patriot Act, in response to the September 11 attacks, made it difficult for foreigners to open a US bank account. It requires banks to verify the identity of anyone opening an account with them, and that these people pass all mandatory anti-money laundering and anti-terrorism checks.

This requirement can be met in several ways:

  • Obtain a visitor visa, travel to the United States, visit the bank of your choice and open an account personally.
  • Visit a U.S. bank with a local branch in your home country for identity verification, if their policies allow.
  • Use third-party services to help you create an account.

Conclusion

While not necessarily a walk in the park, non-U.S. Residents can legally form U.S. corporations and even gain permanent resident status by making substantial financial contributions to the U.S. economy.

If this is a route you are considering taking, it helps to know your options and any obstacles you might have to overcome before taking a big step forward.

Disclaimer: None of the above information constitutes legal advice. Please consult a lawyer, immigration lawyer or tax lawyer, etc. (depending on the type of legal advice you need).

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