How to Successfully Start Your Own Company as a Foreigner in America?

Recent years have seen a rapid rise in the number of new businesses and entrepreneurial ventures springing up in the United States. It should come as no surprise that the US has cemented its reputation as the go-to place for business owners to start and grow their businesses. That is manifested in the American belief that anyone, regardless of their gender, race, ethnicity, can climb up the ladder of success with hard work, perseverance, and sacrifice, the true definition of the American dream.

Starting a business in the US can be an exciting venture, but also be overwhelming for a foreigner at first glance. The dynamic political and economic environment of the US can also be a demoralizing factor for many entrepreneurs. Despite these concerns, it is safe to say that the US continues to top the list of countries that encourages foreign entrepreneurs to succeed with its business-friendly policies.

If you are a foreigner looking to start your own business in the US, you have come to the right place. In this guide, we’ll provide you a step-by-step breakdown of the process of starting your own company as a foreigner. 

Choosing Your Company Structure

Currently, non-residents are allowed to open only two types of corporate entities, and Liability Limited Company (LLC) or a Corporation (C-Corp). The S corporation is exclusive to U.S. nationals. only

For most non-residents, setting up a C-Corp is usually the preferred option since it allows them to enjoy perks like an unlimited number of shareholders. This feature makes the C-Corp the most lucrative business structure for foreign investors. On top of that, the C-Corp provides business owners a greater degree of protection from the intrusion and fiddling of the Internal Revenue Service. However, this protection is afforded only at the cost of double taxation, first at the corporate level and then as dividends to shareholders. To limit tax spending, most companies hire financial planners to get rid of double taxation.   

On the contrary, the often overlooked LLC can also be a lucrative option for foreigners looking to set up their own company in the US. Its most distinct feature is the protection it provides to business owners. The term Limited Liability indicates that members of an LLC are exempt from personal liability for any decisions made on behalf of the company. 

That means that its owners and shareholders have legal protection and are not responsible for any debts and financial losses.

Besides, an LLC is legally permitted to share its profits among its members. These members get taxed on their income and not the company as a whole. 

Choosing a State to Register the Business

The next step is to select the ideal location for your business. For a non-citizen, registering a business in the US to make it a distinct legal entity comes with its own set of complexities. The most logical approach is to register your company in the state where you plan to conduct your business dealings. Conversely, online businesses have the luxury to opt for any state in the US to register their company. That is awesome, right.

But you must be wondering how do you pick one out of the fifty US states to register your business? We have compiled a list of features for you to consider before choosing your final pick.

  • Does the state require US citizenship?
  • How much does it charge for its Annual report fee?
  • How much privacy does it provide to its registered businesses?
  • Is the state foreigner-friendly?
  • What are its state, personal, corporate, and capital gains tax laws?

Keeping in mind all the factors stated above, it is safe to say that the three most business-friendly states in the US are Nevada, Delaware, and Wyoming. 

The Process of Registering Your Company

The registration process varies from state to state and is also dependent on the type of company you are establishing: a C-Corp or LLC. In this guide, we have explained the registration process of the state of Delaware since it provides an effective model for many other states as well: 

  1. Choose a unique name for your company.
  2. Designate a named company agent who can collect legal documents on the company’s behalf.
  3. Fill out a one-page certificate of incorporation. This document contains the name of the company. It also includes the name and address of the company agent, the value of the company’s authorized shares, and the name and address of the incorporator. 
  4. The next step is to pay your company’s annual franchise tax, which can range anywhere between $150 – $200.
  5. Finally, procure an Employer Identification Number (EIN), and you are all set to go. 

The USA is a land of plenty. As one of the biggest and most integrated markets in the world, it is a good place for many businesses to flourish. Deciding to set up up your business in America can prove to be a lucrative venture. However, the decision should not be made hastily or without due preparation. It is also recommended you consult experts before delving right into the registration process to make the process as smooth as possible.

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