Many people are interested in starting a business in the US. Both foreigners and permanent residents are operating small and big businesses that provide services and goods to the public. Both enjoy the benefits of the business system in the US.
There are tremendous opportunities to expand a business, get new investors and clients, and improve the standing of their business. If you want to set up a small business in the US, the procedure is not complicated.
Non –US citizens have the advantage of setting up business in a country that offers the advantage of the lowest tax rate. A crisp and effective manual is available to guide you through the steps of setting up a business in the US whether you are a resident of the country or a non-resident.
The following article will take you through the process of choosing a type of business suitable to your needs to the opening of a bank account and other essential details.
Select a Business Type
There are two options available to you to start a legal business – LLC or C-Corporation. The difference between the two models is in terms of tax responsibility and how much personal liability are you ready to take on. No particular restriction is there in terms of the country you are from and how many business owners will be in an enterprise.
Limited Liability Company (LLC)
A large number of businessmen choose to work as a Limited Liability Company. It is a combination of corporation and partnership features and its members are fully protected from lawsuits and disasters that harm businesses. Profits can be shared among members, as they want. Bank accounts and the personal belongings of members are also protected. The taxation system is clear where tax on income from business can be paid along with tax on personal income.
C-Corporation is not very suitable for US citizens and is not easy because of the double taxation involved. It is recommended for entrepreneurs looking for investors in their company.
S-Corporation is suited to only residents of the US because self-employment tax can be avoided. This tax can eat away 15% of the business income.
Steps to Set up your Business
Start by choosing the state where you intend to set up your business. Though you can set up your business in every state, the purpose of your business will help you make a choice. Permanent residents should preferably set up a business where they are present physically. Foreigners will have to take into consideration factors like if they are planning to open a physical branch and if they are going to be staying in the country. Delaware, Wyoming, and Nevada are most suited to those people who are not going to be physically present for their business. They can register their business here. The banks here are familiar with working with international clients who do not have local offices. Delaware is a very attractive place for business because filing fees are low and the laws are business-friendly.
Does your company not want to invest in opening a physical branch and intends to work through an account in a US bank? Well, then Wyoming will be a good choice for you.
Search for a Registered Agent
A registered agent is a person or company that has a physical address. They will provide you the service of signing and receiving your business documents for you. You must ensure that it is registered in the state you are planning to do business with. Also, another criteria to consider is that information about such a company or person should be easily available. Remember you will have to pay for this service. It is mandatory by law for all LLCs and Corporations to have Registered Agents that are available during business hours.
Get an Employer Identification Number (EIN) issued
The US Internal Revenue Service requires you to get an identification number issued for the company that works as your Tax ID. You cannot start a business without this number. This way you can open a bank account, employ people, operate legally and pay taxes.
Residents with a Social Security Number can apply online on IRS’s website. Non-residents will have to hire a business lawyer who will act on behalf of them to apply and get the number. Opening a US bank account is mandatory. It is the most difficult part of starting a business for non-residents who do not have a permanent address in the US. It is advisable to consult an American bank in your native country for the procedure. On visiting the US, you can open a bank account by walking into whichever bank you want.
Getting a U.S. Mailing Address is mandatory
Your business address can be your mailing address or take the services of companies that provide a US mailing address. Also, get a US phone number. You have the choice of a Skype number, a toll-free number, and Google voice.
To receive payments a U.S. merchant account is required, to get payments through credit cards like American Express, Master Card, Visa, and so on. You will be required to provide details of your business address, phone number, and US bank account to open a merchant account.
Whether your company is an LLC or Corporation, to keep away from unwanted complications, it is important to maintain the company. Pay your Registered Agent his annual fees on time to ensure the easy and smooth running of the business. They are the ones responsible for the maintenance of state and legal documents, without which it is not possible to conduct the affairs of your business. In addition, an annual report of the activities of your enterprise has to be filed. This document gives information in detail about the company’s activities in the year. You may take guidance from many services available concerning the filing of this document. They will help you with the procedure, submission of the document and guide you with the essential information that is to be included. To know more about setting up small businesses and small business insurance, click here.