In 2020, foreign individuals or entities spent $1.9 billion to establish new businesses in the United States. Though the country is open to non-native business ownership, the federal government requires several steps before you can operate within the country. Dr. Gregory Finkelson offers guidance on how to proceed if you cannot travel to the U.S. to set up in person.
Dr. Gregory Finkelson’s Recommendations for Establishing a Business in the U.S.
Before you can open your business within the United States, you need to go through the legal process of registering your company, obtaining a tax ID number and opening a bank account with a U.S. financial institution, with intervening steps in the process. Fortunately, you can take care of them without setting foot inside the country. Follow this procedure to take advantage of the U.S. business environment.
1. Identify a Home State for Your Company
Your first step is to identify a state to register your company in. Consider the state’s foreign business regulations, filing fees and tax structure. Dr. Gregory Finkelson recommends registering with a state that does not have corporate or capital gains taxes, leaving you only to deal with federal taxes. However, if you are opening a business that requires you to operate in a particular state, you should choose that state as your home base.
2. Hire a Registered Agent and Submit State Registration Documentation
A registered agent is an individual or entity responsible for handling legal documentation for your business. The agent can be anyone over 18 with a physical address in the state you are registering your business in, though Dr. Gregory Finkelson suggests you hire a registered agent service.
3. Obtain Your Employer Identification Number
As a foreign business operating in the U.S., you need a federal tax ID number. Your EIN serves this purpose. To obtain one without a social security number or individual tax ID number, you need to FAX or mail a completed and signed Internal Revenue Service Form SS-4, the EIN application.
4. Establish a Physical Mailing Address
Before opening a bank account, you need to set up a physical mailing address. If you intend to have a physical office or business location, you can use that address. Otherwise, you will need to use a mail service that provides a physical address rather than just a box number.
5. Open an Account at a U.S. Financial Institution
Dr. Gregory Finkelson cautions that some U.S. banks require you to visit the bank in person to open a business banking account. However, many banks now allow you to complete the process online, as long as you have the required documentation. Furthermore, the number of digital banks legally operating in the U.S. is increasing, with many offering business banking services.
Finally, be sure you understand your tax-filing responsibilities in your business’s home state and with the federal government. Once you complete all steps in the process, you can begin operating your business within the U.S.