Starting up a company in the United States is a powerful way to vastly expand a business that is going from strength to strength in other international locations.
But if you're not a US resident, you may be left wondering how you even begin to go about the process of starting an LLC or other company.
In this guide, we'll walk you through the process of opening a company in the USA as a non-resident. The process is a little longer for you than it is for US citizens, and mistakes can be time-consuming and costly.
You'll need to learn how to navigate the US tax system, how to open a bank account, and how to obtain a US mailing address, to name but a few of the obstacles you have in front of you. Fortunately, we'll cover all of this and more, below.
The short answer is yes, opening a company in the USA is absolutely doable as a foreigner. You don't need to be a US citizen, have dual citizenship that includes the US, or even have a green card to be eligible to set up a company in America.
You will, however, need to follow a number of steps that we’ve set out below. There are certain legal intricacies involved, and there are a number of common-sense tips that you should be aware of, such as how to choose a strong business name.
But first, let’s explore the types of companies you can create in the US. Choosing the wrong company can set you back and cost you money that you can’t afford to lose in the early stages of entrepreneurship.
Broadly speaking, there are generally four main types of companies to choose from, which are LLC, C Corp, DAO LLC, and sole proprietorship. However, the latter option is an unincorporated business that is simply run by a lone individual. In the United Kingdom, it's known as a sole trader, though the majority of European countries use these terms interchangeably.
Working as a sole proprietor has certain drawbacks, including limitations on raising capital and liability for debts should the business fail. So, let’s focus on the other three options. Each has certain benefits and drawbacks to be aware of.
Much as the name suggests, limited liability companies shield respective business owners from the liabilities typically associated with the company’s debts. In many ways, they're a cross between a sole proprietorship and a corporation. In a sole proprietorship, you do not enjoy those same protections.
The regulation of LLCs is different from one state to the next, but these companies do not pay taxes on their profits in the same way as a sole proprietor would, for example. Instead, profit and loss flow through to the LLC members, who individually report them on their IRS returns.
Here are some of the benefits of choosing a decentralized autonomous organization liability company in the U.S.
People often misuse the word "corporation" to refer to any company operating in the US, but in reality, this is just one type of company. What’s more there are others too, such as B-corporations and S-corporations.
This type of company formation has no significant rulings around who can or cannot own shares in the company. As a result, other people or businesses outside of the US can own shares, which makes it appropriate for foreign residents.
In C-corps, the owners of the business or its shareholders are individually taxed, much like with an LLC. Additionally, these companies must pay income taxes on their profits. And yes, this creates a situation in which tax is being paid twice (double taxation).
Here are some of the benefits of choosing a limited liability company in the U.S.
The DAO LLC is a relatively new business entity, representing a company that isn't governed by a single body. Instead, all of the members contribute toward the business' strategic direction. This type of business has begun to gain traction alongside the rise in technologies such as blockchain and cryptocurrencies.
DAO limited liability companies in the U.S. enjoy the same benefits as an LLC. However, there are additional benefits to this emerging type of company.
Rather than having a traditional board of directors or trustees, DAO LLCs delegate decision-making power to each member within the business. Those who hold tokens are usually permitted to vote on issues related to business strategy or otherwise, and voting normally takes place via blockchain technology.
At present, it is only possible to set up a DAO LLC in three states, which includes the creation of a DAO company in Wyoming.
Now that you’re aware of the different types of companies you can incorporate in America, it’s time to take your first steps on the road to opening a company in the USA. By now, we’ll assume that you’ve understood the information above and have chosen which type of company suits your business plans. Assuming that’s true, simply follow the steps below to get started.
Choosing a business name isn't as simple as pulling it out of a hat. There are legal requirements to consider, and there are practical elements that we strongly advise taking into account. Here are a few tips for choosing a business name in the US:
Now that you're ready to create your LLC, you'll need to designate a registered agent to help you; it's the law in every state. A registered agent is the person who will receive, file, and generally process official and legal documentation on your company's behalf, before ensuring that such documents make their way to you.
A registered agent needn't cost you a fortune; this can be any person who is at least eighteen years old. That said, your registered agent needs a US mailing address that's available during normal working hours. As a result, many foreigners who want to open a company in the US will use a company that provides these services.
Your business will need a mailing address. Fortunately, there's no need to be a US citizen to obtain a mailing address for a U.S. business. Why is a US mailing address required? Your customers or other companies that you do business with may need to send information or packages to you, and you’ll need a way to receive them.
Getting a mailing address for your business has a number of other benefits and can prevent obstacles down the road. What's more, it's a legal requirement in some states. Bear in mind that some states will let you use virtual mailboxes or P.O. Boxes, but others won't.
Fortunately, there are services available that will help you to get a legitimate company mailing address. Some of the simplest solutions allow you to get a US mailing address via a physical lease with minimal effort so that you can verify your business address immediately.
Your business is going to need a bank account to make and receive payments, and you must have an Employer Identification Number (EIN) to open a business bank account in the US as a foreigner (or as a US citizen). This process can be time consuming and complicated, but it's critical, which is why we recommend using a professional service to do the legwork for you. This’ll remove any obstacles or delays you may face by trying to navigate the process yourself.
Your business is going to need a bank account. However, not all financial institutions will allow foreigners to open a US bank account. Some may require physical attendance within a branch, too. Fortunately, services like doola can help you to set up your LLC remotely, including opening your US business bank account.
Since the internet begun to expand rapidly, payment processors have become the go-to for many online businesses and customers. The two most popular choices that will service the majority of your customers are Stripe and PayPal.
Understanding taxation and filing your IRS return can be one of the most confusing parts of opening and operating a US business. There are distinct rules for residents and non-residents; as a foreigner, you'll only be expected to pay taxes if you have FDAP income, though there are other caveats. For a full understanding of this subject, we recommend checking out our full and detailed guide to US taxation as a non-resident alien.
Hopefully, you’ve found the steps outlined above useful. Now, you understand the end-to-end process of setting up a company in the US as a foreign resident. If you're looking for more detailed information on the process, you can check out the US Small Business Administration, which provides a lot of useful advice for people looking to start a business.
For more specialized and tailored help, you can also get in touch with doola. Our mission is to break down barriers to entrepreneurship and help people across the world realize their business ideas on American soil. We understand the importance of time management as a budding entrepreneur, which is why we can take care of everything, from getting your EIN and mailing address, to starting your company and receiving payments.
For more information on using doola to form your company, or opening a company in the US as a foreigner in general, check out our frequently asked questions below.
Ultimately, the decision on which company to open in the US comes down to you, and potentially your co-owners. Here are a few pieces of advice that may help:
If your corporation is located in Washington or Delaware, then you are required to instate a board of directors. While there's no timeframe around this, your business will be unable to take any official actions until this is done. This includes issuing stock, making payments, and hiring staff, so you should endeavor to do it sooner rather than later.
Whereas one or more parties manages an LLC, a DAO LLC is typically overseen by an algorithm. Token holders may also have input into the company's strategic direction and operation.
If you're already managing an LLC in the US, you can indeed convert it to a DAO LLC. This requires filing of an amendment to your business articles. We recommend reviewing the full list of requirements needed to satisfy this.
According to the IRS (Internal Revenue Services), you cannot use a third party to get your EIN. When applying for your EIN, you must list the name of the owner or individual, who will be considered the responsible party for the corporation or business and its funds and assets.
The immigration requirements for the US are strict, and simply owning a US-based company will have no sway in any decision to grant you a visa. However, subscribers to doola's services can get a free consultation with our visa partner.
doola can help you to set up your Stripe account so that your business is ready to make and receive transactions. For a new Stripe account, you'll need:
doola can help you to get your EIN number, secure a lease with a mailing address, and help you to access a phone number. Since you’ll likely already have a personal identification, you’ve got everything you need. For PayPal, the list is similar, though you’ll also need to have an ITIN — doola can provide this, too.
Yes, you'll need to have a US bank account to operate a Stripe or PayPal business account in the US. doola's services include helping you to secure a US bank account, which your business will need anyway.
Wise (formerly TransferWise) requires an EIN. doola can provide you with an EIN, and the remaining process to set up a Wise account for business is simple. Unfortunately, we are not permitted to set an account up for you, but you can access discounted services as a doola customer.
Regardless of how you choose to set up your company, whether individually or with doola's help, you'll be the legally registered owner and manager. We prepare and file documentation on your behalf, but the company isn't set up in a way that will cause any obstacles or trouble to you.