How to start a business in the United States as a foreigner

Thousands of people have been motivated to create a company in the United States in search of greater growth and to thrive as entrepreneurs.

However, this goes beyond being motivated.

It is also about being informed about the entire process of creating a company in the United States as a foreigner.

So, in this article, we want to provide you with all the information you need to achieve your entrepreneurial dreams and build your business with a solid foundation.

Keep reading.

Can You Create a Company in the United States as a Foreigner?

Yes, you can.

Many foreign entrepreneurs ask themselves this question daily, thinking that the whole process is very difficult and almost impossible.

But the truth is that with the right information, guidance, and support, you can achieve it easily and quickly. That’s why we are here to provide you with the information you need.

Why Create a Company in the USA?

As we already mentioned, creating a company in the United States is quite easy and quick. In fact, the requirements are less demanding for various cases.

In addition to this, you also have the following benefits:

• You don’t need to be a citizen or resident.
• You can start with a minimal capital.
• You don’t need to appear before a notary.
• You have various types of legal and flexible business entities to choose from.
• You don’t need to come to the United States to handle the paperwork.

Do you see all the advantages of forming a company in the USA?

The requirements are quite friendly, although they vary depending on the type of business you want to establish.

Let me tell you a bit more about this.

Types of Companies You Can Create in the United States

1. Limited Liability Company (Compañía de responsabilidad limitada)

A LLC is a legally recognized business entity in the state and the most flexible of all.

This type of business is one of the most attractive to foreigners due to its benefits, which include:

• You can have an unlimited number of members.
• You don’t need to be a resident or citizen.
• You can enjoy very low taxes (in the case of foreigners, they may be exempt from taxes, depending on the type of business).

They can be managed directly by their members or by managers.

Only one member is needed to register an LLC.

2. C Corporation

A C Corporation or C Corp is one of the few legal structures available to foreigners when establishing a business in the United States.

This structure is suitable for larger companies and doesn’t have members like the LLC but instead has investors or shareholders.

Here are its advantages:

• Protects the partners’ assets.
• If one of the partners passes away or leaves the company, the C Corp won’t dissolve (unlike the LLC) and can continue to operate.
• Can be publicly traded, allowing entry to new investors such as venture capital firms, business angels, etc.
• Is legally separate from its partners.

3. S Corporation

The S Corporation (Small Corporation) is an IRS tax classification chosen by an LLC or corporations.

This way, small businesses benefit from being treated as a corporation, avoiding double taxation.

The benefits of this corporation are tax-related:

• When there are losses, these are passed directly to its shareholders and can be used to reduce taxes on other income.

Tax credits obtained are passed on proportionally to the partners.

Capital gains or exempt income are passed on to the shareholders.

7 Steps to Create a Business in the United States as a Foreigner

1. Get a Physical Address in the USA

Whether you’re creating an LLC or a corporation, you need a physical address.

Here are three options for obtaining one:

1. You don’t necessarily need a US address; you can also register it with an address from your home country.
2. If you don’t want to use a commercial address, you can also use the address of a trusted friend or family member to register your company.
3. Get a registered agent who will serve as the official contact to receive your company’s correspondence and legal documents.

NOTE: A postal address (PO BOX) may not always work for registering your business in the United States; in most states, you must have a physical address.

2. Choose the Type of Business

As I explained earlier, I’ve provided information about the types of businesses you can register in the USA. The best options for foreigners are LLC, C Corp, S Corp.

It depends on your vision for your company to make a decision.

For example, if your company is family-owned or you have limited resources, the best option for you would be an LLC.

On the other hand, if your company is large, you want to go public and attract shareholders, then you should go for a corporation.

Also, if your vision is towards a large company but you currently lack the resources, you can start with an LLC and later convert the company into a corporation.

3. Verify the Availability of Your Company Name

Choose your company name and then verify if it’s available.

You can do this by checking with the Division of Corporations in the state where you want to register the company.

4. Determine the State to Register Your Company

The choice of the state also depends on your personal and financial situation.

For example, there are states where registering an LLC costs $50, while others can cost up to $800.

Continuing with this example, some states have an annual report fee of $10, while others go up to $500.

That’s why you need to review and analyze these details carefully before making a decision.

5. Apply for an EIN Number

The EIN stands for Employer Identification Number, which is a 9-digit number used to identify the company for tax purposes. It’s the first thing the bank will request to open a bank account. It is also essential to have one because it’s used for obtaining licenses and permits.

Don’t worry; the IRS won’t charge you any tax for applying for an EIN; it’s simply a requirement you need to fulfill.

You need to fill out the IRS SS-4 application to obtain it. You can do it here.

6. Open a Bank Account

You need a bank account to manage the inflow and outflow of funds for your company.

You have three options to open a bank account:

1. If there is an international bank in your country, you can open it from there and use it for your business in the United States.
2. If you can enter the USA, it’s nearby, or you have the flexibility to travel, go and open an account at one of the bank branches.
3. Open an account with a virtual bank. Just keep in mind that many of these virtual bank accounts have certain limitations.

Analyze these options and choose how you will open your company’s bank account.

Need Help Creating a Company in the United States as a Foreigner?

We’ve provided you with information, but we understand that sometimes handling so much information can be challenging.

That’s why at Rex Legal, we take care of advising, guiding, and supporting you in the process of creating your company in the USA.

If you need assistance, contact us now.