Key Summary
- As a non-citizen, you are able to start a business or subsidiary arm of an overseas business in the USA without a visa.
- Consider the state you intend to start your business in, popular choices include Delaware and Nevada.
- You will need to obtain a TIN to start a business in the US.
- As a non-citizen, you will need to appoint a registered agent to handle certain business affairs, such as receiving official communications and fulfilling legal obligations.
- It is necessary to create a business bank account and maintain company compliance to ensure success.
Steps to Starting a Business in the USA
You’ll likely know that, even as a foreigner, it is possible to start a business in the USA. Here’s our expert step-by-step guide on how to work your way through the process in a timely, efficient manner.
1. Visa Requirements
This first section may not be applicable to all non-citizens planing to start a business in the USA, but it is definitely worth a read-through so you have all the facts.
Non-citizens are able to start a business in the US without a visa, if they don’t plan to reside in the country. In most cases, you can work with no visa and encounter no issues.
If you plan to spend some time in the USA working on your business during the set up period, or if you intend to hold meetings, negotiate, sign contracts, and hire people, you would likely need a B1 visa. The good news is, you wouldn’t need to apply for a green card to carry out these business tasks.
The United States offers various visa options for foreign nationals so they can open a business in the USA, such as the E-2 Treaty Investor Visa and the EB-5 Immigrant Investor Program. Each has unique requirements and benefits, tailored to facilitate and encourage business activities by non-residents.
Common Non-Citizen Business Visas
Here we’ve detailed some of the most common visa options for non citizens working in America:
| Pathway | Startup Framework | Business Operations in the U.S. | Validity Period |
|---|---|---|---|
| IER (International Entrepreneur Rule) | The startup must be a legally established and operational entity in the United States, formed within the past five years before applying. It should demonstrate significant potential for rapid growth and employment generation. | You need a significant ownership stake, defined by USCIS as a minimum of 10% for initial parole and 5% for subsequent re-parole. | Initially up to 30 months, with the option to request an additional period of up to 30 months. |
| B-1 (Temporary Business Visitor) | Suitable if the business is yet to be set up. | Activities allowed include securing funding or office space, contract negotiations, or attending specific business meetings related to establishing a new venture. Direct work for or managing an established U.S. business is not permitted. | Up to 6 months for the first stay; extensions possible for another 6 months. The maximum duration per visit under B-1 status is one year. |
| E-2 (Treaty Investors) | Requires a significant capital investment with at least 50% ownership or operational control. The business cannot be marginal, meaning it must be capable of generating sufficient income within five years. | Your role involves developing and directing the enterprise. | Initial approval for two years, extendable in two-year increments without a maximum stay limit. |
| H-1B Visa (Specialized Occupations) | Must have a higher education degree or its equivalent; The job must be in a specialty occupation | Work authorization for up to 6 years; Spouse and children under 21 can accompany; Possible path to Green Card | Employer submits Form I-129; Subject to annual cap and lottery system; If approved, complete DS-160 and attend a visa interview if outside the U.S. |
2. Choosing the Right Business Structure
As a non-citizen starting a business in the USA, you only have two business structures available to you. These are Limited Liability Company (LLC) or Corporation.
LLCs offer simplicity and flexibility, with limited personal liability, making them a popular choice. Corporations, particularly C-corporations, provide opportunities for raising capital but come with more complex tax and regulatory requirements.
Impact of Business Structure
Business structure significantly influences tax obligations and legal liabilities. LLCs often benefit from pass-through taxation, while corporations are subject to corporate taxes.
Non-citizens must also consider their structure’s impact on their visa status and ability to remain compliant with US immigration laws.
S-Corporations
When researching business structures in the US, you may come across S-Corporations. These are a popular choice amongst Americans due to their tax benefits. Unfortunately, as a non-citizen, you are unable to start an S-Corp.
This is because the IRS requires all shareholders to be US citizens or permanent residents (with a green card). The restrictions are due to the specific tax structure of S-Corporations, where income is passed through to individual shareholders and taxed at personal income tax rates.
Confirm a Business Name
Once you have picked your business structure, you should also finalize a name for the business. The name you pick cannot already be in use with another business. Most US states
Once you have chosen a structure, you need to confirm your business name. The name you choose must not have already been used. Head to the Secretary of State website in your chosen business state to check that it is available. Alternatively, you could verify this with the US Patent and Trademark Office.
3. Selecting a State to Start Your Business
Choosing the right state for your business in the U.S. involves balancing factors such as tax policies, legal environment, market accessibility, and operational costs.
Consider states with business-friendly policies, a skilled workforce, and those offering incentives for new businesses. It’s also crucial to assess the state’s quality of life and overall cost of doing business to ensure a conducive environment for growth and sustainability.
3 Popular States for Starting a Business
1. Delaware
Renowned for its pro-business stance, Delaware offers a comprehensive body of corporate law and a specialized Corporate Court that handles business disputes. With more than half of publicly traded U.S. companies registered here, it’s known for its privacy protections and favorable tax laws.
One important factor to note is that you don’t have to base your business in Delaware to register it there.
If you have started a business in another state, or country, but wish to register it in Delaware, choose an experienced registered agent who can provide you with a registered street address and make the application on your behalf.
2. Nevada
Nevada is attractive for its lack of state corporate income tax and personal income tax. The state also provides strong asset protection and privacy for business owners, making it a popular choice for entrepreneurs seeking favorable tax conditions.
There are, however, some downsides to registering your business in Nevada. They have slightly higher filing and business license fees than other states. Nevada also has a business commerce tax but this is only applicable for those with a gross revenue of $4 million or over.
3. Wyoming
Wyoming stands out for having no state corporate or personal income taxes and offering significant asset protection. Its business-friendly climate is further enhanced by low operational costs and privacy benefits for business owners.
You will, however, have limited privacy compared to other states such as Delaware which can be off-putting for those not keen to share their personal details.
4. Secure a Registered Agent
As a non-citizen of the USA, it is a requirement for all businesses that you appoint a registered agent.
This can be an individual or a company. They will serve as an official point of contact between your business and the state you register in.
Often registered agents will have different packages to suit various business needs. For example, if you require a US street address or for an EIN to be created on your behalf, companies such as us Valis International, are able to act on your behalf.
Understanding the Role of a Registered Agent
Receiving Legal Documents
They are responsible for accepting service of process, which includes any legal documents related to lawsuits, and official government communication.
Ensuring Compliance
By managing essential paperwork, the registered agent helps keep your business compliant with state regulations and deadlines, such as annual report filings and renewals.
Maintaining Privacy
For business owners, particularly those operating from home, a registered agent offers privacy since their address is listed on public records, not the business owner’s personal address.
Selecting Your Registered Agent
When choosing a registered agent, consider the following aspects:
Professional Reliability
The agent should have a proven track record of dependability and professionalism, ensuring sensitive documents are handled appropriately. Choosing someone that has first-hand experience of registering a business in the USA is also advantageous.
Consistent Availability
They must be available during standard business hours to accept documents which is crucial for meeting legal deadlines.
Location
The agent must have a physical address in the state where your business is registered, as P.O. Boxes are not acceptable.
Multi-State Operations
If your business operates in multiple states, you’ll need a registered agent in each state, or choose a service that offers multi-state coverage.
5. Register your Business
You are now ready to register your business entity within your chosen state. You should file either an Article of Incorporation (C-Corp) or Article of Organization (LLC) which tends to be completed with the Secretary of State’s office but can sometimes be done in a Business Bureau, or a Business Agency.
Whilst the information required for these filings can vary depending on the registration state, they generally include the business name and address, nature of the business and details of the registered agent. You should also provide details of any members, managers, owners, and directors.
6. Apply for a Taxpayer Identification Number
A critical step in setting up a business in the USA as a non-citizen is obtaining a Taxpayer Identification Number (TIN). This number is essential for tax purposes and is required for various business activities, including opening bank accounts, hiring employees, and complying with IRS regulations.
Understanding Taxpayer Identification Numbers
A TIN is a unique number used to identify an entity or individual in tax-related activities. As a non-citizen business owner, you may need to apply for one of the following types of TINs, depending on your circumstances:
Social Security Number (SSN)
An SSN is usually for citizens and some non-citizens with permission to work in the USA. Some non-citizens might be eligible for an SSN.
To apply for an SSN, non-citizens must have permission to work in the USA. You’ll need to complete a Form SS-5. This can be obtained from the Social Security Administration.
Employer Identification Number (EIN)
This is the most common TIN for businesses, including non-citizen-owned entities. An EIN is necessary for hiring employees, opening business bank accounts, and for business tax purposes.
Applying for an EIN can be done online through the IRS website, by mail, or by fax. The process is straightforward and free of charge. Non-citizens without an SSN can apply for an EIN by completing IRS Form SS-4 and conducting an interview with the IRS. Alternatively, for a speedy and hassle-free approach, we can obtain your EIN for you.
Individual Taxpayer Identification Number (ITIN)
For non-citizens who cannot obtain an SSN but need to comply with U.S. tax laws, an ITIN serves as their tax processing number. It’s used primarily for filing tax returns and is issued regardless of immigration status.
In many cases, this is an optional step but we would recommend doing this as a non-citizen as it makes banking easier and can also be used to form credit reporting, allowing you to apply for business credit.
To apply for an ITIN, a W-7 form needs to be completed and submitted to the IRS, along with proof of identity and foreign status.
Understand the Requirements
As a non-citizen, information on the TIN you require might feel like an overload but using a professional agent, such as Valis International, can help to relieve the stress. Registered agents are familiar with the process and will quickly identify which TIN applies to you, speeding up the process and allowing you to focus on other business aspects.
7. Set up a Bank Account
Setting up a business bank account is important when starting a business in the USA as it can help you track the income and expenditure of your business.
Required Documents for Opening a Business Bank Account
To open a business bank account in America, you will require an EIN, business formation documents, ownership agreements, a business license, and some personal ID.
Bank Selection Criteria
Choose a bank based on its fee structure.
Also, consider their online banking services and experience with international business clients. Your bank needs to understand US banking regulations and non-citizen business needs.
Benefits of a Separate Account
A dedicated business bank keeps your personal and company finances separate. This will build business credit history in the US and simplify accounting.
Opening a business bank account will streamline your financial management. It can also enhance credibility and professionalism.
8. Keep Your Business Compliant
Maintaining compliance is vital for businesses in the USA, especially for non-citizen entrepreneurs. It involves following federal, state, and local regulations, including tax laws, employment practices, and industry-specific guidelines.
Staying informed about these changing rules is essential to avoid legal issues and fines. Seeking help from legal and tax professionals is advisable to tackle complex matters. They will offer insights and support on legal aspects of running your business.
Wrapping Up
Non-citizens starting a business in the USA will find unique challenges and opportunities. Crucial success factors include choosing the right visa and business structure. Careful planning and the right resources can ensure a rewarding venture.
Are you a non-citizen looking to start a business? Register with us in Delaware today, to benefit from a pro-business state, no income tax and a quick register turnaround.
