All You Need to Know About
Business Registration in the US
For the last 10 years, the number of new businesses being registered in the US has increased year on year. The number has risen from just over half a million new businesses in 2010 to 804,398 in 2020. This is the highest number of new businesses registered in nearly 20 years!
Adding your business to that number can seem a bit daunting, especially if you’re new to the business world. It’s even more confusing and overwhelming if you’re doing business from outside of the US.
This guide will help you understand the process involved in registering a business in the US. It will take you through the whole process from conception to taxes!
The Legality of Owning a US Business
Before we get into the process of registering a business, we need to look at who can and can’t register a business in the US.
You don’t need to be a US citizen to register your business in the US. However, this will affect the kind of business you can register.
Foreign owners can register businesses as limited liability company (LLC) which offers a lot of flexibility in terms of business structures and taxation. LLCs also allow you to appoint your foreign business as the managing member of the US company as opposed to an individual.
You could also register your business as a C-Corporation with an individual as a director. You don’t need to have a visa or step foot in the US to be a director.
The issue with C-corps is that they are subject to double taxation. This means that the company itself pays taxation on income, then shareholders also pay tax on their dividends. In order to avoid this double taxation, many people choose to register their businesses as LLCs.
There is another kind of corporation open to US citizens, that is an S-corp. These corporations are not subject to double taxation, but you need to be a citizen to own shares in S-corps. This means that you can’t register as an S-corp as a foreign individual.
Final thing before we look at the actual registration process, visas. We’ve already mentioned that to own or be a director of a company you don’t need a visa. You don’t even need to have visited the US to own a business.
Visas do come into play if you want to do any work for your company in the US. If you want to act as an officer or hold a job role in your US business, you’ll need a visa to be able to enter the country. There are a few options available to you depending on your financial circumstances and the company’s goals.
Here are four of the most common visas used by business owners to enter the US.
- E-2 Investor Visa – This visa does not allow you to settle as an immigrant, but it does have an indefinite lifespan so long as you own a business.
You do need to provide financial investment for your business to qualify for this visa. The amount of money required depends on the kind of business you are starting.
With this visa, your spouse and children can join you in the US. Your spouse can also get authorization to work in the US when they arrive.
- EB – 5 Investor Visa – This visa does grant you and your immediate family green cards; however, it also requires a large financial investment.
You need masses of documentation for this visa and the process is long, complicated, and therefore expensive. This option is out of reach for many due to the significant cost.
- H- 1B Visa – These visas are designed to allow business owners to sponsor foreign workers. If you are the business owner, you can apply to sponsor yourself with this visa but it’s a difficult process.
To sponsor a worker, they must have at least a bachelor’s degree while you must have the means to employ them in a specialist role for at least 6 years.
- L1 – Visa – This visa allows you to bring an exec or a manager from one of your foreign offices to the US. That worker can enter the US with the purpose of running or establishing an US office.
It is a non-immigrant visa and has a relatively short lifespan of only a few years.
Registering Your Business
We have 5 simple steps to help you register your business in the US. Once you’ve chosen whether to go for an LLC or a C-corp, these steps will see you right.
1. Choose a location for your business
You don’t need to have a physical address in the US or a brick or mortar store. What we mean is choose a state to register your business in.
When choosing a location, you’ll need to consider where most of your business is being conducted. You should incorporate your business in the state where you do business even if it’s a state with higher associated costs and burdens.
If, however, your business is not conducted in any particular location, you can choose any state to register in. In that case, you’ll want to choose a lower cost and burden state like Delaware or Nevada.
Most business or tax advisors are familiar with the rules and restrictions of these states because of how many businesses choose to register there.
2. Register Your Name and Business
Depending on the state you register in, the forms may be slightly different, but the overall principle is the same.
First of all, you need a unique name. This name should reflect your business aims and beliefs.
Once you’ve settled on a name, you’ll need to register it in state and trademark it to protect the name on a federal level. At this time, you might also want to register the domain name to prevent it from being taken.
To register, you’ll need a registered agent. Their job is to receive business and legal documents on your behalf. Most states require a registered agent to incorporate a business.
As a foreign business owner, your registered agent’s address will serve as your business correspondence address too.
The final step to registration is to fill in a certificate of incorporation. This is a one-page form that contains the business name, the name and address of your registered agent, and the amount and total value of any shares.
You’ll have to pay a fee based on the amount of capital investment or stock issued.
3. Register With the IRS
Once you’ve registered with your state, you need to let the IRS know about your business. They will issue you with an employer identification number (EIN) which allows you to hire workers, open a bank account, and pay taxes.
You can apply online for free here. Beware, there are some websites out there that will act as intermediary services and charge you.
4. Register with Local Agencies
Depending on your industry and registered location, you may need to register with some additional local agencies.
You don’t need to notify any city or municipal offices when you start your business, but you may need to notify before you can trade in that city or locality.
For more information about state and local information, check out foreignusa.com. You can search for information by location.
5. Apply for Permits and Licenses
Finally, to get yourself up and running, you’ll need to check whether you need any permits or licenses to operate.
This will depend on the kind of business you run, the industry regulations, and the state laws. For example, if your business needs to import wildlife, you’ll need to get a permit from the Fish and Wildlife Service.
You can check whether or not you need a permit or license here.
Paperwork, permits, licenses, and registrations can be incredibly confusing. It’s no wonder whole businesses and services are established to help you navigate the maze of business registration.
Armed with the above information, you should be able to complete the registration process yourself.