Starting a business in the United States can be an exciting endeavor. With a U.S.-based business, you can establish more credibility for your company, attract high-quality talent and investors, and much more.
But when starting a business stateside, there are some important financial and legal considerations to keep in mind. The team at Accountants Without Borders is sharing the top 5 things you need to know:
1. Starting a business in the United States doesn’t allow you to work in the U.S.
In general, there are no restrictions when it comes to foreign citizens forming a business in the United States. You are not required to have a green card or visa. In most cases, you’ll follow the same process as a U.S. citizen.
But it’s important to know that forming a business in the U.S. from abroad does not give you the legal right to work in the United States. That said, you can still earn profits from your U.S.-based business from abroad as a foreign citizen.
2. You have to file an annual tax return
All businesses in the United States are required to file a tax return every year. You must file a federal tax return with the Internal Revenue Service (IRS), and you may have to file a tax return with whichever state your business is incorporated in.
Failing to file a tax return may subject your business to hefty fines and penalties. Accountants Without Borders can help you fully understand your tax obligations, and we can help you stay on track of your yearly tax returns.
3. You’ll need to choose the right business entity
The United States has a variety of different business entities or structures, including corporations, limited liability companies (LLCs), and more. Foreign citizens typically choose to form a C corporation or LLC, but the right structure for you depends on your needs and goals.
Generally speaking, most foreign citizens choose to start an LLC rather than a C corporation. This is because C corporations are subject to double taxation on dividends, making LLCs a more tax-friendly option. An LLC is also easier to set up and maintain, and it has less formalities than a C corporation.
4. Your business will be subject to U.S. contract and employment laws
If you intend on hiring employees, it’s important to know that your business will be subject to U.S. employment laws. The United States has a variety of laws in place to prevent discrimination, retaliatory firing, and more. There are different types of employer actions that the U.S. may consider unlawful, so be sure to familiarize yourself with these laws.
Another thing to remember is that your business will be subject to U.S. contract law as well. Before signing contracts, it’s not uncommon for both parties to have their legal counsel review the contracts in detail and exchange numerous versions until the fine print is agreed upon. To protect yourself, we suggest you seek the services of a lawyer before negotiating any major contracts.
5. It’s essential to speak to an experienced tax professional
As mentioned above, there are important tax laws and regulations that you’ll need to stay on top of. Hiring an experienced tax professional is one of the most important things to do when starting a business in the United States as a foreign citizen. It’s best to work with an accountant who has specific experience assisting foreign citizens with forming U.S.-based businesses.
Meet with our tax experts about starting a business in the U.S.
Accountants Without Borders offers expert advice and tax consulting to help people from all over the world start a business in the United States. We design customized solutions to help reduce your tax burden as much as possible. Contact us today to schedule an appointment.