How Non-Residents Can Incorporate in the U.S. — A Step-by-Step Guide!

In the current global economy, numerous entrepreneurs and business owners from outside the United States are keen to create a foothold in this profitable market. Establishing a business in the U.S. as a non-resident provides various advantages, including access to a vast customer market and investment prospects, as well as beneficial tax frameworks and legal safeguards. Nonetheless, the process may appear intricate without an understanding of U.S. laws and regulations.

This guide outlines the key steps that non-residents must take to establish a business in the U.S., emphasizing practical factors and providing advice to ease the process. We also present eCheckplan, a reliable incorporation services provider that can enhance the experience for global entrepreneurs.

Grasping the U.S. Business Environment for Non-Residents: —

Before going further, it is vital to understand the primary corporate structures in the US: 

LLC:

An LLC provides personal liability protection, which means that personal assets are generally safeguarded in cases of business debts or legal actions. LLCs have less reporting obligations than corporations.

Taxation: Generally, an LLC functions as a "pass-through" entity for tax reasons, indicating that the business itself does not pay taxes, and profits and losses are reported on the owners' individual tax returns. Non-residents encounter a complicated tax environment and might be required to submit particular forms or choose a different tax treatment for the LLC.

Non-resident perspective: The advantages and security provided by an LLC make it a favored option for non-residents. Membership does not necessitate US citizenship or residency.

C corporation:

A C corporation is distinct from its owners as a legal entity and offers the greatest degree of personal liability protection. It can generate funds by offering shares, and it must maintain a board of directors and conduct regular meetings.

Taxation: Corporate income tax applies to C corporations. Dividends paid as profits are taxed again at the level of the shareholder, resulting in double taxation. For non-residents, though, this might not be as significant if they avoid taking dividends and reinvest earnings into the company.
Consideration for non-residents: Non-residents are allowed to own a C corporation, and there are no residency prerequisites for directors or officers. This is a viable choice if you intend to reinvest earnings or pursue venture funding.

S corporation:

An S corporation, similar to an LLC, functions as a pass-through entity but requires a structure comparable to a C corporation.

Taxation: Shareholders report income on their personal tax returns. It isn't liable for double taxation.

Non-resident requirement: Non-residents are ineligible to be shareholders in an S corporation, making this option typically unavailable for non-resident entrepreneurs.

Collaboration:

In a partnership, ownership is shared by two or more individuals. Various types of partnerships exist, such as general partnerships (GP) and limited partnerships (LP).

Taxation: A partnership operates as a pass-through entity, with profits and losses passing through to the personal tax returns of the partners.

Non-resident involvement: While non-residents may join as partners, the tax consequences can be intricate, particularly in a general partnership where partners bear personal liability for business obligations.

Single proprietorship 

This is the most basic type of business, held and run by a single individual with no separation between the owner and the enterprise.

Taxation: The owner's personal tax return includes reported income.

Non-resident factors: Generally, non-residents are unable to form a sole proprietorship in the US since it necessitates the owner to operate in the business, which contradicts visa and work permit laws.

Non-residents Visa options for opening a company in the US : —

The E-2 visa is the most sought-after option for entrepreneurs and is the nearest equivalent to a “start-up visa” in the US. Three primary qualifications are required to obtain one:

You need to be a citizen of a nation that is included in a Treaty of Friendship, Commerce, or Navigation with the US. A complete list of qualifying treaty nations is available on the Department of State’s Treaty Countries webpage.

You should have either already invested or be intending to invest a considerable sum of money in a US enterprise. Currently, there isn’t a fixed sum of money that you must invest, but it should be sufficient to purchase or create a new business and to manage and grow it. The investment must expose the capital to partial or complete loss if it does not succeed. You must also demonstrate that the funds have not been acquired, either directly or indirectly, from illegal activities.

• You need to demonstrate that you possess a controlling stake (50% or greater) in your business.

• You should aim to enter the United States exclusively to establish and manage the investment business
  
  

The E-2 does not provide a straightforward route to acquiring your Green Card. Authorized treaty investors and their employees can have an initial stay of up to two years. You can apply for an extension of your stay in periods of up to two years. An E-2 nonimmigrant can be granted an unlimited number of extensions. Nonetheless, you must keep an intention to leave the United States once the status ends or is canceled.

E-2 Visa Alternatives: —

If the E-2 doesn’t seem suitable for you, there are many other visas to consider. A complete list of them is available in the Entrepreneur Visa Guide by the US Citizen and Immigration Services, but some of the more frequent ones include:

The F-1 OPT (Optional Practical Training) Visa is for students in the US holding an active F-1 Visa who are starting a business connected to their major at the university.

The H-1B Specialty Occupation Visa mandates employment in a role that generally necessitates a relevant bachelor's degree or higher in a specialized area.

The O-1A Visa for Extraordinary Ability and Achievement is awarded to those who can demonstrate “extraordinary ability” in the fields of sciences, arts, education, business, or athletics. This often implies that you would require ongoing national or international acknowledgment in your area of expertise.

How to get your Business Started in the US as a non-resident? 

Step 1: Choose Your Business Structure and Place of Incorporation

Non-residents should select the appropriate entity type, with LLC and C-Corp being the most prevalent, and pick the state that provides the optimal mix of legal protections and tax benefits. Delaware continues to be a favored option because of its supportive business climate and well-established judiciary, yet states such as Wyoming provide lower costs and greater privacy.

This is an important initial step. Register your business in a U.S. state that aligns with your operational requirements. Engaging with reputable incorporation service providers like eCheckplan can assist non-residents in making informed decisions without facing legal complexities independently.

Step 2: Choose a Registered Agent in the United States.

U.S. law mandates that each incorporated company must have a registered agent located at a physical address in the state where it is incorporated. The registered agent handles legal documents and governmental communications for your company. Numerous incorporation services, such as eCheckplan, include this service within their packages, removing the necessity for non-residents to establish a physical presence on their own.

Step 3: Submit Articles of Incorporation or Organization

The subsequent step includes filing the official formation paperwork with the state authorities. For an LLC, this would be the Organization Articles; for a C-Corp, the Incorporation Articles. The documents contain essential company details like name, address, purpose, and information regarding members or directors.

States assess formation fees that range from approximately $50 to $500. Numerous services facilitate this filing online, handle state communications, and provide founders with confirmations after approval.

Step 4: Obtain an EIN for Foreigners 

The Employer Identification Number (EIN) is fundamentally a Tax Identification Number granted by the IRS. To open a U.S. company bank account, file tax returns, and compensate employees is necessary.

Non-resident business owners may obtain an EIN without needing a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Applications can be submitted directly to the IRS via mail, fax, or phone. Utilizing an incorporation service such as eCheckplan frequently simplifies and accelerates this process by managing forms and IRS communications for you.

Step 5: Open Business Bank Account of U.S. 

Launching a U.S. business bank account is a very important step in order to separate personal and business finances to gain credibility. Many banks need incorporation documents, EIN, and identification.
Although certain banks require a physical presence for account setup, numerous fintech and online banks now offer remote onboarding for international business owners. Incorporation services may suggest banking partners and help set up accounts to expedite the process.

Step 6: Adhere to Continuous U.S. Business Compliance Obligations

Once incorporated, it is essential to uphold compliance to ensure your business remains in proper legal standing. This includes: 

• Submitting yearly or every two years reports,

• Settling franchise or state tax obligations,

• Keeping a designated agent,

• Maintaining current corporate documentation.

Non-residents gain advantages by selecting incorporation services that provide continual assistance and alerts for compliance maintenance. Services such as eCheckplan offer compliance management, allowing international entrepreneurs to concentrate on expanding their business while ensuring they meet crucial deadlines.

Step 7: Comprehend Tax Responsibilities and Reporting Requirements

Owners of businesses not residing in the U.S. need to understand federal, state, and local tax regulations. LLCs generally transfer income to members for external reporting, whereas C-Corps are subject to corporate taxes. Tax treaties between the U.S. and various nations can lower tax obligations, though adequate consultation is advised.

Incorporation services typically offer essential tax advice and can link you to tax experts knowledgeable about U.S. businesses with foreign affiliations.

Final Thoughts:

Forming a business in the U.S. as a non-resident offers significant opportunities but necessitates awareness of various legal, tax, and administrative procedures. By adhering to these organized steps, selecting a business entity and state, designating a registered agent, submitting formation paperwork, acquiring an EIN, opening a business bank account, and maintaining compliance: you can simplify your path.

With professional incorporation services such as eCheckplan, global entrepreneurs gain essential support to navigate challenges with safety and simplicity. This liberates essential time and resources to concentrate on successfully developing and expanding your U.S. business.

Regardless of being a startup founder, online retailer, or software provider, adopting the U.S. incorporation framework effectively sets you up for international expansion and trustworthiness in one of the globe's largest economies.