Starting a business in the United States can be straight forward even for non-resident foreign nationals in certain circumstances. There are even some scenarios where you would not need to visit the U.S. to establish a business.
If you plan to visit the U.S. to form a business or to live in the U.S., then you’ll also need to consider the right visa. We will discuss the appropriate visa options, and how to visit the U.S. as a business visitor for starting a business.
5 Steps to Starting a Business for Non-Resident Foreign Citizens
1. Decide on a Business Structure:
The first step in starting a business in the U.S. is to decide on the most suitable business structure for your venture. Common options for non-resident foreign citizens include:
Limited Liability Company (LLC): An LLC offers flexibility, limited liability protection, and pass-through taxation. It's a popular choice for small businesses and startups.
Corporation: A corporation provides limited liability protection and allows for the issuance of stock, making it ideal for businesses seeking to raise capital or go public. There is the C Corporation and S Corporation. It’s important to note that non-residents foreign citizens are not permitted to own S Corporation, until residing in the U.S. for at certain period of time.
Partnership: A partnership involves two or more individuals or entities sharing ownership and management responsibilities. It's commonly used for professional practices or joint ventures.
Consider consulting with a legal or tax advisor to evaluate the pros and cons of each business structure and choose the one that best suits your needs and long-term goals.
2. Register the Business:
Once you've chosen a business structure, you'll need to register your business with the appropriate authorities. The registration process varies depending on the state where you plan to operate. Generally, you'll need to:
File formation documents, such as:
- Articles of Organization for an LLC or Articles of Incorporation for a corporation
- Secretary of State or other relevant state agency.
It's important to research the specific requirements and procedures for business registration in the state where you intend to conduct business.
3. Apply for an Employer Identification Number (EIN):
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number issued by the Internal Revenue Service (IRS) to identify your business for tax purposes. Even if your business doesn't have employees, obtaining an EIN is necessary for:
- Opening a business bank account.
- Filing federal and state taxes.
- Hiring employees in the future.
- In some cases, applying for appropriate business license(s) and permit(s)
You can apply for an EIN online through the IRS website, and the process is free of charge. If you want professional assistance with filing an EIN, a business attorney or a tax expert such as, Certified Public Accountant (CPA) can assist with the application.
4. Apply for an Individual Taxpayer Identification Number (ITIN), if Needed:
If you don't have a Social Security Number (SSN) or are not eligible to obtain one, you'll need to apply for an Individual Taxpayer Identification Number (ITIN).
It is usually not necessary to have an SSN to start a business. However, some businesses may require an SSN for the purpose of obtaining certain business license(s) or permit(s). If a business license or permit needs an SSN, then it may be possible to use an ITIN as an alternative, depending on the city, state and federal authorities.
To apply for an ITIN, you'll need to complete the Form W-7 and submit it along with supporting documentation, such as a valid passport or other identification documents to the IRS. It's important to note that an ITIN is for tax purposes only and does not confer any immigration status.
If you want professional assistance with applying for an ITIN, a tax expert such as, Certified Public Accountant (CPA) can assist with the application.
5. Open a U.S. Business Bank Account:
Opening a U.S. business bank account is essential for business-related transactions such as purchases and receiving payments. As a non-resident foreign citizen, you may encounter additional requirements or restrictions when opening a bank account in the U.S.
Some banks may require you to have physical presence in the U.S., such as a registered office (business premise) or a representative who can visit the branch in person. Additionally, you'll need to provide documentation to verify your identity and business ownership, such as your EIN, entity formation documents, and proof of address.
Research different banks and their account options to find one that caters to the needs of U.S. businesses owned by non-resident foreign citizens and offers suitable features and services.
If you hold an account with a bank that operates internationally, you may be able to open a U.S. business account remotely, bypassing the need for physical presence.
Do you need a visa to start a business in the U.S.?
In general, no, you don’t need a U.S. visa to start a business in the U.S. However, depending on your goals, such as whether you want to live in the U.S. or you just need to temporarily visit the U.S., will determine whether you need a visa.
Temporarily Visiting the U.S. to Start U.S. Business
For foreign nationals who do not intend to live in the U.S. and are able to operate the business remotely from abroad, a U.S. visa may not be required. However, if you plan to visit the U.S. for business-related activities such as opening a U.S. business bank account or scouting for business locations, you will need to enter the U.S. as a B-1 Business Visitor or with the ESTA Visa Waiver Business (WB). Most people achieve this by obtaining a B1/B2 Visitor’s Visa or an ESTA Visa Waiver travel permission for certain nationals. It's crucial to enter as a B-1 or WB business visitor, and not as a B-2 or WT pleasure visitor. As business visitor, foreign nationals are permitted to engage in certain business activities in the U.S., including investing-in or setting-up a business, but may NOT to work in the business.
Intending to Live Inside the U.S. and Work in the U.S. Business
For foreign nationals who wish to reside in the U.S. and actively work within their U.S. business, a common visa option is the E-2 Investor Visa. The E-2 visa allows foreign business owners to reside in the U.S. and legally work within their U.S. business. Additionally, the foreign investors may bring their spouse and unmarried children under age 21, as E-2 dependents. You can find more information about the E-2 visa option:
https://e2visalawyer.net/visa-resource-center/
Summary
For foreign nationals, starting a U.S. business can mean tremendous financial opportunities. Before taking actions, it’s crucial to understand the U.S. visa requirements and implications, depending on your goals. Whether you plan to operate the business remotely or reside in the U.S. and work within your business, there are specific visa options to consider.
For those intending to apply for the E-2 investor visa, it's essential to proceed with caution. Before taking any of the initial steps, it's strongly advised to consult with an experienced E-2 visa attorney. The setup of your business must follow the E-2 visa requirements from the outset. Incorrect business structures or improper fund transfers to the U.S. business account could potentially jeopardize your E-2 visa case. Therefore, seeking guidance from a knowledgeable reputable and knowledgeable attorney specializing in E-2 visas is crucial to maximize your chances of success. With proper planning and legal guidance, you can embark on your journey to start a successful business in the United States.