How do you Register a Company in the US as a Foreigner? Step-by-Step Guide

Millions of businesses are registered in the US every year, which benefits Americans and non-US residents alike. A foreigner can establish a formal business structure like a Limited Liability Company (LLC) or Corporation in the US by following set guidelines in the state where the business will be located. 

The different US states operate differently, meaning the requirements for company formation for non-US residents will vary from state to state. Moreover, forming a US company for foreigners is more complex, but that doesn’t mean it’s impossible. 

Some of the rules and regulations foreigners must adhere to include federal and state laws, tax obligations, and proper business documentation. If you’re interested in knowing how to register a company in the US as a foreigner, this step-by-step guide is what you’re looking for. You’ll learn the different types of business structures that a foreigner can start in the US, tax obligations, and how to comply with company formation rules in the country as a foreigner. 

Business Structures to Choose From

Choosing the right business structure is like getting the appropriate vehicle for your business operations. It’s the initial step to creating a business in the US as a resident or non-US resident. 

The business structure you choose will influence many issues in your business, including: 

1. Taxes
2. Paperwork requirements
3. Personal liability, and 
4. The ability to raise funds for business

Non-residents should consider the factors below when choosing a business structure to establish in the US: 

1. Personal asset protection
2. Tax obligations 
3. Recordkeeping requirements
4. Compliance to standards
5. Raising capital
6. Long business goals

Let’s discuss the different types of business structures you can register in the US as non-residents.

1. Limited Liability Company (LLC)

A Limited Liability Company is the most popular structure among many business owners, as it offers personal liability protection. It means personal assets are protected from any risk if the business goes into financial trouble. Plus, LLCs also have fewer reporting requirements compared with corporations.

• Taxation - An LLC is a “pass-through tax entity,” meaning it doesn’t pay taxes to the IRS, but the profits and losses are passed through to the owners. The owners then file personal tax returns. As for non-residents, the tax landscape is complex, as they may have to file specific forms or choose for the LLC to be taxed as a different entity. However, the option to elect how to be taxed is only for tax purposes. 
• Non-resident consideration - An LLC is flexible in ownership, management, control, and transfer, which makes it a popular choice for most business owners. No law requires the owners to be US citizens or residents.

2. C Corporation and S Corporation

A C corporation is a separate entity from its owners before the law. It offers the highest level of personal liability protection, and it can raise capital by issuing stock. A Corp must have a board of directors and hold regular meetings.

• Taxation - C corporations pay corporate income tax, and profits are distributed as dividends. The gains are taxed again once they get to the shareholders, which leads to double taxation. Non-US residents can form a C Corp, but they can’t receive the dividends to avoid double taxation. Instead, if they reinvest the dividends back into the business. 
• Non-resident consideration - There are no rules restricting non-US residents from owning a C Corp, and the directors aren’t required to be US residents. It’s an ideal business choice for anyone who plans to reinvest their profits back into the business. 

An S corporation is also a pass-through entity like an LLC and has similar structure requirements as a C corporation.

• Taxation - Income is passed through to shareholders who file them as personal tax returns, meaning it’s not subject to double taxation.
• Non-resident consideration - Non-residents can’t be shareholders of an S corporation, meaning the structure isn’t a good option for non-residents. 

3. Partnerships

Two or more people own a partnership, and they exist in different types: general partnerships (GP) and Limited Partnerships (LP). 

• Taxation - Profits and losses flow through to partners who file them as personal tax returns.
• Non-resident consideration - Non-US residents can be partners, but the tax implications are complex, especially in a general partnership where partners are individually liable for business debts.

4. Sole Proprietorship

A sole proprietorship is the simplest business to form as it’s owned by a single person, meaning the company and owner are the same entity before the law. 

• Taxation - Income from a sole proprietorship is reported as a personal tax return.
• Non-resident consideration - Typically, foreigners can’t establish a sole proprietorship since the owner must be the person running the business. Hence, there might be a conflict between some regulations with visas and work permits. 

How to Register a Company in the US as a Foreigner

Registering a business in the United States is a fantastic idea for anyone who wants to expand their business reach to the international market. 

The country has a robust economy, a large growing market, and a favorable business environment. However, before you begin the process of doing business in the US, you must register your company to ensure you comply with business laws.

The process of registering a company in the USA is straightforward for both citizens and non-US residents. However, foreigners may have to go through a slightly different process, especially when it comes to documentation. Here’s how to register a company in the US as a foreigner: 

1. Choose a Business Name

Your business name must be unique and not similar to an existing business name in the state you’ll be operating in. To ensure you get it right, you can use name search tools to search your state’s database to find out if the name is available. Plus, there are business naming rules you need to check out to ensure you’re compliant.  

2. Get a Registered Agent

Your business needs a registered agent to receive official mail on your behalf. They ensure that all your mail gets to you on time, since missing a deadline is consequential. Getting a professional agent ensures your businesses are compliant with deadlines and your critical paperwork is handled properly. 

3. Business Structure

As discussed earlier, you need to decide on the ideal business structure for your company. A Limited Liability Company or a Corporation might be your perfect structure due to taxation benefits and ownership flexibility. Setting up a corporation is more complex than an LLC, but both structures offer limited liability protection for assets and finances. 

4. File Paperwork

As a non-US resident, you may be required to present more paperwork in your state to register your company. Company registration might vary from state to state, or you should contact the state secretary’s website to find out the documents you’re required to present. 

5. Pay the Filing Fees

Besides filing your paperwork or documentation, you’re required to pay filing fees as per your state’s directives. It might vary depending on the state where you’re registering your company.

6. Get a Federal Tax Identification Number (FTIN)

A federal tax identification number is the identity your business will be identified with by the Internal Revenue Service (IRS). It’s a unique code to your business issued by the IRS, and you can apply for it online or by mail.

7. Get a Business License

Contact your state to learn about the licenses you need for your business. The requirements for getting a business license will vary from state to state, and you can find this information in your local government offices or website. 

8. Open a US Bank Account

Your business needs a US bank account to handle business transactions. To open a business account, you need your passport, proof of business registration, code of association, and EIN. Depending on the state you’re registering your company, you may need a US address. As a foreigner, your registered agent’s address will work. Remember to look for a bank that has experience handling international clients to help you.

Factors to Consider When Choosing a State to Register Your Company

Choosing the right state to register your business is crucial. Formation rules, taxes, and requirements vary in each state, which makes some more favorable for non-US residents while others are ideal for Americans. Here are the factors to consider as a non-resident when registering a company in the US: 

1. Taxation - Some states like Delaware, Wyoming, Nevada, and South Dakota are famous for their favorable tax policies. Some charge lower taxes, while others have no income tax. 
2. Legal system - Choose a state with a business-friendly legal system like Delaware, as it’s known for being business-friendly. Delaware has a court dedicated to corporate law, known as the Court of Chancery. 
3. Filing fees will vary by state: initial filing fees and annual report fees.
4. Franchise taxes are imposed by some states on businesses depending on the size and earnings.
5. Physical presence or nexus - As a non-US resident, the state in which you register your business can create nexus tax obligations. It comes about if your business needs a physical presence in the US or you plan to employ workers, you should consider the cost implications and logistics of these functions. 
6. Privacy is vital in any business, and some states in the US offer more privacy protection than others to business owners. For instance, shareholder and director details aren’t exposed to the public in Wyoming and Nevada.
7. Market access - Consider registering your company near your geographic target market or in the exact location for accessibility and networking opportunities. 
8. Professional support - Registering your business near professional services like legal and accounting professionals, especially those with experience handling international companies, is crucial to your business. 

Benefits of Registering a Company in the US as a Foreigner

Operating a business in the US is a dream to many. However, only a few people know it’s easy and possible to register a company in the US from abroad. But is it worth it? What are the benefits? Let’s discuss how foreigners benefit by opening a company in the US:

1. Reputation - As the world’s biggest economy, US-based companies are considered more reputable.  
2. Tax benefits - Registering your business in the US gives you an opportunity to structure your business in a way that favors you in taxes. You can choose to register an LLC and then elect to be taxed as a corporation to avoid double taxation. 
3. Access to a ready market - As the most lucrative market in the world, US residents alone account for almost a quarter of global spending. So, as a business owner, you have access to a ready market without intermediaries.
4. Access to capital funding - America has the most reputable venture capitalists in the world, more than any other country. Forming a C Corp in Delaware will expose you to VC investors as they consider the state to be business-friendly in corporate law. 
5. Great banking system - the government insures American banks, and they offer many perks and bonuses to credit card owners.
6. No sales tax - When advertising your online business based in Delaware, the state doesn’t collect sales tax, meaning you don’t pay for it. 
7. Low set-up and maintenance fees - In some states, the initial set-up costs and maintenance are affordable. 
8. Annual compliance - In some countries, yearly filing might be costly and time-consuming. However, if you register an LLC in the US, you only pay for the annual filing fee and your registered agent. 

Form Your LLC with Foundeck Today

Foundeck offers a range of fast and efficient online company formation services, allowing you to register a business structure of your choice quickly from anywhere and keep it compliant. To get started, kindly contact us here.

Frequently Asked Questions

Can a foreigner register a company in the US?

A foreigner can register a company in the US as long as they adhere to the regulations in the state they wish to conduct business. No restrictions are limiting non-US residents from starting a business in the US. The process of registering a company is straightforward for both Americans and non-Americans.

 Can I open a business in the US from abroad?

As a business owner, you don’t have to be in the US to register or start a business in the country, nor do you need a visa. Owning a US-based business is different from working in the company. However, if you decide to work in the company, you have to get a US visa. 

Do I need a visa to register a company in the US?

No. You don’t need a Visa to register and set up a business in the US. There are two types of investment visas: the E-2 visa and the EB-5 Investment visa. They allow startup entrepreneurs to set up a business in the US, but both have significant differences.

Can an individual start a US company?

An individual can start a sole proprietorship business in the US. The business venture is owned and managed by one person. 

What is the best state for a non-US resident to register a company?

The ideal state for a non-US resident to register a business in the US is Delaware. The Tiny State offers privacy to business owners, tax benefits, and asset protection. Wyoming is also another favorable state as its taxes are low, and there’s more protection. 

In Summary

The thought of registering a company in the US may seem daunting, but it’s doable and easy. As a foreigner, the process is straightforward, akin to that of an American citizen, but you may be asked for more documents to verify your identity, age, and business activities.

So, if you want to register a company in the US as a foreigner, you need to know where you’re registering, the kind of business you want, and your documents. The process of company registration might vary from state to state. Hence, you need to find out what your state expects from you. Failure to comply with the guidelines can lead to disapproval and inconveniences, which can be a waste of time and resources. 

Many benefits come with registering a company in the US. The greatest of them all is the ability to expand to the international market. The US economy is the strongest, and it’s easy to get business funding when your business is registered there. 

Plus, there are recommended states that are ideal for foreigners to register a business, namely Delaware, Nevada, Wyoming, and North Dakota. As a foreigner, once your business is up and running, your registered agent will have to file and pay annual filing, prepare annual reports, and receive your company’s official mail to ensure you don’t miss vital communication. If you need help to register your business in the US or have any question about business registration in the US, kindly contact one of our Foundeck experts here.