As a non-resident looking to set up a US company, you have even more steps to go through than a US resident, and more downside if you make a mistake. For example, there are more income tax issues for non-residents who want to take their income out of the US. Obtaining an appropriate US work visa and opening a bank account are also problems. Each of these topics is very complicated. In short, you not only have to create a workable business model, but further have to make it work within the US tax, legal and economic framework.
The steps outlined below describe the critical steps that must be addressed before a business can be launched.
- What type of company is being set up
- S Corporation, C-Corporation Versus LLC Tax Comparison. (“S” corp status is not available to non-US residents)
- In which state the company will be incorporated
- Where in the US the company will conduct business
- The type and activity of the business, and its need for licenses, registrations, permits etc.
- The staffing needs, which in turn influence the need for physical location and size of facilities
Checklist: How to set up a US Company as a Non-Resident
Step 1: Determination Stage
Step 1, determine what exactly you want to do, where and how you want to do it, how much it will cost and whether or not you have the budget. From this step, you can then develop a plan of action, so you need to determine:
- Where to establish your US business
- Where to incorporate your US company
- Your need for protecting your intellectual property, including trademarks, logos, patents, trade secrets and other IP
- Whether you will need to obtain any special licenses for your service or product. From professional services (like medicine to architecture) to specialized products (aviation parts to food importing) to restricted services (military goods to certain technologies), many business needs licenses or permits in order to trade.
- Your need for visas or other immigration needs If you plan to conduct within the US, someone will have to manage it. While you can hire Americans to do the work, you will probably want to maintain oversight, if not active leadership. The more time plan to spend in the US the more you will need to know about business visas.
- Your need for staffing for the business. This will affect your budget, your need for office space and your knowledge of US federal, state and local employment laws.
- Your need to access the capital markets in the US: are you self-funded or looking for loans, grants or direct investment?
- Your need for marketing, supply chain and other support services.
- Are there any tax incentives available, and what options are available to minimize your tax burden
Free business planning templates are available from SCORE (Service Core of Retired Executives) As an alternative, you can use the lean canvas designed to organize the strategy for a startup business. It’s free for 30 days, and very useful. (We are not related to either site in any way).
Step 2: Planning Stage
In the Company Planning Stage you will determine such practical matters as:
- The name of the company
- Whether to be a corporation or a limited liability company
- Which state to incorporate in and which states to register in
- Determine the capitalization of the company (how many shares at what par value, and how much each shareholder will contribute to the company as their capital contribution
- Determine who will be the shareholders, officers and directors
- Determine the roles and responsibilities of the company’s officers and directors
Step 3: Action Stage
After completing the Company Planning Stage, the Action Stage should be very smooth and fast:
- Provide the necessary documents
- Form the company
- Register the company in other states as needed
- Hold the organizational meeting, appointing the officers and directors, issuing shares to the shareholders and taking such other actions as necessary
- Obtain the federal Employer Identification Number
- Prepare and file BE-13 Survey with US Bureau of Economic Statistics
- Open your bank account
- Start business: buy, lease or rent office space, hire employees, market the products, etc