Starting a business in any part of the world, firstly, requires to have a plan and the necessary resource to execute the idea to make it a reality. Considering the potentiality and the opportunities available in the US, many entrepreneurs aspire to set up a business and explore the American market for business growth and expansion.
There is a lot of confusion with regard to whether a U.S. citizen can only open a business in the US or even a non-US citizen can try their luck. The answer is anyone can start a company in the US following the right legal path. No matter whether you are a U.S. citizen or not, starting an LLC or a Corporation isn’t difficult if you know how to do it.
Here are some of the steps every aspiring entrepreneur need to follow to get started with their business in the American soil.
Step 1: Decide the Business Type
The first move towards setting up your business in the USA is to finalize and be sure of the type of business you want to establish. You must thoroughly go through each business type and understand how it works and then based on which type suits your objectives you can proceed. For instance, if you are a non-US citizen, then LLC is the most recommended type of business for you. It helps to protect your personal assets from lawsuits and business debts if any. Also, starting an LLC structure is cheaper and simpler especially in terms of taxation. On the other hand, S-Corporation is the type of business that is recommended to the US-resident.
Step 2: Deciding the Company Location
Now, the second the stage is to decide which location you want to form your LLC or Corporation. Once you know which type of company you want to set up, you must then select from which area your company will operate the business. For a U.S. citizen, forming LLC in the state where they are physically living is recommended. However, non-US citizens must look for states that are business-friendly and form their LLC there.
Step 3: Register Company’s Physical Address
Once the location is final, the next thing to do is to have a registered agent who can receive legal and official documents on the company’s behalf. You must get a registered agent located in the state where your company is established. For example, if you are setting up a business in Florida, you need to choose a Florida registered agent service. However, remember that the registered agent service cannot be used to forward mail or it cannot be used as the company’s legal address or mailing address.
Step 4: Register Your Business
The fourth step is one of the crucial aspects of starting a business. It is important that you register your business, in whichever form you have selected – LLC or S-Corporation or C-corporation. The time it takes to get done with the registration may vary from state to state. Depending on which state you are filling for registration, the documentation procedure and duration of registration differs.
Step 5: Get Your Business EIN
EIN stands for Employer Identification Number which is also known as Tax ID. This identification number is similar to the social security number and is issued by the U.S. Internal Revenue Service (IRS) for identifying a business in the USA. To start a business, you must have this number as it will later be required to open a bank account, hire employees, file taxes and apply for business licenses and permits.
Step 6: Have a US Mailing Address
For financial transactions, you need to open a bank account, and for that, they will ask you to provide a U.S. mailing address or residential address. If you don’t have either of them, you can submit your business address as well.
Step 7: Opening a Business Bank Account
This step is a challenging one especially for non-US residents who are going to start their business. However, once you get your EIN, opening your business account becomes easy. You must visit the bank in person and inquire about the necessary documentation required to complete the process.
Step 8: Open Merchant Service Account
Now, when you are starting a business, your ultimate goal is to sell and earn from customers. And to do so, you will need to open a business merchant account. This will help you to accept payments both credit and debit transactions from the customer.
Step 9: Insure Your Business
It is very important that right from the beginning you insure your business. The initial years are a bit risky and to play safe and secure from any unforeseen business challenges, getting business insurance is always recommended. A sudden accident or a lawsuit or a natural disaster may cause heavy losses if your business is not insured to meet those unexpected events. It will help to protect both your business and personal assets. There are many types of business insurance available. You can choose any depending on your business type and requirement.
Step 10: Apply for ITIN
Like the way businesses have a tax ID, IRS also issues personal tax ID to individuals without Social Security Number (SSN). Hence, if you are a non-US resident without holding SSN, then you must get your Individual Tax Identification Number (ITIN).
Step 11: Be Clear About Tax Formalities
Doing business in any country requires you to pay certain taxes as per the law. Similarly, even in the US, depending on your business type, you will be required to oblige to tax responsibilities. Make sure that you know well about the tax policy and strictly follow it to avoid any legal consequences. The tax filling procedure may be different for US citizens and non-US citizens.
Step 12: Business and Personal Account Should Be Kept Separate
This is perhaps one of the keys to a successful business venture that you must keep your business assets separately and not mix it with personal assets. No matter whether you form LLC or S-Corporation, your personal account should not mix with a business one.
Step 13: Keep Your Company Compliant
It is essential that the business you have set up maintains and adheres to US laws. Failing to comply may lead to unwanted consequences which nobody will want. If you are a non-US citizen, non-compliance may lead to tax problems and even cause visa cancellation.
Step 14: Talk to a Business Lawyer
Consulting a business lawyer who can guide you with the legal formalities is a worthy investment you can make while starting a business in the US. Most entrepreneurs fail to understand the importance of a business lawyer and take up the challenges alone without proper consultation. Hence, while starting your new venture in the USA, talking to a business lawyer can help.
Wrap Up!
New beginnings can be a little challenging initially. However, if you are on the right path and know what you are doing, everything will eventually fall in place. With the right strategy and the resource, setting up a business in anywhere across the globe can be an easy affair. However, make sure that you oblige the law, taxation rules, and compliance regulations of the place where you are forming your company. When in the US, follow the mandates set for businesses there to achieve your goals without any hurdle.
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