How to Open a Business in the USA as a Non-Resident

The United States of America is an excellent setting for business expansion because the expression “American Dream” did not appear by chance. For foreigners, America embodies opportunities for development and unlocking a company’s potential. Choosing a company form is an essential question for an entrepreneur. The LLC form in the United States is particularly interesting, characterized by flexibility and attractive legal protection. In this article, we will tell you who is suitable for this form of organization, what factors should be considered when choosing it, and how the company registration process goes.

Benefits of US Company

The question of how to register a company in the USA is relevant for many entrepreneurs for several reasons:

• Business scaling. Well-established logistics and connections with other countries are opportunities to enter the American and world markets.
• Increased reputation. The title of an American company allows you to increase the level of trust in a legal entity from the point of view of clients and potential partners.
• Working with international platforms and services. Both popular marketplaces, payment systems, and neobanks freely cooperate with American companies.
• Access to the newest solutions and a highly skilled workforce. Advanced technologies are an opportunity to optimize business processes, and well-educated employees will help increase income.
• Tax optimization. In the USA, the tax burden depends on the chosen state, and an entrepreneur can choose a jurisdiction with the most favorable conditions.

Conditions for foreign companies and the availability of support programs also depend on the state, field of activity, and form of business.

LLC: Company Features

Typically, entrepreneurs choose one of two forms of business in the United States: LLC or C-Corp. LLC is an organization that can have one member (single-member) or two or more (multi-member). A company with one participant is an analog of an individual entrepreneur, with two or more – a partnership (including from a tax point of view).

If an LLC has only one member, all of the company’s income is reported on that member’s return. In a multi-member LLC, the tax burden falls on all members according to their profits. The rules for the distribution of profits (as well as features of decision-making and entry/exit from the LLC) are prescribed in the charter when creating a legal entity. Profits and losses do not have to be distributed in proportion to the participants’ shares: the company’s owners can choose any distribution scheme, indicating it in the charter.

An LLC may be classified as a corporation rather than a partnership if necessary. In this case, the entity will be treated as a C-Corp for tax purposes and subject to corporate tax rules applicable to that form of organization. Business owners can choose this option to access business deductions or simplify reporting. You must complete Form 8832 (Entity Classification Election) to do this.

Taxation of LLC

The US tax system has two levels. Some taxes are determined at the state level, some at the specific state level.

At the federal level, the income tax rate is set for legal entities and individuals, as well as excise duty, capital gains tax, and real estate tax. Companies with employees also pay social and medical fees. The state corporate tax rate (for LLCs classified as C-Corps) is 21%. The income tax paid by LLC members under pass-through taxation ranges from 10% to 37%.

Additional corporate and income tax rates are determined at the state level. Companies also pay sales tax (state and local). Some states do not charge corporate and sales taxes, which reduces the tax burden on businesses. So, if you want to register an LLC in Arizona, check local tax laws.

LLC Registration Process

To register a company in the USA, you need to complete several steps:

1. Select state. The state level determines the tax rate and requirements, additional fees and assessments, access to assistance programs for foreign companies in the USA, registration costs, and much more. Some of the best states for business include Wyoming, New York, North Dakota, Florida, Alaska, Texas, Delaware, and Montana.
2. Select a name. US company names should not be identical or too similar to existing ones. In addition, each state defines a list of words that cannot be included in the name of a legal entity or require approval from governing bodies. The name must indicate the form of the company.
3. Submit documents. Their exact list depends on the state. One of the documents required to register an LLC is the charter, which sets out the rules for managing the company.
4. Obtain an EIN and (optional) license. EIN is a unique number that every legal entity must have. You can get it at IRS
5. A permit is required for some types of activity (e.g., transport and logistics companies). The state determines the rules for obtaining it.
6. Open a bank account. Typically, this requires an EIN, business registration certificate, license, and proof of legal address. Note: you can only open an account with a US bank in person. If this is not possible, you can do this using an online bank (Wise, Payoneer, Capitalist, etc.).

Conclusion

As you can see, LLC is the most convenient company organization for non-US residents. Moreover, you don’t even need to be physically in the country to register. You can do most of the actions remotely or through intermediaries. Therefore, if you thought opening an LLC in the USA was impossible for citizens of other countries, this article should convince you otherwise.