Setting Up A Business In The States: A Guide For Non-US Residents
by Mony Shah Business 21 February 2024
The United States continues to be a beacon of opportunity for entrepreneurs worldwide.
It welcomes ambitious individuals irrespective of their nationality. Whether you aim to launch a tech startup, open a retail store, or venture into e-commerce, the US offers an inviting business environment accessible to individuals everywhere.
But before you transfer money to the US, to start your business abroad, it’s important to equip yourself with a solid understanding of North America’s economic landscape.
Today, we’ll be doing just that by covering aspects like choosing the proper business structure, obtaining necessary permits and licensing, and outlining other valuable business resources that you may look to use when setting up your US-based enterprise.
Read on to learn everything you’ll need to know about setting up a business in the United States of America as a non-US resident.
Understanding North America’s Business Climate
The US has one of the largest consumer populations on Earth, making it an attractive destination for international firms. Its population of over 331 million people offers a huge customer base for various products and services.
Alongside this, the US economy is a global leader in innovation and technology, with renowned tech hubs like Silicon Valley in Northern California and the Research Triangle in North Carolina. If you’re looking to fund a tech startup, you’ll find all the commercial real estate and industry networking opportunities that you’d need to establish your business.
Finally, the US offers access to various funding options, including venture capital, angel investors, and traditional lending institutions. This access to capital is naturally essential for business growth and expansion.
Business Structures
The three main choices when it comes to establishing a business structure in the States, these being Sole Proprietorships, LLCs, and “C”- or “S”-type Corporations. We’ll briefly define them, with a short list of pros & cons for each below.
Sole Proprietorships
First up is a sole proprietorship, or sole trader business model. Although setting up a sole proprietorship can differ from region to region, this process is fairly straightforward in the States. Operating as a one-person show involves minimal startup paperwork or formalities. Taxes are reported on your personal returns, and you retain complete control over operations. This simplicity makes the structure attractive to many people.
The cons include the liability owners face should they incur large debts related to the business. In this case, the owner’s assets may be at risk to satisfy these debts. Access to capital is also challenging with sole proprietorships since owners cannot sell corporate shares to investors.
LLCs
Limited Liability Company structures protect your personal assets by separating the business’ liabilities and offer flexibility in management and taxation, allowing you to customize your accounting practices.
These pros are offset by more upfront paperwork and legal formalities that may be required when setting up your LLC. Be sure to seek professional advice (i.e. schedule an appointment with a business consultant) if you feel you may need additional support when setting up your LLC.
Corporation (C-Corp or S-Corp)
This structure’s main advantage is the ability to sell stock shares, allowing for flexibility when attracting outside investors. Shareholders are also shielded from corporate liability concerning business debts and legal actions against the company.
The main disadvantage of this structure is the complexity stemming from regulations, required annual reports, and shareholder meetings.
Before choosing your company’s structure, be sure to consider your business’s nature, long-term goals, and risk tolerance. Consult with a legal or financial advisor experienced in international trade for guidance if necessary. Finally, as a non-US resident, remember that your decision may have tax implications in your home country and the US, so familiarize yourself with your tax responsibilities prior to registering your business.
Permits and Licenses
Next, let’s look at how business owners can secure the right US permits and licensing for their business. Specific permitting requirements depend on several factors, including the location of your company, your industry, and the products or services you offer. Below, we’ll briefly discuss the common types of certifications required.
General Business Licence
Frequently, cities and counties require this certification, and many professions, such as lawyers and doctors, obviously require more specialized licenses. Be sure to look into the general business license requirements that will pertain to your specific industry or sector.
Health Permits
Food and beverage-related companies require certifications from the local health department. There are also specialized permitting procedures for alcohol and tobacco-related ventures, usually at the State level.
Environmental Permits
If you plan for onsite manufacturing operations or any service potentially affecting the local environment, you may face additional certification compliance. Building new structures also requires more paperwork to ensure structure building codes and land use regulations are adhered to.
Accessing Business Resources
As a non-resident, access to valuable resources and support networks is crucial for assistance in launching your business. Below, we’ll briefly discuss how to access these different resources, including government assistance, networking opportunities, and professional guidance.
The US Government has programs in place for supporting entrepreneurs and small businesses. One of these initiatives is the Small Business Administration (SBA). Here, you can find resources like training, counseling, and loans available to non-residents.
Incentives, resources, and grants from many states and local governments are also available to attract business to certain areas. Research your chosen market or look into funding opportunities provided by state governments or local councils to uncover incentives advantageous to you.
It’s also a good rule of thumb to engage with local chambers of commerce. These hubs are great for connecting with other local entrepreneurs. Industry-specific trade groups and associations are worth investigating to boost your company’s local credibility. Don’t forget in-person and online seminars, plus regional conferences.
Finally, it never hurts to seek legal counsel or consult with a CPA (or a ‘certified public accountant’). Retain attorneys and accountants familiar with international transactions and business law to assist with financial transactions, reporting, and tax compliance. Many are themselves registered with economic development agencies and Chambers of Commerce.
Your Path to Success In The US
We’ve briefly covered the complex topic of international expansion to the United States. The main takeaway is that building a business there as a non-resident is undoubtedly a challenging goal. But it is also a path filled with immense opportunities and rewards for those who put in the hours of research and hard work.
Success in the American market hinges on a combination of planning, relentless determination, and leveraging the best government and professional resource networks available to you. Stay resilient, stay informed, and take advantage of the incentives available as someone willing to invest in the United States.
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