Step-by-Step Guide
Everything You Need to Know About Starting a Business in the US.
Are you considering starting a business or branch in the United States but unsure if it’s allowed as a foreigner? There are countless reasons to start a business in the United States. From business-friendly conditions, supply chains, infrastructure, workforce factors, and quality of life considerations to specific technology needs, everyone has their own reason for wanting to establish their business in the US.
Starting a Business in the US
If you’re curious about how to start a business in the US as a foreigner, this blog will help demystify the complexities.
Before we explain the steps to take, let’s first discuss the benefits of establishing your business in the USA. As we all know, entrepreneurs aim to position their businesses in locations where they can maximize revenue and ensure smooth operations.
Why Choose the US?
Entering the American market can be quite lucrative for companies based in Europe. Since you don’t have to be a U.S. citizen, and residency is not required, non-U.S. citizens are free to start or expand their businesses in this competitive part of the world.
Diversity and openness are highly valued in the United States. New entrepreneurs from various sectors and different countries are welcomed without issue. This environment allows them to find their niche in the market and thrive.
In the U.S., they can invest their money in any sector to gain competitive advantages in one of the world’s most open markets.
Why Choose the US for Business?
Here are some reasons why people choose the US over other places in the world:
World’s Largest Market
Did you know that the United States offers the largest consumer market in the world? That’s right—the United States, with a GDP of $20 trillion, encompasses 325 million people. GDP stands for Gross Domestic Product. In fact, the US has the highest level of household spending in the world, accounting for about one-third of global household consumption.
Moreover, the country offers free trade agreements with nearly 20 other countries, providing access to hundreds of millions of additional customers. More importantly, the United States continues to collaborate with various companies to enhance opportunities for American exporters.
Hotbed for Innovation
The United States is also recognized as a leading pioneer in the research and development sector (R&D). Additionally, the US registers more international patents than any other country. Today’s brilliant minds are protected by a robust intellectual property framework, while the innovators of tomorrow are educated at top universities and supported by incubators across the nation.
Whether you are establishing a small business or a mid-sized organization, the US government will assist in ensuring a smooth operation, helping you gain benefits and contribute to a thriving ecosystem of invention and inspiration.
Starting a USA Business – The American Dream Guide
Ease of Doing Business
Another reason for foreigners to start a company in the US is the ease of doing business. Every business owner wants to run their company without any interruptions from the government or other agencies. In the United States, this is less of a concern.
Supported by a regulatory framework that encourages the starting and managing of a business, the culture of American business promotes free enterprise and competition. Furthermore, the United States is known as a stable democracy with a transparent and predictable legal system for businesses.
Skilled Workforce
Skilled personnel is one of the most critical aspects of any business entity. When employees bring experience and creativity to their work, it is more likely that your company will stay up-to-date in its industry. It is reassuring to know that the US workforce is skilled, innovative, mobile, and diverse.
Moreover, American workers are among the most productive globally. For a better future, the United States has prioritized partnerships with private and public sector organizations to ensure that the workforce can meet the demands of a 21st-century economy.
Access to Capital
Money and adequate financial resources are the lifeblood of any business entity. To stay healthy, blood must flow smoothly; the same principle applies to a business. To remain competitive, having access to capital is crucial.
If you are considering starting a new business in the US, you don’t have to worry about this. The United States is home to the world’s most developed, flexible, liquid, and efficient financial markets. Investment funds, venture capitalists, and angel investors are available to help ensure your company in the US can gain a significant advantage.
Steps to Start a Business in the US as a Foreigner
Now that you have a good understanding of why entrepreneurs choose the US, the next step is to learn how you can start a business without navigating through complex legal issues.
While establishing a startup as a foreigner can sometimes be a long journey, it doesn’t have to be a deterrent. The US facilitates the registration and operation of your business as smoothly and comfortably as possible. One important thing to remember, however, is maintaining a good command of the English language.
Utilizing the Best Markets in the World
Starting a Business in the US
In this article, we explore the steps you need to take as a European when you want to start a business, branch, or sales office in the US.
#1 Choose Your Business Structure
As a European in the US, you are required to establish a Corporation (also known as a “C-Corporation” or “Regular Corporation”). It’s somewhat similar to a Private Limited Company but not the same (→ Explanation of the Differences). Another type of entity known as an “S-Corporation” requires all shareholders to be U.S. citizens. Starting with an LLC is not typically a sensible step for newcomers to the American market.
If you are considering setting up a C-Corp, or simply an INC, you can experience a wealth of benefits. The company can easily expand by offering unlimited shares. While profits are taxed twice—first at the corporate level and then as dividends to shareholders—this entity is generally more attractive to external investors.
Moreover, the benefits for shareholders are usually evident since they typically qualify for a lower dividend rate compared to others. Additionally, the parent company doesn’t have to pay capital gains tax when selling the U.S. subsidiary, provided the U.S. company does not primarily own real estate.
#2 Choose a State for Business Registration
After selecting your business structure, you need to choose a state where you want to register your business. Select a location that aligns with your business’s goals and plans.
If you are already conducting business in a particular state, or if your clients are located there, it’s best to establish your Inc there. You have obligations in that state such as your office, premises, and employees. For instance, there’s no point in operating 100% in California—a state known for high costs—and registering your Inc in Nevada or Delaware, despite these states being more cost-effective tax-wise.
If you deal with containers, you would be based near the sea, not in Switserland. Apply this logic when choosing your location.
However, if you are not tied to a particular state, most advisors might still recommend establishing in Delaware, followed by Wyoming. This advice harks back to the ’80s and ’90s, attributed to Delaware’s historically flexible corporate laws offering generous protection to directors and shareholders, along with foreigner-friendly regulations. However, many other states, like Florida or Texas for instance, are often better options nowadays. Other states have simply caught up in creating a favorable business climate.
#3 Registration
The next step is to register your business in your chosen state in the US. Each location has different forms and requirements for setting up a business entity. Below are the steps to register your business in Florida, which serves as a simplified model for many states:
Choose a Unique Business Name: The business leaders must select a unique name for the company.
Select a Registered Agent: Every business must choose a registered agent to help receive legal documents on behalf of the company.
File Articles of Incorporation: The organization must complete a one-page articles of incorporation, detailing:
- The total amount and par value of shares the company is authorized to issue
- The name and address of the registered agent
- The name and US mailing address of the incorporator.
#4 Obtain an Employer Identification Number
Once you register your business in a particular state, you must obtain an EIN (Employer Identification Number)/National Tax ID for your business to start a company in the US as a foreigner. (→ Assistance with EIN Application)
While this number is not essential for hiring employees, it is necessary for opening a bank account, paying taxes, or obtaining a business license. The primary officer of the US company might already be registered with the IRS as the “responsible party” and may have previously obtained a separate taxpayer identification number from the agency.
If so, you can’t simply apply for an EIN without additional steps: there may be a need for supplementary documentation from the company attorney, or a further declaration might need to be completed. Sometimes, if you’re in the USA, it might be easier to visit an accredited IRS Agent. There, you can provide personal identification and fill out all the forms in person.
USA Business Playbook – From Idea to Execution
How Can Van Holland Group Assist You?
Now that you have a clearer idea about starting a business in the United States as a foreigner, it’s time to work on your plan. Make a decision: choose the best business structure and the best location according to the needs and requirements of your business entity.
Once you’ve made these decisions, you’ll need to register your company. This is where Van Holland Group comes into play. We assist you with the registration and establishment of your business, navigating you through any legal complexities.
From incorporation to guidance in setting up your American business, Van Holland Group is ready to support you. Our back office can assist you with a wide range of services.
So, you’re looking to start a business in the U.S. as a European?
The team at Van Holland Group is here to guide you step by step in conquering the market! Of course, the steps outlined above are general guidelines. Get in touch for a personal consultation. No two businesses are the same, and we’re eager to hear your story. Who knows, we might be able to assist you with numerous steps in the coming months!
We are happy to provide personal advice.
- Plan a TEAMS video call at your convenience
- Contact us by phone at (+1) 786 233 6384
- Or email us at: info@vanhollandgroup.com
Disclaimer: We do not provide legal advice, and this is not a legal document. Always consult with an attorney.
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