We all know by now that the bellybutton of the financial world has a post office box in the USA. If you want to swim with the big fish, head straight into the ocean and start with these great tips.
Opening a company in the USA - the benefits
The USA has a strong structure in place to help small businesses develop, and grow into large companies. The circuit, the contacts, the infrastructure and the world-position, are optimum for any audacious entrepreneur with an original idea for a brilliant product. Let’s see some of the advantages of opening a company in the USA.
SBA Small Loan Program
The Small Business Administration doesn’t loan the money directly; it works with lenders as an intermediary, and makes sure they will get their money back. They offer a wide array of loan programs to incentivize brand new start-ups to develop and raise funds. The basic idea behind the loans is helping entrepreneurs take their first steps with the money they need, so they can make investments and pay it back later with the earnings of a grown business.
- TIP: The Microloan Program is especially useful for entrepreneurs that don’t need large amounts of money, like web-based service companies. The average requested is about $13,000, but it can go up to $50,000.
Venture Capital Financing
Those who believe very strongly in the content of their startup can fish around for interested Venture Capitals who are willing to invest money. Venture Capital financing equates, in most situations, to a significant loss in terms of control and decision-making but is one way to partner with more experienced, wealthy and powerful people. Remember; the US is one of the strongest money capitals in the world. Therefore, the biggest fish swim in their ocean. So if you go fishing, it is better to go where the big fish are.
- TIP: Expertise and know-how are two immaterial assets most people pay to have. When offering the Venture Capitalists your business, make sure you are working with savvy business owners who have been in your position before.
US Bank Account
The benefits of having a US based bank account are plenty. It is not a necessary thing to start operating in the US, but is a definite advantage since the money you’ll be making is going to be US currency. This way you´ll eliminate all money-converting and other third party fees, such as PayPal. Most banks will give you a free debit card to withdraw money in any of the thousand global ATMs.
- TIP: When doing any Business to Business (B2B) negotiations, having a US Bank account can increase your reliability and improve your overall image. This can result in landing the deal.
Types of business entities
The choices for a foreign national to choose from are few and specific: Limited Liability Company (LLC), or a Corporation (C-Corp). The selection will be dependent upon the size of the business you are expecting to fund. For beginners, the best bet is to go for the LLC which is far simpler to set up. Fewer regulations apply to them, and it prevents business profits being double taxed. For a full explanation of what an LLC is and the benefits of choosing it, you can check this video.
Benefits of LLC:
- Double taxation does not occur on business profits.
- State regulations and formalities are less than for Corporations.
- Income splitting is now available for LLC (used to be a corporate-only feature).
- TIP: You can even have a professional set your LLC for you at a meager price.
Ready, set, GO!
Now you have decided to do it - and have the business idea that will change your future - it is time to get things done and start building the empire.
Step 1 - Select a State
Choosing the state is not a minor decision. Selecting the correct state is imperative since tax regulations are different in each. Even if you’re operating overseas, it’s crucial to choose a location that is international-friendly such as Wyoming, Delaware and Nevada. Banking entities in these areas are familiar with working with non-US citizens.
Step 2 - Name your LLC
Naming your LLC is important, and you need to give it serious thought. Your LLC name is going to be your presentation card to the world and will stick with you for a long time.
- TIP: For more on how to do it, please check legal zoom.
Step 3 - Choose a registered agent
Another crucial step to getting your business running is to hire a Registered Agent Service to provide you with a physical address in the US, which is open during regular trading hours. Doing this is important for you to receive and forward all official information, such as the process of legal actions and state filings.
- TIP: You can check some options here.
Step 4 - File the Articles of Organization with the State
Also known as the Certificate of Organization, this document needs to be filled out. It differs from one state to the next, so you need to request the one that applies to you specifically. It is making a formal declaration to the State about the organization you’re funding, and all of its characteristics.
- TIP: You can find a detailed step by step instruction right here.
Step 5 - Create an Operating Agreement
This legal document outlines the ownership and the member duties within your LLC. The document itself will set out the working and also the financial relations between the business owners, as well as between members and managers.
- TIP: For a full guide on how to do it, please check this page.
What next? Steps after forming your LLC
Finally, let’s take a look at the basics to cover once your LLC is up and running:
- Obtain your EIN (Employee Identification Number) from the IRS.
- It will allow you to open a US Bank Account, accept US payments and pay US taxes.
- Register for State tax (each state is different).
- Non-US residents are taxed on US source income only.
- Obtain Business License & permits.
- To learn which the exact one is for you, please head here.
- Hire Employees to deliver your services in US soil and to have a more stable presence in the country.
- Everything you need to know about how to hire your first employee in the US here.
- Get insurance! An item we need to emphasize: don´t go bankrupt, get adequate insurance.
- To know more about which best suits your needs, you can check this page of legal zoom.
It is relatively simple to take steps to have your own US-based company. All you need to know is in the instructions above. Let’s go a little deeper into why: in today’s globalized economy it is beneficial to be operating from the center of the financial market. There are other options, of course, like China and India, but those countries don’t have the same established infrastructure to accommodate new business owners in the market. There are obstacles to overcome, of course, but nothing that’s worthwhile is done without effort.
Are you a business owner situated in the United States? Do you have any advice about starting a business in the US? Let us know in the comments below.