Tips • February 5, 2024
How to Incorporate a Company in the U.S. as a Non-Citizen (Part 1)
The United States is flush with economic opportunities, especially for entrepreneurs. However, opening a business doesn’t happen overnight. It’s an involved process, which can be daunting for non-citizens who are eager to make their business a reality.
Between strategy building, sussing out the landscape, and in-depth planning, there are a lot of baby steps that need to be taken in order to set any business owner up for success – let alone someone who's not a resident of the United States.
The current landscape is not tilted in the favor of entrepreneurs who are non-citizens. In fact, in some ways, it can feel as if it’s stacked heavily against them. But the odds are not insurmountable.
First Steps on the Road to Success
Am I Eligible to Incorporate a Company in the U.S.?
Yes, you are! You just need to follow the proper steps that any entrepreneur, American or otherwise, needs to perform before they’re legally allowed to open their business.
Here are the 8 basic steps you need to follow to be eligible to open your business in the U.S., regardless of your citizenship status:
- Choose your type of corporation (LLC or C Corp)
- Register your business’ name
- Get your Employer Identification Number (EIN)
- Determine if you need a state tax number, based on your chosen state
- Obtain all necessary business permits and licenses for your industry
- Purchase insurance for your business
- Open a business bank account in the U.S.
The last step can either come at the beginning or at the end. In many cases, it’s best to incorporate this step throughout your startup process:
- Get consultations from professionals.
Getting professional guidance will ensure that your paperwork is always filed properly, you’re meeting all the federal and state regulations required by your industry, your finances are being tracked and monitored properly, and you’re checking all the boxes to protect yourself and your business from unnecessary obstacles.
What are the Different Types of Corporations in the United States?
There are three types of corporations that exist within the United States:
- Limited Liability Company (LLC)
- C Corporation (C Corp)
- S Corporation (S Corp)
For non-residents, the easiest route would be to register as an LLC or a C Corp.
The difference between them is determined by whether you’re the sole owner of the business, or if you’ve got other co-founders or partners with whom you’re starting the business.
How Long Does It Take to Start a Business in the U.S.?
The act of registering a business may only take a few days, but there’s a lot more that goes into incorporating a company in the U.S. than simply deciding what products or services you’re going to offer, and then developing a brand for your business.
Not only do you need to decide what type of corporation you’re going to register, but you’ll need to consider how each different type of corporation would affect how you and your business are taxed. Making plans to segregate your personal taxes from those of your business requires careful planning.
In addition, each state has unique regulations pertaining to how businesses are taxed. It may not be complicated opening a retail business in states like Texas, but if you’re going to be running an online eCommerce store, the process becomes substantially more complex.
You’ll be required to pay taxes based on the regulations of the state in which you’ve incorporated, but you’ll also be responsible for paying appropriate taxes in each state in which you’re selling.
- How are you going to run your business?
- Are you going to be producing everything yourself?
- Or are you going to be doing a lot of outsourcing and partnering with third-party vendors?
- Who are these vendors going to be, and can partnering with them be profitable for your business?
All of these factors take time to evaluate, arrange, and implement.
There are a lot of hard realities to face as a new corporation. There’s more to consider in regards to this than just “how quickly can I open my business?”. You need to do a lot of high-level thinking and strategizing so that you’re prepared to face these realities head-on.
This means that there is no clear-cut answer for how long it takes to start a business in the U.S. You can register a company, and maybe even open the doors on a business in a relatively short period of time.
However, years of planning and months of strategic execution often go into the most successful startups.
What is the difference between starting a business as a U.S. citizen vs starting a company as a non-citizen?
Here’s the thing, certain states in the U.S. are very open to non-citizens registering and opening a business, but not all states. You need to be mindful of choosing a state that allows and encourages non-residents to open businesses.
The other major difference facing non-citizens is the difficulties that you could face when trying to open a bank account in the U.S.
Since this is one of the requirements for legally opening your business, establishing a bank account can be a challenge for non-citizen entrepreneurs, especially those who aren’t living in the United States.
Be mindful of these two factors, and you’ll save yourself from facing some unexpected headaches during your initial setup.
Are there Visa Requirements for someone wanting to start a business in the U.S.?
There are no direct visa requirements for entrepreneurs when they’re opening a business in the U.S.
You’ll need to follow all of the guidelines relating to eligibility that we discussed earlier, but opening a business in the U.S. as a non-citizen does not relate to your current visa status.
Because opening a bank account is one of the most challenging aspects of starting a foreign-owned company, you’ll need to be able to show a local address that’s associated with your business. In some cases, this can cause unexpected headaches for non-citizen entrepreneurs as they begin their startup process.
For brick-and-mortar retail stores, it just means providing the address of the store’s location. You can also use one address to register the business and another address as the actual store location, as long as they’re located within the same state.
However, for online or eCommerce-only businesses, you’ll still need to have a physical address that can be tied to the business. This can be your home, your accountant’s office, or a building that’s being used as the headquarters for the online store.
Regardless of how you choose to arrange it, the address must be located in the state in which your business is registered.
Choosing the Right State for Your Business
Because not every state in the U.S. treats opening a business the same way, especially for non-citizens, you need to do some research ahead of opening your business to find a state that will best work for your business.
The LLC cost only $90 in Delaware, but yearly, it’s a bit more expensive at $300. However, you’re able to use a third-party registered agent and organizer, if you’d like to remain anonymous within the business.
This is easily the cheapest option for LLC licensing costs. At $50 to set up and NO yearly fee, this is a great choice for entrepreneurs - especially those who are running on very tight budgets and want to minimize their startup costs.
Wyoming’s setup cost is a little higher at $100, but the yearly renewal cost is only $50, which is much cheaper than most other states that charge a yearly cost for registration. This state allows you to register using a nominee service, which like Delaware, allows you to maintain anonymity within the business.
Stay tuned for Part 2 in this series!
Truly Financial is Here to Help
Congrats on making it this far! I know this is a lot of information to process, and sometimes you need to speak to someone who has practical experience dealing with all the hurdles involved in incorporating a company in the U.S.
If you have any questions not addressed here, reach out to me on LinkedIn or Twitter to continue the conversation. I’m always happy to help business owners build their dreams, earn to their potential, and grow without boundaries.
Thanks for reading!
Co-Founder, Truly Financial
Resources • January 17, 2024
Tips • April 6, 2022