The popular American dream of owning a business in the United States is not restricted to U.S. citizens only. And there is no need for residency or citizenship to set up your small business in the United States.
Most start-up business entrepreneurs today aim to have a stable and solid base in the United States. It’s interesting to note that US incorporation is simple but might appear challenging when you haven’t spoken to the people who have been successful at it.
Non-US citizens need to follow a few processes and rules to make this dream a reality. The steps are almost the same that a citizen in the United States should implement to establish a business in the country.
In this article, we will list the steps and other crucial facts to know for non-US entrepreneurs to accomplish their business goals.
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Keep the Essential Federal Approvals in Place
Usually, foreigners aren’t required to have a green card to own a business. Neither do they need to get listed as a director or corporate officer of a U.S. company and earn profits from it as long as they pay their taxes.
However, to work in a business that non-US entrepreneurs have invested in, they should have sanctions from the U.S.
government either through an EB-5 Visa or anE-2 Treaty Investor Visa.
The E-2 classification enables non-immigrant entrepreneurs to stay in the United States for almost two years. Extended stays can be granted in two-year increments.
While there aren’t any restrictions on the extensions that you can request, E-2 investors should attempt to move out of the United States when their E-2 status expires.
On the other hand, the EB-5 Immigrant Investor Program derives its name from the employment-based 5th preference visa that participants get if they are eligible.
It is available for foreign entrepreneurs who invest close to $1.8 million, or approximately $900,000 if the person is in the targeted employment area and creates 10 new full-time employment opportunities.
Select The Type of Business Entity
When thinking aboutcompany incorporation in the US, there might be a few limitations of business structures that foreign entrepreneurs might encounter for their concerned U.S. companies.
For instance, non-residents might not be able to create an S Corporation, as every shareholder is required to be a U.S. citizen.
Typically, the LLC (Limited Liability Company) and C Corporation business entity types are selected, as they provide personal liability security for the business owners and provide tax flexibility.
To create either of the entities, the non-resident entrepreneur needs to file business registration paperwork in states where the business will be functional.
Contact a Registered Agent
C Corporations and LLCs must appoint a registered agent in every state where formation documents have been filed to accept service of the process on the company’s behalf.
Simply put, the term “service of process” indicates legal notices and correspondence from the Secretary of State and various other government notifications.
The need for registered agents differs from one state to another. Usually, the agent needs to be more than 18 years old, possess a street address in the state, and be present during normal business hours.
USA Corporate Services states that today there are registered agents helping non-resident entrepreneurs set up businesses in the US.
These agents work with a team approach and suggest the services of accountants and lawyers as and when needed by non-US entrepreneurs.
Get an Employer Identification Number (EIN)
The IRS states that every U.S. business should possess a TIN (Taxpayer Identification Number). For LLCs and corporations, it should be an EIN.
However, since mid-2019, the IRS has allowed individuals with an ITIN (Individual Taxpayer Identification Number) or SSN (Social Security Number) to be the “responsible party” for applying for an EIN. The entities might not use their current EINs to obtain more of it.
Since foreign entrepreneurs don’t have an SSN, it is a smart decision to apply for an ITIN. Also, the IRS form (W-7) needs documentation that confirms a person’s identity and the link with the foreign country. Once they get the ITIN, the foreign entrepreneurs can ask for their EIN by using Form SS-4.
Get the Necessary Permits and Licenses
Similar to any other business, companies owned by non-US entrepreneurs should apply for permits andlicenses required for their business activities, industry types, and several jurisdictions where they function.
It is necessary to check with the county clerk, local government authorities, and Secretary of State to decide the business requirements.
Hence, as a non-US entrepreneur, you might have some extra work and probable challenges. However, all these challenges are not impossible to address and resolve when you try to get help from trusted professionals.
They can guide you through the process correctly. The steps mentioned above are some of the essential aspects of starting your business in the US when you don’t belong there.