Beginning a new business is an exhilarating, yet anxiety-inducing venture. This aspect is only multiplied when it comes to starting a company overseas. Opening up shop in a foreign country and sharing your goods/services to a new market is immensely exciting. However, on the flip side, going abroad raises an extra set of complexities you’ll need to deal with before you can get your business up and running.
With the United States undergoing sharp changes both economically and politically in recent years, it might seem like an unstable option when settling on a destination for your overseas business. Nevertheless, foreign companies have been welcomed into America for some time — and this is unlikely to change anytime soon.
The good news doesn’t stop there, either. The steps for a non-citizen to set up a business are quite simple, at least compared to the regulations of other countries. Plus, thanks to the fact that it’s the US, there are many resources available to provide a helping hand when needed. Before anything else, however, use this as a starting point for launching your business in America.
A Plan of Action
To start, you have to decide whether your business idea is one which will be viable in the US. Once that has been resolved, it’s a case of figuring out when and how to start putting the pieces together to begin your commercial adventure. Yet this is only the beginning. Here are various points to consider when developing a plan of action:
- Do you have the necessary funds? A sizeable budget is required to begin an overseas business in the US. This isn’t just simply for standard costs such as premises, purchasing stock, advertising, and so on. To acquire certain visas, you also need to invest a substantial amount of money. If the business isn’t self-funded, you will also have to look into the different avenues to secure grants, loans or direct investment.
- What intellectual property needs protecting? You need to get coverage for any of the IP’s you intend to use for your business, including patents, logos and trademarks. This would even include any trade secrets you possess.
- How will your business be structured? The structure of your business and the amount of employees needed affects different components, most notably your budget. This is not only due to wages for staff members, but also the rent for necessary premises to house your company. Speaking of hiring staff, you will also need to develop knowledge about local, state and US federal employment laws.
- Are any special licenses or permits needed? Depending on the field your business operates in, specialist licenses or permits might be obligatory. Professional services such as architecture and medicine require authorization. The same goes for the likes of food import, military goods and even specific technologies.
- Does your business have a unique name? Before you can progress with the registration of your company, you need to select a unique name. This means the business name cannot match one which has previously been registered in the US. Thankfully, it is easy to search through the US Patent and Trademark Office database to see what names are available.
- What state will you choose? Choosing where to base your business is, obviously, an important step. There are financing incentives for those who operate a business in an area which is designated low-income. Some states, such as Delaware and Nevada, also have lower business tax rates.
The Visa Issue
It’s true: you don’t necessarily need a visa to open a business in America. Although keep in mind that even if you own a US business, this doesn’t provide you with the right to live there. As a result, many non-citizens go through the process of obtaining a visa.
While this is a stumbling block which deters plenty of people, there is good news. First of all, there are various US business visas on offer. Secondly, it’s not as difficult to score a visa as you might imagine.
The most effective visa, especially for those who want to become a permanent resident of the US, is an EB5. This option does require a significant cash investment, and your business needs to hire at least ten US residents within the first two years of operation. If the company meets these requirements and survives for five years, you can receive permanent residency.
There are two EB5 visa choices: regional centers and direct investment. A regional center is the easiest option for those simply seeking to gain permanent residency in the US. It involves investing funds passively, allowing you to take a backseat from the business operation. Alternatively, direct investment is the option for those who want to have a greater hands-on approach with their business. More business opportunities are available — you could even invest in a franchise — and there’s scope for earning a larger profit. If you need further assistance and information, Hirson can help you map out an EB5 Direct Investment plan.
Business Entity: Corporation or LLC?
There are two business entities available for non-citizens starting a company in America: corporation and Limited Liability Company (LLC).
Corporation
If you choose to go with a corporation for your business entity, this comes with a number of advantages. Arguably the most important benefit is the fact that your company receives unlimited stock. Along with being able to easily expand, it is also a facet which is appealing for investors.
Another feature enjoyed by businesses is the solace from close involvement by the IRS. That’s right, you are protected from the IRS poking through your company dealings — at least, to the degree they do with other entities. This does come at a cost, however. You have to pay double the amount of tax. However, with careful planning, this double taxation can be circumvented for the most part.
LLC
Alongside dodging the aforementioned double taxation issue, LLC also has its fair share of positive aspects. For most, the biggest advantage is that your company is covered with limited liability. This means that if your business is unfortunate enough to be sued or incur serious debt, your personal assets will not be up for grabs. This is because all members of the business are guarded from personal liability when it comes to any business actions or decisions.
Also, LLC’s do not require strict recordkeeping, which is a positive point over corporations. Furthermore, they have very little in the way of restrictions with regards to sharing profits between members.