Key Summary
- Foreign individuals or entities can register a business in the US, with no citizenship or residency requirements.
- Key considerations include choosing a state with favorable tax laws, a supportive business environment, and understanding legal requirements.
- Business registration involves appointing a registered agent, confirming the business structure (LLC or C-Corp), and ensuring the business name is unique.
- The process includes filing specific documents, like Articles of Organization or Incorporation, and paying varying state fees.
Table of Contents
Eligibility for Foreigners Registering a Business in the US
Who Can Register
Virtually any foreign individual or entity can register a business in the United States. There are no citizenship or residency requirements for starting and owning a business in the US.
This openness means that entrepreneurs, investors, and companies based outside of the United States can establish a business entity, such as an LLC or C-Corporation, in any state they choose, subject to that state’s specific regulations and business laws.
Who Can’t Register
While there are few restrictions based on nationality or residency, there are certain limitations based on legal status and specific business types.
Individuals who are under legal sanctions or embargoes imposed by the US government, or those involved in illegal activities, are prohibited from registering a business in the US.
Additionally, certain industries may have specific restrictions that could limit foreign ownership or participation, such as defense contracting or businesses that require a security clearance.
How to Start a Business in the USA for Non-Citizens
1) Choosing a State for Registration
Of course, before you register your business, you need to decide which state to do it in. As a foreigner, you might not be aware that you can register your business in any state, you don’t necessarily have to trade within it.
Here’s what to consider before choosing a state to start and do business in the USA:
Tax Laws
An important consideration for any business is tax legislation. States such as Delaware, Wyoming, and Nevada, as recommended by Orinn Rahman in her YouTube guide to opening a business in the US. These are all known for their business-friendly tax regulations which can lead to significant business savings.
You will also need to consider sales tax, franchise tax, property tax, and capital gains tax. These also vary by state and should be considered based on the needs of your business.
Business Environment
Certain states are renowned as industry-specific hubs, for example, California is synonymous with technology. When starting your business in the USA, think about your business and the environment it would be best suited to.
These industry hubs will be ideal for networking opportunities, skilled workforce, and, potentially, customer base. The economic stability of a state and its growth opportunities are also integral factors to consider as a foreign entrepreneur.
Legal Requirements
Some states offer more straightforward processes and lower fees for business formation. When registering your business as a foreign owner, you will want to consider how easy it is to form your business. Also, consider the regulatory environment.
Think about your chosen state’s legal system and its history with business litigation. Delaware, for example, is highly favorable thanks to its well-established corporate law system.
Support for Foreign Entrepreneurs
Some states offer foreign entrepreneurs specific resources, networks, and support systems. These resources can be invaluable for those starting out in a new country, providing guidance and assistance in navigating the business landscape.
State-Specific Incentives
Many states offer incentives to attract businesses, such as grants, tax incentives, or assistance programs. These incentives can be particularly beneficial for startups and should be explored when setting up a company in the USA as a foreigner.
Best States for Registration
Delaware
Renowned for business-friendly laws and its corporate court system, Delaware is a top choice amongst business owners, including foreigners who plan to open a business in the USA.
Some of the benefits of registering a business in Delaware are many: there is no income tax on corporations registered in Delaware that don’t trade there. Also, shareholders who don’t reside in Delaware do not need to pay tax on shares in the state.
Nevada
With a favorable tax structure, including the absence of state corporate income tax, Nevada stands out to foreign entrepreneurs keen to maximize profits.
There is no need to disclose company officers or directors in Nevada, offering greater privacy. Additionally, there is minimal business reporting in the state further supporting its business-friendly ways.
Wyoming
Low costs and a pro-business environment make Wyoming an appealing choice. There are no state corporate or personal income taxes there.
It is also well known for having a straightforward regulatory environment, making it easy to do business. There are also low annual fees and minimal reporting requirements.
2) Appointing a Registered Agent
As a foreigner registering a business in the USA, you will need to appoint a registered agent. The agent will act as your official point of contact with your chosen state.
They can also provide you with a street address for your business where correspondence, including legal and tax documents, can be sent. It also helps to protect your personal privacy.
This is particularly useful for non-citizens setting up a business in the USA who are unlikely to have an address in the country.
Registered agents often offer other useful business services, such as being able to retrieve EINs or opening a business bank account on your behalf.
3) Confirm Business Structure
Part of registering a business requires you to confirm your business structure. As a foreigner, you are only able to choose from two structures; Limited Liability Company (LLC) or Corporation (C-Corp).
LLC
This flexible business structure means that owners, often referred to as members, are not typically personally responsible for the company’s debts and liabilities. LLCs also offer flexibility in management and profit distribution, making them a popular choice.
Pros:
- Simpler structure
- Fewer reporting requirements
Cons:
- Limited in terms of raising capital
C-Corp
This legal structure allows owners, or shareholders, to be taxed separately from the entity. They also offer the advantage of unlimited growth through the sale of stocks, which can attract investors.
They are, however, subject to more stringent regulatory requirements. They can also face double taxation, where both the company’s profits and shareholders dividends are taxed.
Pros:
- Unlimited growth potential
Cons:
- More complex regulations
- Potential double taxation
4) Finalize a Business Name
To confirm your official business name, you will need to ensure that it is not already in use or registered by another entity. It is not advisable to register your business with the same name as another entity as you can be subject to legal action or trademark infringement.
Most states offer an online database where you can conduct a search to verify if your chosen name is available. You could also use the US Patent and Trademark Office to search.
5) Register Business Entity
The process of registering your business entity varies by state but generally involves filing documents with the state’s business filing agency. The general process tends to be:
Where to Register
The primary place to register your business is usually the Secretary of State’s office. Some states may have a different designated state agency responsible for business registrations.
This process is typically done online through the state’s business filing agency’s website, but some states may also offer mail-in or in-person options.
Required Documents
For a C-Corporation, you will need to file Articles of Incorporation. These documents outline the primary aspects of your corporation, including your business name, corporate structure, and stock details.
If you’re forming an LLC, you will file Articles of Organization. This document includes details like your business name, address, the nature of the business, and information about its members.
Fees
Filing fees when starting a business in the USA as a foreigner are mandatory and vary significantly from state to state. These can range from a modest amount to several hundred dollars.
Some states may have additional fees for expedited processing or for filing additional required documents.
After Registration
Once you have registered your business entity, the registration process is complete. There are, however, a few other recommended steps to take. These include:
Obtaining an EIN
An EIN (employer identification number) is essential for business operations in the US. This unique, 9-digit number is used by the IRS for tax purposes.
You will also need this number for hiring employees, opening a business bank account, and filing tax returns. You can ask your registered agent to retrieve an EIN on your behalf.
Permits & Licenses
Depending on your business type, you may need specific permits or licenses to operate. Some examples of licenses required include for alcohol, firearms, and some healthcare businesses.
You will often need an EIN to apply for licenses. Many can be applied for online, but some require paper forms. You will also need to pay a fee for most licenses.
FAQs
How much does it cost to register a company in the USA as a foreigner?
Costs will vary from state to state. Typically, the cost will be between $100 to $800.
What documents are required to register a company in the USA?
As a foreigner registering a business in the US, the required documents largely depend on the type of business entity you are forming.
Generally, for an LLC, you will need to file Articles of Organization, and for a C-Corporation, Articles of Incorporation are required. Some states might require proof of identity, such as a passport. It’s also important to note that while a Social Security Number (SSN) is not mandatory for foreigners, obtaining an Employer Identification Number (EIN) from the IRS is essential for tax purposes.
Global Gateway
Registering a business in the USA as a foreigner involves several key steps including confirming a business name and structure, appointing a registered agent, and submitting key documents to the Secretary of State. Understanding these steps and meeting all legal requirements is crucial for a successful business venture in the US.