I was checking my Google Analytics the other day and discovered that 32% of my blog traffic is from a country outside of the United States.
That’s almost a third! And if you look at the students in my Create A Profitable Online Store Course, 25% of my members are from different countries as well.
Anyway recently, I’ve been receiving a lot of questions from entrepreneurs who want to know how to open a business in the USA as a foreigner.
After all, the United States is one of the largest markets in the world but the problem is that selling into the US is very difficult unless you have a physical presence in the country.
Using myself as an example, I almost never buy anything(as a consumer) from online shops outside of the US because the shipping is prohibitive and I prefer to work with local vendors.
So today, I asked my friend Nellie Akalp to write a post that will teach you how to incorporate a business in the United States as a non-resident.
Nellie Akalp is a serial entrepreneur, small business expert, speaker and author. She is the founder & CEO of CorpNet.com, an online legal document filing service, where she helps entrepreneurs start, grow and maintain a business.
We live in a global world these days. It’s no surprise when a company has a presence in several countries. For those located outside of the US, there’s plenty of appeal for setting up shop here in America. The process isn’t simple, but it’s doable, if you’re looking to incorporate from a foreign country.
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Step 1: Choose Your Business Structure
As a foreign company, you have two primary choices for the type of business structure you can form here in the US: the C Corporation and the Limited Liability Company (LLC).
Note: A foreigner can not form an S Corp in the United States because shareholders must be US citizens or residents
A C Corp allows you to raise capital, and may make you appealing to investors who only work with incorporated businesses. You can have an unlimited number of owners or shareholders, and you can transfer ownership of your corporation. Your C Corp will last beyond the life of you as the owner, unless you dissolve it.
The LLC is beneficial in that it’s treated as a “pass through” entity for taxes, meaning that profits pass through to owners and are reported on individual tax returns.
If you’re unsure which is the best structure for your foreign business, feel free to contact us for advice.
Editor’s Note: I’ve written a small business startup guide that goes over the pros/cons of each business entity that you can check out here
Step 2: Choose A State To Incorporate Or File Your LLC In
If you already know the state you will operate out of, it’s best for you to file your business structure in that state to simplify paperwork. If you don’t plan to have a physical presence in the US, then you are free to file your business structure in any state.
Many businesses prefer Nevada, Delaware, or Wyoming for this, as they are the most business-friendly (and sometimes have the lowest taxes for businesses).
Editors Note: There are many nuances to take into account when choosing the right state to incorporate in. Before making this decision, I would urge you to do some research and make an educated decision.
For those that reside in the US, if you are a small corporation with less than 5 shareholders, it is often beneficial to incorporate in the state where your business has a physical presence.
Step 3: Get A Registered Agent
It can be helpful to have assistance in the form of a registered agent to deal with legal paperwork on your behalf. This person or company is officially recognized by the state where your business resides, and is authorized by your corporation to accept services of process on your behalf.
Your registered agent can ensure that you renew business licenses and keep compliant with your business structure, even if you never step foot in the US.
Your registered agent must be located in the state where you formed your corporation or LLC. There are companies who offer this service, and many also will help you with your business entity filing as well.
Step 4: Get a Federal Employer Identification Number
In the United States, the Internal Revenue Service keeps track of all businesses through what’s called an Employer Identification Number (EIN). In order to get an EIN, you need a social security number.
If, as a foreign business owner, you don’t have a social security number and aren’t eligible to get one, you can instead use an Individual Taxpayer Identification Number (ITIN).
Either your EIN or ITIN will be required for the next step: opening a US business bank account.
Step 5: Open a US Business Bank Account
This may be the most complex part of the process of starting a business in the US for foreign business owners. Requirements for opening a business bank account will vary, depending on the bank, but in general, you will need to supply:
● Paperwork showing your business is incorporated or an LLC
● Your EIN or ITIN
● Your passport
Ideally, you should handle opening an account in person, but if that’s not possible, you can work with a service that can open an account on your behalf.
Step 6: Get Professional Help
Because the rules around finances and laws likely vary slightly from your home country, it can be helpful to hire an expert like an accountant, an attorney, or a business filing company like CorpNet.com who is an expert in working with companies who have holdings in more than one country.
It may take a year or two for you to be comfortable with handling your finances or legal concerns on your own, so having professionals by your side can be a boon.
Step 7: Stay Compliant
In the US, compliance doesn’t end once you start your business. Whether you file as a corporation or an LLC, you are required to file an annual report. This document keeps the information on file for your business up to date as regards your physical location, registered agent, and shareholders. Even if there are no changes from the previous year, you still need to submit this form.
While certainly, expanding your business into the US from another country requires a bit of work, ultimately it will pay off with the expansion of your company and increased sales.
Quick Note From Steve
I own 2 LLCs and I formed both of them on my own. Once you know what you are doing, the process is actually fairly straightforward but if you are from a foreign country, it can be extremely daunting to figure out what you have to do.
Even as a US citizen, it’s pretty painful to go through pages and pages of documentation and often times it’s a major time suck.
What I like about Nellie’s company, CorpNet.com is that it has a very “Mom & Pop” feel to it. They are a company that specializes in small businesses and what sets them apart is that they will give your business more personal attention.
So if you have any questions about any of the steps above, then please click here, contact CorpNet.com and use coupon code: MWQHJ to receive 10% off your order.
They are essentially a one stop shop for everything listed above and you’ll get a real live human to talk to:)
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- Do You Need Small Business Insurance With An LLC Or Corporation?
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Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at ProfitableOnlineStore.com.
His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC.
He's also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.
In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts.
To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.
Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.