What To Consider When Starting A Business As A Foreigner

Starting a business as a non-resident in the United States can be a little hectic if you hardly know your way around the process. However, it’s possible if you know what to consider and prepare adequately. Unlike residents, US non-residents can encounter a few restrictions, including the conformation to a few business structures. Besides, international tax regulations, visa securing, and bank account opening can differ slightly for US non-residents. 

This article offers insight into what you should consider when starting a business as a non-resident:

• Company Structure

The United States sections only a few business entities for non-residents, including Limited Liability Companies (LLCs), partnerships or Limited Liability Partnerships (LLP), and C Corporations. LLCs are pretty common and preferred among non-residents since they’re tax pass-through and also possible to open them from overseas. However, LLCs require that you open a  non US resident LLC bank account and liaise with a registered agent to facilitate the process.

The requirements, steps, and procedures for starting permissible legal structures for non-residents can vary. Therefore, it helps to get into the details to understand the nuances. Working with a registered agent can help simplify the process as they understand how to establish your business, including submitting the necessary documentation and opening a US bank account.

• Business Registration

Business registration means getting formally certified to operate legally within the US, which can be quite a process. LLCs don’t require doing as much as other business structures, which is why most non-residents prefer them more. Registering with an agent’s help is much easier since they’re well-informed about the process. That’s not to say that partnerships and LLPs are more challenging to form, although they can be marginally procedural.

You can start and register any business in the United States, including real estate, automotive, and insurance. After registering your business, you can find talent, procure supplies for your company, and establish your business goals.

• Tax Benefits

Most US non-residents enjoy tax benefits since they’re primarily tax-through. That means your business won’t be subject to taxation by the federal government, but the profits and losses will be passed to your partners. These partners usually report the losses or income on their tax returns. US non-residents find it beneficial to open LLCs as they render these tax benefits.

You can still opt for partnerships and LLPs as they’re also tax pass-through legal as LLCs. C corps, also permissible for US non-residents, can still be your ideal option. Nonetheless, they aren’t pass-through, and you may have to pay taxes on your earnings to the federal government. These tax benefits can help you work with lower tax rates, which enables you to save on costs. Tax benefits can also be deductions and credits that reduce your business’s taxable income. C Corps may not offer such tax benefits but can be ideal go-to entities for foreigners.

• The State Of Incorporation

Some states are considered more restricting to registering and starting businesses for foreigners. For instance, California and New York can make it quite challenging for foreigners to open their LLCs as they put specific regulations that you must follow. Texas, too, can make registering businesses quite more procedural for foreigners than locals, although it’s widely known for its business-friendliness. Foreigners might also need to obtain a certificate of good standing from the secretary of state, which can complicate the process.

However, some states make starting businesses for foreigners almost frictionless. Good examples are Delaware and Nevada. There’s usually no need to open a bank account or state tax imposition, and the laws can be lenient. It helps to consider the state you want to incorporate into your business as a foreigner to make the process seamless and manage it hassle-free.

• Market Research

It helps to research before establishing your business in the United States as a non-resident. It’s a rule of thumb to know whether your business has the right and sufficient customers around you to facilitate product and service sales and guarantee profits. The US market can be challenging if you hardly understand how to reach valuable clients.

It helps to understand customer behavior and do a comprehensive competitor analysis to understand what other businesses are doing differently. Moreover, it’ll be prudent also to learn more about the business’s branding and marketing strategy that gets you ahead of the competition.

Conclusion

Starting a business as a foreigner can be challenging. However, you should swiftly establish one if you understand what to consider. Starting a business has never been a seamless process for anyone as it takes doing a lot, including acquiring capital and managing it. But despite the friction, you can establish a business in the US, even as a non-resident.