Last Updated on November 23, 2022 by Anda Malescu
The article discusses can a foreigner open a business in USA? The answer is yes, foreigners and non-US citizens or non-residents can open a business in the United States, set up various US companies or otherwise invest and do business in the United States similar to everyone else who is a US citizen or resident but with certain limitations.
For many foreign business persons and investors, the United States is an attractive country to do business in because of its ease of doing business, reduced bureaucracy and healthy regulatory environment combined with a strong market and stable legal system.
Typically, foreigners can open a business in USA in their personal capacity as an individual or through another company, including a holding company. When foreign citizens own companies in the United States, these companies are usually referred to as foreign-owned US companies.
So, a foreign-owned US company is a company that is owned by a foreign citizen or by a foreign company and is registered to do business in the United States in at least one state. For example, if you are a foreign citizen from Italy and you want to open a business in Miami, Florida as a foreigner, then you can register a company in Florida to be able to do business there and you can be the owner of the company or another company you own can be the owner of the US company, or both.
It is possible for foreign citizens to own 100 percent of the company in USA or have other partners and own less. While as a foreigner you can start and own a business in USA, keep in mind that some states and financial institutions (banks) are more flexible than others when it comes to setting up companies or business bank accounts for companies owned by foreign citizens.
Among the US states, the state of Florida is often used by foreigners and non-residents to start a business in USA because South Florida and especially the Miami area is responsive to foreigners. Also, taxes in Florida, formation fees and management and maintenance costs for the company are lower than in other states.
Foreigners and other non-residents opening a business in USA must decide in which state to form the company and understand the business laws of the specific state where they want to register the business because each state is different, and each state has its own laws when it comes to requirements and rights and responsibilities for the business.
It is recommended that foreigners work with a business formation lawyer to understand the business formation requirements and the limitations on work in the United States.
WHAT TYPE OF BUSINESS CAN A FOREIGNER OPEN IN USA?
There are various types of businesses that foreigners can open in the United States but before going into details it is important to briefly discuss the advantages and disadvantages of each.
In the United States there are two types of corporations – C corporation and S corporation. The S corporation is taxed only at the individual level, while the C corporation is subject to double taxation by being taxed both at the corporate entity level and at the shareholder level when dividends are paid. Corporations provide limited liability to the owners.
Limited liability companies (LLCs) are only taxed at the individual owner’s level similar to S corporations, provide limited liability for the owners similar to all corporations and provide management flexibility and less stringent formalities.
To start a business in USA, foreigners who are non-US residents can form a limited liability company (LLC), a C-type corporation or a partnership in any US state.
However, foreign citizens who are not considered US residents for tax purposes cannot form an S corporation; it is in fact prohibited for non-US residents to fully or partially own an S corporation. Only US citizens and foreign citizens who are considered to be US residents can own an S-type corporation.
To better understand, foreign citizens who are non-US residents are individuals who are not U.S. citizens and who have not passed the green card test (have a green card) or the substantial presence test (be substantially present in the United States) as defined by the U.S. Internal Revenue Services (IRS).
For example, a typical situation of a non-US resident foreigner is when you are a citizen of Argentina, you reside in Argentina and you want to open a business in USA and own 100 percent but you want to hire other individuals to run the business and you only want to come to the US briefly on a visitor visa without seeking to apply for business or investor visas for the United States.
However, if a foreign citizen becomes a green card holder during a calendar year or meets the substantial presence test (spending substantial time in the United States not on F, J, M, Q, A or G visa) then he or she is considered a US resident.
HOW TO OPEN A BUSINESS IN USA AS A FOREIGNER
As a foreigner you can open a business in USA by following these steps:
- Select the type of business entity you want to open
- Select the state where you want to open the business in USA
- Open the US business
- Get State Tax Registration
- Get a business bank account
- Get necessary licenses and permits
- I-9 and other compliance issues
- Draft and review a Franchise Agreement, if applicable
WHEN DOES A FOREIGNER NEED A VISA TO OPEN A BUSINESS IN USA?
As a foreigner you do not need a green card or a temporary visa to start, own or buy a business in USA or to be a director or officer in a corporation or an LLC. However, owning a business in the US does not automatically give you the legal right to work in the United States.
There is a big difference between being an owner of a US company and simply owning the business while other employees work for the business and actually working for the business in the US.
A foreigner who wants to work in the United States for the business they opened must first obtain a US visa that allows them to work in the United States. Not all visas allow foreigners to work in the United States and you cannot work in the USA for a business you started on a B1/B2 visa. There are however other business visa options for foreign business owners who want to work in the US for their company such as E-1, E-2, L-1, O-1, EB-5 visas and others.
MALESCU LAW CAN ASSIST
If you are a foreign citizen and you want to start a business in USA or purchase a US-based business, our experienced business and immigration lawyers in Miami, Florida USA can assist you to form a company in the US, obtain a tax ID, prepare and file the formation documents, register the company in USA and provide any additional services as needed. Contact our business formation lawyers today or schedule a consultation.
Malescu Law P.A. – Business & Immigration Lawyers
