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. Learning English is a basic requirement if you plan on doing business with the Americans, but other aspects such as filing for your Employer Identification Number, and choosing which type of company you want to be, can make matters more confusing.
Choose Your Company Structure
Most foreign nationals choose to establish a C corporation, which can expand by offering unlimited stock and is typically more attractive to outside investors, even though its profits are taxed twice, first at the corporate level, and then as dividends to shareholders.
For corporate shareholders, the advantages are usually clear: Corporate shareholders typically qualify for a lower dividend rate. Even individual foreign owners are probably best off with a C corporation since the structure will shield them from direct I.R.S. scrutiny.
Of course, C corporation owners pay more for that shield as a result of the double tax. But in many cases, tax planners can use salaries, pension costs, and other expenses to reduce corporate income and eliminate much of the double taxation.
Choose a State to Register Your Company In
The company’s business should determine where it locates. If one state dominates its market, it’s best off incorporating there as there’s no way to avoid obligations of doing business in, say, California, a famously high-cost jurisdiction, by registering in Nevada or Delaware, two famously low-burden states. On the other hand, if the business will not be concentrated in any particular state, then a Delaware corporation is recommend followed by Nevada. This is in part because of Delaware’s “flexible” corporate law that offers generous protections to shareholders and directors, and also due to its outsider-friendly rules.
The forms and other requirements for forming a business entity vary somewhat by state. Here’s how incorporation works in Delaware, which serves as a simplified model for many states:
Obtain an Employer Identification Number
An Employer Identification Number is necessary not just to hire workers, but to open a bank account, pay taxes or often to get a business license. We obtain one for you.
The Bottom Line
In most cases, foreigners with business or investments in the United States should set up a domestic corporation. Consult with experts on tax law in both your home country and the U.S. before taking the plunge, as the rules for foreign nationals can be more complex than if you were a citizen. We help with incorporating your U.S. based business, provide access to a tax professional, draft all necessary legal contracts, and provide counsel on the ins and outs of how to run your U.S. company successful.
Raise money from potential investors without exposing your business to liability
Protect your assets by licensing the rights to your brand and intellectual property
Set up legal buy-sell agreements and create business transition plans