- The process of opening a business in a foreign country comes with its own unique set of challenges. Many individuals have the misconception that if they are not US citizens, the process for US company registration for non-residents is extremely difficult to complete.
- In this article, we will dive into the type of business entities a non-resident individual can open in the US, how to decide which business structure and location is most appropriate for your business needs, the benefits of register company in USA and lastly the step by step guide on how to register a business in USA as a non-resident. If you too are contemplating starting a business in the USA, then Tetra Consultants’ team of business set-up consultants is here to assist you to get started. Tetra Consultants is an international consulting firm that is proficient in assisting entrepreneurs to register a company in the USA.
Types of business entities non-residents can open in the US
Essentially there are two main types of business entities that non-residents can open in the US:
Limited Liability Companies (LLC)
- It is a business structure that separates the identity of the owner and the business, resulting in limited liability for the business structures’ members
- This protects the personal assets of its members and ensures that they are not held personally liable for the liabilities and debts of the business
- The corporation business structure is also known as a C corp, similarly, its owners have protection against any liabilities of debts faced by the business
- However, the taxation and cost of formation are higher than that of a Limited Liability Company
Choosing your company structure (LLC vs Corporations)
- The initial decision stages of selecting the most suitable company structure may seem overwhelming but through the consideration of a few factors, the most optimal business structure becomes rather obvious for many.
- When completing a US company registration for non-residents, owners and members should consider the main factors of taxes and financing.
- LLC members are only required by law to pay personal income tax
- Corporations are required to pay corporate taxes on their business income, this is known as double taxation
- Raising large amounts of capital for a corporation is much easier compared to an LLC due to the corporation’s ability to be traded in the public stock market, allowing them to sell shares to the public in order to finance their large scale operations.
- On the other hand, LLC’s are only limited to raise capital through debt or equity
Benefits of starting a business in the US as a non-resident
- Taxes impact every company regardless of their size since it impacts the net profit of a business entity
- The U.S tax system is considerate of businesses and offers tax benefits, especially to businesses smaller in size. An example would be in the COVID-19 pandemic, the American Rescue Plan offered employee retention credits and paid leave credits.
Access to U.S market and capital
- With the United States having one of the most well developed venture capitalist economies in the world. Incorporation in the US grants opportunities for business owners to gain access to deep pockets investors.
- A common state with business friendly laws that commonly attract venture capitalists is Delaware, therefore many individuals wanting to incorporate as C-corp usually do so in Delaware.
- The US economy is known worldwide and possesses the highest nominal GDP of any economy all over the world
- Additionally, the branding of US translates over into the branding of the business and assists in the marketing of the business entity as a result.
Affordable setup and maintenance
- Contrary to popular belief, incorporation in the US is not as expensive as many believe. According to the World Bank’s 2020 report, the USA is ranked as the 6th highest country in terms of ease of doing business.
- In terms of company maintenance, not only can companies in the US have 100% foreign ownership but they only require annual reporting fees to maintain.
- Additionally, there is no requirement of a nominee director within the country.
- Furthermore, dissolving a business entity in US in majority of the states also do not require a fee
Great banking system
- Banking fees are low and the US dollar provides a stable currency that is recognised around the world
- In the United States of America, bank accounts are insured up to $250,000 by the US government, higher than most first world countries.
Payment processors and credit facilities
- With a plethora of payment processing options in the US such as Stripe, Shopify payments, Paypal, and even higher risk payment processors like with your US LLC.
- Famous payment processors such as Stripe provides entrepreneurs with the opportunity to start an online business in and improve the business’ cashflow
The steps to incorporate a US company as a non-resident
- The whole process of company registration in USA for non-residents to getting the business operating can be broken down into a simple 5 step process:
- Choosing the state of location and entity type
- Reservation of company name & fulfilling pre-registration requirements
- Preparation of documents & file for registration
- Opening corporate bank account
- Fulfilling financial reporting and tax obligations
Delaware vs Wyoming LLC company incorporation as a non-resident
- It is usually most convenient and advised for our clients to incorporate in state that your business will be operating in to avoid any possible complications
- Delaware offers the business owner anonymity in the incorporation process whereby they are not required to list their name on the entity formation documentation
- Wyoming allows the business owner to elect a ‘nominee’ as the owner of the LLC other than themselves.
- It is commonly practised that if the business owner has future plans to convert their LLC into a c-corp, they should register in Delaware to obtain the prestige that comes with incorporation over there.
- Otherwise, incorporation in Wyoming may prove to be a more beneficial state of incorporation with its lower filing fees, annual fees and culture attracting non-resident entrepreneurs from all sorts of industries.
Will you need a Visa to start a business in the US?
A commonly asked question is whether a Visa is required to own a US business.
- In short, the incorporation process itself does not require a Visa, however, if you plan to work for your business in the USA, you will be required to obtain a visa.
- Examples of certain types of visas that allow individuals to work in the US are:
- E-1 Treaty Trader Visa
- E-2 Treaty Investor Visa
- EB-5 Job Creation Visa
- L-1 MultiNational Transfer Visas
- H-1B Visa
- A common favourite among foreign entrepreneurs who have registered a business in the USA as a non-resident is the E-2 visa, which is the closest thing to a ‘start up’ visa there is
To obtain a E-2 Visa, the 3 main requirements of the individual are:
- They must be a citizen of a country that is part of a Treaty of Friendship, Commerce or Navigation with the US.
- They must be willing to invest a significant amount of capital in a US business (typically around $100k or more)
- They must prove they have a controlling share of at least 50% ownership
- Overall, the whole process of US company registration as a non-resident may come across as a complex one. However, with Tetra Consultant’s experienced and knowledgeable teams in tax, accounting, compliance, we will be able to help non-residents seamlessly incorporate, maintain and operate their business entities in the US.
- Allow Tetra Consultants to take on your complexity in the incorporation process in over 50+ jurisdictions. Feel free to contact us should you have any questions.