How to Start a Business in the USA as a Non-Resident

Can you start a business in the USA as a non-resident?

Here's the good news. You can most certainly start a business in the U.S. as a non-resident. You don't have to become a U.S. citizen, nor do you need a Social Security number. And there are plenty of benefits to forming a legal business entity in the USA, including:

• Increased credibility. When you formally register your business in the U.S., you show you are committed to your U.S. company. This added professionalism makes it easier to attract customers, partners, and potential employees.
• Personal liability protection. A separate legal entity distinguishes between you, the person, and the business while protecting your personal assets from business debts and liabilities.
• Easier to access capital. The U.S. has one of the world's leading investment and capital ecosystems. With a U.S. business, it will be easier for you to access venture capital firms, angel investors, and financial institutions to raise funds. 

Follow our listed steps so your business is truly able to benefit from the robust U.S. economy and its business-friendly environment.

How to open a company in the United States

In the United States, the business formation process for a non-resident is similar to that of a U.S. citizen or permanent resident. Here's how it works.

Step 1: Decide which state to form your business

A U.S. business needs to be registered in a specific state. This doesn't happen at the federal level. Each U.S. state and territory comes with its own advantages and disadvantages, and therefore, the question becomes, "How do you choose the right state for your business?" 

Consider the following factors as you decide on a state to conduct business in:

• Where will most of the business activities occur? If most of your business's activities and customers are concentrated in one state, it makes the most sense to register your business there.
• State's formation costs and process. Some states have higher filing fees and more cumbersome corporation and LLC registration processes.
• State's tax burden. Likewise, there are states that have a higher tax burden compared to states like Florida, Nevada, and Texas, which levy no state income tax.
• State's regulatory and entrepreneurial environment. Consider how quickly business-related legal issues are settled and how business-friendly the state laws are. Delaware, Nevada, Wyoming, and Florida are popular choices among foreign entrepreneurs for their pro-business laws and ease of formation.

Step 2: Choose a business structure

While you have the ability to start a business in an industry of your liking, foreign nationals can only form one of two legal business structures.

• Limited liability company. Unlike sole proprietorships, an LLC provides legal protection. This means that your personal assets are safe from any business liabilities. An LLC is also easier to form and has fewer compliance requirements than a corporation. With an LLC, the business owner can opt for the profits and losses to be passed through and reported on their individual tax returns.
• C corporation. A C corporation also offers liability protection, but it is far more difficult to set up and entails more stringent paperwork and deadlines. This type of business structure is also prone to double taxation. This means that the corporation is first taxed on profits, and then whatever is passed on to the owners—the company's shareholders—is again taxed as personal income or dividends.

The business structure you choose can significantly impact your personal liability, how you manage your business, the amount of taxes you'll pay, and how you can secure financing. A business lawyer can guide you in picking the right business structure for your U.S. venture.

Step 3: Pick a unique business name

Your company's name is an extension of your business, and it needs to be memorable, legally compliant, and available. State governments have varying naming rules, but some common ones are:

• The name should have an appropriate business identifier. If you are forming a corporation, then the name must include "Inc." or "Corp."
• The name should be easily distinguishable from existing names registered with the state.
• The name should not impersonate a state or federal government body, like the FBI or Federal Bank.

LegalZoom's AI-powered business name generator can help you brainstorm creative and easy-to-spell business names that satisfy state naming rules. Remember to go through your state government's business name database to see the selected name’s availability. For further peace of mind, you can also check the U.S. Patent and Trademark Office's trademark database to confirm that your chosen name doesn't infringe on any business at the national level. 

Also, if you wish to operate your U.S.-based business under a different name other than the legally registered name, then you must file for a "Doing Business As" certificate with your respective state government. 

Step 4: Hire a registered agent

Every business entity in the U.S. must appoint a registered agent. The registered agent is in charge of receiving legal documents such as service of process, tax notifications, and other correspondence from the state. The majority of states require the agent to be at least 18 years of age and have a physical address in the state of formation, which ensures compliance with state regulations. As a foreign national, it's best to hire a registered agent service to fulfill this requirement so you don’t have to physically be in the U.S. to run your business. 

Step 5: File your formation documents

Once you have a name, a registered agent, and an operating agreement, you get to the "main" part—filing your paperwork. Depending on your choice of business structure, you will need to file either articles of organization or articles of incorporation.

Both forms generally require you to provide the following details:

• Legal business name, address, and structure
• Purpose and duration of business
• Registered agent name and contact information
• Name of members or board of directors

The filing fees differ by state, and the selected business structure, and most states provide an online filing option. While you can complete the paperwork yourself, working with a professional can further streamline the process and minimize the likelihood of rejection from the state. 

Step 6: Get an employer identification number (EIN)

While you don't need a Social Security number (SSN) to form a U.S. business, you most certainly need an EIN. This nine-digit federal taxpayer identification number, issued by the Internal Revenue Service (IRS), is a must-have for all foreigners seeking to start a new business in the United States. An EIN lets you do everything you need to grow your business—whether that's hiring employees, paying taxes, or establishing business credit.

To get an EIN, you need to:

• Gather essential information. You will need your complete legal name and address, and your business's legal name and address. You will also need to provide a reason for applying for an EIN (starting a business or opening a business bank account).
• Complete IRS Form SS-4. Online filing is not an option for foreigners with no legal residence or principal place of business in the U.S. You have to mail, fax, or call in the completed application. For international applicants, calling the IRS at 267-941-1099 during business hours is usually the quickest way to get an EIN.

LegalZoom makes it easier to get an EIN as a foreigner. We will accurately fill out your paperwork so any chance of delays or rejection is minimized, and we will get back to you with an EIN confirmation letter.

Step 7: Open a business bank account

With your EIN and LLC or C corp formation documents in your hand, you can open a business bank account. Not only is this a good bookkeeping practice that reduces tax confusion, but a dedicated business bank account for your LLC or C corporation further strengthens the distinction between you and the business.

Each bank has its own fee structure, minimum balance requirements, and commercial banking service offerings for foreign nationals. If you expect to conduct international money transfers or currency exchange, make sure your selected bank is equipped to handle those needs. 

Step 8: Secure necessary licenses and permits

Even as a non-resident business owner, you need to make sure your business is running with the appropriate licenses and permits. Depending on your business type, size, and industry, you may require licenses and permits from the federal, state, local, or even all three levels.

Some common licenses you can expect to apply for are:

• General business license. Some states require all businesses within the state to have a general business license that gives them the legal authority to operate.
• Seller's permit. This license, sometimes known as a sales tax license, allows you to collect and pay sales tax to the state.
• Professional license. Certain professions like doctors, engineers, architects, and accountants need a professional license to operate within a certain jurisdiction. These licenses are often procured at the state level.
• Health permit. These are required by businesses that offer food and drinks. Health permits are typically issued by the city or county health department.

LegalZoom's Business License Service simplifies the process of identifying and maintaining the correct licenses and permits. 

Considerations for foreign business owners

Overall, the business formation process in the United States is similar for U.S. residents and non-residents. However, foreign business owners need to pay extra attention to a few more areas to ensure the smooth setup and operations of their business. 

What business structures can be used by foreign entrepreneurs?

Currently, foreign entrepreneurs can form either an LLC or a C corporation in the U.S. A foreign-owned LLC in the U.S. can't opt to file taxes as an S corporation. As per the IRS, the owner of an S corp must be a U.S. citizen or permanent resident.

A startup business attorney can guide you in choosing between a limited liability company and a corporation.

Do you need a visa to start a business in the U.S.?

No, you don't technically need a visa to start a business in the U.S. You will, however, need a visa if you plan to visit the U.S. to check on your business or if you decide to actively manage and work at your U.S. business.

The following visa options are available to foreign residents who own a U.S. business.

• B-1 business visa. This is a short-term visa that allows you to visit the U.S. to negotiate deals with partners, secure funds, or attend meetings for the business. But, you can't work for your business or sign business contracts on this visa.
• EB-5 visa. You can qualify for an EB-5 visa if you have invested at least $1 million ($800,000 if the business is in a targeted employment area) in your U.S. business and created 10 or more jobs.
• E-2 visa. An E-2 visa is a popular choice for foreign entrepreneurs as it has lower monetary investment criteria. However, this visa type is only available to citizens of countries that the U.S. has a treaty with.

An immigration lawyer can guide you on which visa will be required based on your needs.

How much does it cost to register a company in the USA?

Registration costs vary by state and business structure. At the very minimum, you have to pay your LLC or corporation's filing fees with the state. A limited liability company's filing fees range from $35-$500. A corporation's filing fees vary between $45-$300. You will also need to hire a registered agent if you don't have a physical location in the state you wish to register your business entity in. Professional registered agent services charge between $100-$300 per year.

What are the tax obligations for a non-resident owner of a U.S. business?

All business owners have to pay taxes, and as a foreign national, things can get complicated. Your U.S. business may be subjected to:

• Federal taxes like income and payroll taxes
• State personal income taxes
• State franchise taxes

What differs is that non-resident owners of U.S. businesses typically only have to pay federal and state taxes on income earned in the U.S. A tax attorney can help you identify and fill the appropriate tax forms, like Form 5472, with the IRS and the state where your business operates. 

Non-U.S. citizens should also review any tax treaties between their home country and the U.S. to see if they are subject to double taxation and other compliance requirements.

There may be exceptions to your business in the U.S.; therefore, it's always best to check with a business lawyer or tax specialist about your tax obligations. 

Who needs to file Form BE-13?

Foreign nationals who own at least 10% of a new business or acquire 10% or more ownership interest in an existing business in the United States are mandated to complete Form BE-13 with the Bureau of Economic Analysis (BEA). You have 45 days from the new business's creation (the date your company was registered with the state government) to submit this form. Non-compliance can result in penalties.

FAQs

Can non-citizens get loans to start a business in the U.S.?

Yes, non-U.S. citizens can get business loans to start a U.S. company, but they have to check the eligibility requirements set forth by the lender. The Small Business Administration (SBA) provides loans to non-citizens who own at least 51% of the U.S. business and are lawfully living in the U.S. by having a work visa or permanent residency. Reach out to your local Certified Development Company or find a loan through SBA's Lender Match program.

Non-U.S. citizens can also qualify for personal loans to start a business, but again, eligibility and approval depend on the lender. Lenders such as SoFi, Upgrade, and Oportun are known for providing loans to non-U.S. citizens who are lawful residents, such as green card holders and those on valid visas. 

Which state should I register my business in?

This really comes down to where you'll primarily be conducting business. That said, Delaware is generally favored by foreign nationals to start a business because the state has progressive business laws and doesn't require a physical address in the state for foreign businesses. Also, the state doesn't charge any state income tax for businesses that don't operate within the state. So, if you operate a completely off-shore or online business, forming in Delaware could be financially advantageous.

What are the requirements to open a company in the USA?

You need to pick a state, select a business structure and business name, and appoint a registered agent before you can form a company in the United States. LegalZoom’s formation services can reduce your workload and make the process smoother. 

How long does it take to form a business in the U.S.?

Processing times vary by state. You can check your state's Secretary of State website for current processing times. Some states offer the option for expedited processing to speed things up, but this service comes at an extra cost. 

How can a non-resident maintain a business in the U.S.?

You need to meet your state's compliance and tax requirements to maintain your LLC or C corp in the United States. Most states require registered business entities to file an annual report and pay the appropriate fees to remain in good standing.