You have that burning desire to bring that business idea to life. But you’re skeptical. You wonder, “should I move to the US or just set this business in my home country?”. You know the US has it all for you, but you are scared to make that move. You are worried it will be difficult for an expatriate to set up a business in the US. It won’t be easy to pass all the requirements. Not to talk of successfully registering the business.
But is it complicated? Not as tricky as you think. Business Insider reported that it takes six days to set up a business in the US, compared to 13 days in UK/Ireland and 38 days in China. It also noted that immigrant businesses make up about 12.5% of all small businesses in the US. Surprised?
Do you still doubt the odds? You shouldn’t. In this piece, you will learn how to set up a business successfully in the US as an expat. Let’s begin!
Choose a Suitable Business
There are three primary types of business in the US. And the mode of taxation varies from type to type. Hence, you must understand the common business structures and how they are taxed before you consider setting any of them. Let’s look at the three business types.
With S-Corporations, you can avoid double taxation. Taxes are only deducted from shareholders’ income. So, they pay tax on their shares.
S-Corporation is a domestic business. Hence, only US residents can be shareholders in an S-Corporation.
It can be exciting to hold shares in a company and receive dividends while staying off business activities. Many foreigners will consider this a soft life. If you are interested in this structure, then a C-corporation is the business model you should consider as it is suitable for non-residents.
Unlike S-Corporation, C-corporation is double taxed. What do I mean? Well, the corporation and the stakeholders get taxed. There’s a tax on profit, and there’s also a tax on dividends.
The distinguishing factor about LLCs is that the business is separated from the owner. Your business will be treated as a separate entity if you run into trouble. Your personal assets will be separated from your business assets. More reason this business structure is most recommended for non-US citizens. Interesting, right? That’s not all. An LLC business is only taxed when your business profits become your personal income. Hence, there’s no need for your accountant to file double tax records.
Nevertheless, you must remember that LLCs are under state regulations. And taxation structures differ from state to state. Hence, consult a US Immigration attorney before filing your business license.
Choose a Suitable Location
There are many states in the US. That implies differences in business climate from place to place.
To determine your business location, there are a few things to tidy up. First, think about the type of business you’re starting. This is because certain businesses do better in certain places. For example, aside from Silicon Valley, places like Utah and Massachusetts are right for you if you’re starting a tech company.
If you don’t know where to start your survey, the best thing to do is consult with a business attorney or accountant.
Choose the Right Structure
When you must have chosen a good business location, another essential thing to do is to know the right type of building for your business.
Office space, retail space, and warehouse space are just a few options available. Aside from that, the kind of space you take will depend on the type of business you’re running.
If you’re starting a small business, you don’t have to worry about office space. But if you’re starting a retail business, you’ll need a large space that can accommodate your entire inventory. And a manufacturing business will require a space big enough for your equipment.
So before you start your business, take your time to figure out what kind of structure you’ll require.
Choose a Befitting Name
Choosing a name for a new company can be overly tasking. While it may seem like a small task, it’s a step that cannot be left out.
Your business name is what your customers will see, so you want to choose something that will be catchy, easy to remember and represent your business well.
There are a few things to keep in mind when naming your company. First, choose an available name. You don’t want to choose a name that another company has already taken.
Since your business name will help to attract the right type of customers, you need to consider how it looks in your marketing materials, like your website and business cards.
Once you’ve chosen your business name, you can register it with the state, giving you legal ownership of the name. Then, you can start using it for your business.
Register Your Business
Once you have chosen a business type, you must register your business. If your business is not correctly registered, you would be denied access to commence operations in the US.
Remember that registration procedures are not the same for all business types. Plus, state guidelines may also determine the requirements for registering a business. But as a whole, you will need the following during the registration process:
· US mailing address
· Employer Identification Number (EIN). The method of getting an EIN differs for citizens and non-citizens
· US Bank Account
· Individual Tax Identification Number
· Business Licenses and Intellectual Property documents
· Sponsorship License. A sponsorship License would come in handy when you need to hire foreigners.
· Business Insurance
Get your Tax Identification Number
Getting your tax IDs is not as difficult as people think it is. If you’re thinking about setting up a business in the United States, you’ll need to get a tax ID.
A tax ID is sometimes called an Employer Identification Number (EIN). And it is usually assigned by the IRS. You can apply for a tax ID online, which is pretty straightforward. You’ll need to fill out a short form and provide basic information about your business. Your tax ID is crucial to starting a business in this country.
Get a Business License and Permits
Starting a business in the United States requires obtaining a license and permits from the state and local governments.
Depending on the type of business you want to start, you may need multiple licenses and permits. Inability to get your business licensed and duly signed can induce heavy fines or even a closure of your business.
Starting a business in the US is not entirely straightforward. While it opens you to a truckload of opportunities, it can be challenging to navigate. Hence, you must conduct adequate research before making the first move. I’d also strongly recommend you speak with a professional for proper guidance.