People travel to the USA with a mindset that non-citizens have to get a circular job instead of putting their expertise to practice by starting a business
In spite of being a foreign citizen, opening a company in America may be the best business decision you’ll ever take.
The US is a perfect place for businesses/companies aiming at explosive growth and a great base camp to conquer the world.
The U.S.A has the largest and most sophisticated economy in the world, it is a paradise for startups and tech companies, with massive venture capital ready to back promising businesses.
So, if you are ready to start a business, here is a full guide on how to start a business in the U.S. For non-citizens. The table of contents provided below will give you an overview.
Facts About USA
According to Wikipedia, the United States of America (USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America.
It consists of 50 states, a federal district, five major self-governing territories, 326 Indian reservations, and some minor possessions
The United States is in many ways a nation like no other. It is the third-largest country in the world by landmass – nearly as big as the entire continent of Europe.
The United States is the country with the greatest number of highly wealthy individuals, but overall its residents are not the richest in the world and have the largest economy in the world.
The US economy is connected to the country’s enormous population, technological innovation, high consumer spending, high average incomes, as well as a moderate unemployment rate.
According to the USDA, non-citizen investors own at least 28.3 million acres of U.S. farmland, an area about the size of Ohio.
Though the United States is home to less than 5% of the world’s population, it accounts for approximately 25% of global economic output.
According to Forbes, out of the 2000 world’s largest companies, 575 are U.S.based. China and its special administrative region of Hong Kong are home to 309 of the 2,000 biggest businesses.
Read this: How to Start A Business In South Carolina In 2022: The Ultimate Guide, Step-by-Step
Why Do Business In the USA for Non-Citizens?
A lot of people wonder why Non-citizens do business in the USA? Or are non-citizens allowed to do business in the USA?
The answer is yes. As a foreign citizen, you are allowed to start up a business, and the procedure to start is the same as that of any American citizen.
Generally, America is a land of plenty. It is a good place for businesses to flourish. So, because of this a lot of foreign citizens see the USA as s a very good place to start a business.
Furthermore, there are more reasons the USA draws non-citizens to start up their businesses in the state.
First, the USA has one of the largest and most integrated markets in the world. It offers competitive tax rates.
Secondly, it gives foreign citizens access to venture capital, angel investors, and a variety of other public markets.
Most importantly, it makes it easier to get a green card. Furthermore, your business will have personal liability protection.
It enhances your company’s reputation to customers both in the U.S. and other parts of the world. Also, When your company goes public, it can be listed in the U.S. stock market.
List Of Business Opportunities For Non-Citizens In the USA
If you wish to build a business in the US as a non-citizen, here are some business opportunities
List Of Start-up Businesses That Rose From USA
Here are start-up businesses that rose from the US
What Are The Requirement To Start A Business In the USA For Non-Citizens?
Setting up a new company might feel like a major task but it really isn’t. As a foreigner, the process isn’t lightning-fast. The first time you set up a business (LLC) in the US, the entire process can take around 5 weeks.
Learning English is a basic requirement if you plan on doing business with Americans. Therefore, here are the requirements to start a business in the USA for foreign citizens
#1. Register Your LLC
To start the process you need to work with what is known as a “Registered Agent”.
You will pay your fee, give your agent 2-3 different company names, and provide some personal information (which they keep confidential) and details of your business.
Usually, registering a new LLC takes 72 hours, and the cost is $319.
#2. Get a Physical Business Address
If you don’t have one already, get yourself a business address in the USA.
You can get away with using your registered agent’s address, but often these get flagged with banks and payment processors and cause trouble down the road.
So, the best is to sign up for a physical street address. it cost $150/year.
#3. Apply For An EIN
For you to set up a bank account, you’ll need an Employer Identification Number from the IRS.
An EIN is essentially social security or tax file number, only for business entities.
If you have an SSN or an ITIN, you can apply for one for free online. If you don’t then, it can be a bit difficult to get one. You can do so by:
- Fill in Form SS-4.
- Fax it using a virtual fax service
- Wait
If you use a fax service you should receive a return fax within 4 weeks of applying, otherwise, your virtual address service will open and scan this letter for you. Note that it cost nothing to apply.
#4. Get a Bank Account
To start a business, you need to open an account, which can be either
- Mercury: best for eCommerce, SaaS and service businesses, or
- TransferWise: best for affiliate marketing.
With a Mercury account, you will have many options with checking and savings accounts in USD.
It is great if you’re planning on using something like Profit First for your company. You also get physical and virtual debit cards on demand.
On the other hand, TransferWise gives you local accounts in Australia, Europe, Singapore, the USA, the UK, and elsewhere.
This can be helpful if your business earns income from affiliate marketing and you need local bank accounts for program payouts.
You can also open the account if you want. It is free, with a $250 bonus at Mercury.
Also, check this: How To Start A Business In Indiana In 2022: The Ultimate Guide, Step-by-Step
#5. Get a Payment Processor
If you plan to process your credit card payment, you either apply for 2Checkout or Stripe account.
Stripe gives a better rate, while 2Checkout allows you to process PayPal payments without a PayPal account.
This process will need you to jump through some hoops. But it depends on your level of paranoia and how often you travel.
You may want to set up a virtual desktop like Amazon Workspaces to apply and log in to these services. It is free to do this.
#6. Set Up A Bookkeeping System
Now that you are good to go, you will want to make sure you have some sort of accounting system in place, both for record-keeping purposes and to help you run your business well.
You can do the accounting yourself, using both Mercury and TransferWise accounts that will auto-import into Xero daily.
But to save a lot of time you can use a service like Bench or any You get a company email address for receipts and just forward anything/everything to it, and everything is magically organized.
This service cost $159/month.
Steps On How To Start A Business For Non-Citizens In the USA
Starting a U.S.-based business as a foreigner can be a long road, but the country makes it easy to register your company and open your business.
Here is a step on how to start a business for non-citizens in the USA
#1. Have the Necessary Federal Approvals in Place.
Generally, foreigners don’t need a green card to own a business or be a director of a U.S. company and earn profits from it, if they pay taxes.
However, to open a business, you must have approval from the U.S. government which is either through an E-2 Treaty Investor Visa or EB-5 Visa.
E-2 Treaty Investor Classification
To qualify for E-2 Treaty Investor classification, as a non-citizen investor, you must:
E-2 classification allows non-immigrant investors an initial stay in the U.S. of up to two years. Extended stays may be granted in up to two-year increments.
For more information about the process and required forms for E-2 classification, Click here.
EB-5 Visa Classification
They name the EB-5 Immigrant Investor Program after the employment-based fifth preference visa that participants receive if they qualify.
Eb-5 visa classification is available to foreign entrepreneurs who invest at least $1.8 million—or $900,000 if the entity is in a TEA (targeted employment area)—in a commercial enterprise and create ten new full-time jobs.
Furthermore, With an EB-5 visa, a conditional permanent residence may be granted to the investor and family members for a two-year period.
For more information about the EB-5 Visa Classification, you can click on this link.
#2. Choose a Business Entity Type
You need to choose the type of business entity you want. There are some restrictions on the business structures that foreign entrepreneurs may form for their U.S. companies.
For example, as a non-citizen, you may not form an S Corporation because each shareholder must be a U.S. citizen or permanent resident alien.
Generally, the C Corporation and the Limited Liability Company (LLC) business entity types are chosen because they offer personal liability protection for business owners and offer some tax flexibility.
So, to form either entity, an entrepreneur must file business registration paperwork in the state(s) where the business will be operated.
#3. Appoint a Registered Agent
LLCs and C Corporations must designate a registered agent in each state where it has filed formation documents to accept service of process on behalf of the company.
“Service of process” refers to legal notices, correspondence from the Secretary of State, and other official government notifications.
Here are some of the requirements of a registered agent.
#4. Obtain an EIN (Employer Identification Number)
The IRS requires all U.S. businesses to have a Taxpayer Identification Number (TIN). For corporations and LLCs, It must be an EIN.
The IRS will only allow individuals with an SSN or ITIN to be the “responsible party” on EIN applications. Entities may not use their existing EINs to obtain additional EINs.
This is because foreign entrepreneurs do not have Social Security numbers, they can apply instead for an Individual Taxpayer Identification Number (ITIN)
#5. Set Up a Business Bank Account in the U.S.
To start a business in the U.S., you must open a bank account based in the U.S.
It has become more difficult for foreigners to open an account in the U.S. since the USA Patriot Act was passed, but with official documentation and proof of identification, it can be accomplished.
So, here are the required items.
#6. Obtain Required Licenses and Permits.
Just like any other business in the U.S.A., companies established by non-citizens must apply for licenses and permits relative to their industry, business activities, and the jurisdictions where they operate.
However, it’s important to check with the Secretary of State, county clerk, and local government authorities to decide what requirements your business is subject to.
Conclusion
In most cases, non-citizens with business or investments in the United States should set up a domestic business.
You can consult with experts on tax law in both your home country and the U.S. before diving into any business, as the rules for foreign nationals can be more complex than if you were a citizen.
Also, this article will give you a guide on how to start a business in the U.S.A. for non-citizens.
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