November 7, 2017
Can Foreign Nationals Start a Business in the U.S.?
Can a foreign national individual or corporation incorporate and start a business in the U.S.? This is one of the recurring questions we get from prospective non-US entrepreneurs and corporations. The short answer is yes; U.S. laws do not impose citizenship or residency requirements when starting a business in the U.S. In fact, the U.S
Can a foreign national individual or corporation incorporate and start a business in the U.S.?
This is one of the recurring questions we get from prospective non-US entrepreneurs and corporations. The short answer is yes; U.S. laws do not impose citizenship or residency requirements when starting a business in the U.S. In fact, the U.S. legal system is very business friendly, and encourages entrepreneurship by simplifying the requirements to opening a business. However, foreign nationals must adhere to additional conditions in order to legally run a business in the U.S. This article will overview the steps non-US residents must take to start a business in the U.S.
Step 1: Choose a Business Entity
There are two types of corporate entities a foreign national can incorporate in the U.S.: a Limited Liability Company (LLC), or a Corporation.
Most foreign entrepreneurs choose to form their business as a corporation because it is easier to raise capital as a corporation, and you are subjected to less auditing by the IRS (U.S. tax services). However, corporations are subjected to a double taxation: the revenue is taxed once it is earned at the corporate level, and again when the shareholder receives it in the form of a dividend.
Choosing to incorporate as an LLC is a good option for you if you are risk averse. In an LLC, your legal liability is limited to the assets you invest in the company. You cannot be held personally liable for corporate debts.
We highly recommend seeking the help of a tax specialist in the U.S., and in your country, to help you choose the best entity set-up for your business. Your choice will have an impact on your company registration requirements, taxes incurred, and legal liability.
Step 2: Choose Your State of Incorporation
In the U.S., many companies incorporate their entity in Delaware or Nevada because both states are business friendly jurisdictions. Delaware corporate law offers businesses the flexibility to organize themselves, and choose bylaws. In addition, there is no state income tax on corporations in Delaware, and it is not required for corporations to maintain a bank account or a local physical address in the state. However, you should adopt a more nuanced approach when deciding where to incorporate your business.
It is good practice to incorporate the business in the state in which the daily activity of the business will take place. If your business will not operate primarily in one state, then Delaware or Nevada should be your go to option.
Step 3: Register Your Business
Step three essentially provides your business with “vitals,” and general identification components. When registering the company, you will be able to apply for an Employer Identification Number (EIN) which will then allow you to conduct daily acts of corporate management such as hiring employees, opening a bank account, paying corporate taxes, etc.
To register the company, you will need to hire or name an agent for service of process: this person will receive lawsuits and other documents on behalf of your corporation.
You should then fill the certificate of incorporation with the secretary of state, or any other applicable state agencies..
Step 4: Apply for a Visa (for work permit)
Starting a business in the U.S. as a non-US resident does not automatically provide you with work authorization. If you are a foreign national who is not a green card holder, or does not already possess a work permit, you still need to go through a visa clearance to work legally in the U.S.
There are a few visas options available to foreign nationals entrepreneurs in the U.S.:
The B-1 Visa: this visa does not allow you to work in the U.S., but is useful if you wish to temporarily enter the U.S. for business activities such as meetings with business partners, negotiating contracts, or attending a conference that will support you to start a business in the U.S.
The E-2 Visa is the closest U.S. version of a startup visa. This visa applies to foreign entrepreneurs from a country with which the U.S. has a treaty of trade and commerce. If awarded, this visa enables an individual to temporarily enter the U.S. and set up a corporation based on a “substantial investment” (at least $100,000) he or she has invested in a bona fide company.
The L-1A Visa allows managers or executives of an international company to relocate temporarily to the U.S, in order to manage a subsidiary, branch, or other affiliate company, or to open a branch of the company in the U.S.
The EB-5 Visa, also known as the “green card visa,” allows foreign entrepreneurs who invest at least $500,000 in a business, that will result in the creation of at least 10 full times jobs for U.S. workers, to immigrate to and start a business in the U.S.
Do you need to begin the process of immigration to start a business in the U.S.? Are you unsure if your country has a treaty of trade and commerce with the US? Hiring a lawyer to assist in immigrating to the US for business purposes, or setting up a foreign national corporation to conduct business in the US, is critical to the success of the transition. Prewitt Law Firm, founded by an immigrant, is here to support you. Call +1 646 583 1206 or send us an email at @ firstname.lastname@example.org to begin the process of your transition to successfully conducting business in the United States.