Opening a company in the United States can be an excellent opportunity to expand your business and explore new markets, however, it is necessary to be aware of all legislation and costs involved in the process.
In this guide, we will explain how to open a company in the USA, the main types of companies that can be opened and answer general questions about the subject.
So keep reading to understand everything you need to know about this process!
Table of Contents
Opening a company in the USA: what is the process like?
Types of companies you can open in the USA
Sole Proprietorship (Individual Company)
General Partnership (Simple Partnership)
LLC (Limited Liability Company)
LLP (Limited Liability Partnerships)
LP (Limited Partnerships)
Step by step to open a company in the USA
1. Define what type of company you will open and in which location
2. Create your company name
3. Register the company and request the EIN
4. Have a registered agent
5. Have all necessary documents on hand
6. Open a bank account
Opening a company in the USA: benefits and challenges
Benefits
Challenges
General questions about opening a company in the USA
Do I need a visa to open a company in the United States?
Am I entitled to a Green Card if I open a company in the USA?
How much does the process of opening a company in the USA cost?
To open a company in the USA, how much do I need to invest?
Open your company in the USA with the help of D4U Immigration!
Opening a company in the USA: what is the process like?
Opening a business in the United States involves several steps, including choosing the type of business, registering the business, obtaining a tax identification number, and complying with local and federal regulations.
This process may vary depending on the state where the company will be established. Therefore, the ideal is to hire a specialized immigration consultancy, such as D4U Immigration, to help you with all the details.
Types of companies you can open in the USA
One of the crucial steps when considering opening a business in the United States is choosing the type of business entity that best meets your needs and goals.
This decision not only influences the structure and operation of your business, but also determines the level of responsibility you will have in relation to the company's debts and obligations.
In the United States, two fundamental concepts regarding corporate liability are limited liability and unlimited liability.
In limited liability, owners are not personally responsible for the company's debts, which protects their personal assets in the event of the company's financial problems.
Unlimited liability, in turn, provides that the owners are personally responsible for all of the company's debts, which means that if the company faces financial difficulties, the owners' personal assets can and will be used to pay the debts.
Below are some of the main options available for those who want to open a company in the USA:
Sole Proprietorship (Individual Company)
In this type of business, the owner is solely responsible for all debts and obligations of the business, which means that their personal assets, such as their home and savings, can be used to pay the business's debts in the event of financial difficulties.
General Partnership (Simple Partnership)
In a simple partnership, all partners share unlimited responsibility for the company's debts and obligations.
Each partner is personally liable, which means their personal assets are at risk in the event of the company's financial problems.
LLC (Limited Liability Company)
An LLC is a popular choice because of its flexibility and limited liability protection for owners.
This option is ideal for small and medium-sized companies, offering a more simplified and tax-efficient structure.
LLP (Limited Liability Partnerships)
LLP, in turn, is perfect for professionals who want to work together, such as lawyers or accountants.
In this structure, partners have limited liability, meaning they are not personally responsible for the company's debts.
LP (Limited Partnerships)
LPs are made up of at least one general partner and one limited partner.
The general partner has unlimited liability, while limited partners have limited liability but also have less control over the company.
Step by step to open a company in the USA
Now see a step-by-step guide to opening a company in the USA:
1. Define what type of company you will open and in which location
The first step to opening a company in the USA is deciding what type of business you want to establish. Each type has its legal and tax peculiarities.
It is also crucial to choose the state where your company will be registered, as laws and taxes vary greatly from state to state.
2. Create your company name
Your business name is your identity, so make sure it is unique, reflects the essence of your business, and complies with state guidelines.
It is also important to check the availability of the name to avoid future legal conflicts.
3. Register the company and request the EIN
After defining the type and name of the company, you will need to officially register it in the chosen state and obtain an Employer Identification Number (EIN) from the IRS (Internal Revenue Service). The EIN is essential for tax and administrative matters.
4. Have a registered agent
A registered agent is mandatory in the US. He will act as an intermediary between your company and the State, receiving legal and tax documents on your behalf.
This figure is crucial to keeping your company legally compliant.
5. Have all necessary documents on hand
Prepare and organize all necessary documents, including the company operating agreement, contracts, licenses and permits required to legally operate in your industry and location.
6. Open a bank account
Finally, open a US business bank account as this will not only facilitate business transactions but also help in separating your personal finances from your company finances, an important practice for financial management.
Opening a company in the USA: benefits and challenges
1.1 – WHERE TO ESTABLISH YOUR US BUSINESS
Choosing a business location is perhaps the most critical decision, and once you are committed to a choice it is expensive to change. Each of the 50 United States has its own business regulations and tax schedules.
The location you choose should be one that fulfills business objectives in the most cost-effective way. At the outset, a company needs to identify which factors are the key drivers in the location choice.
Some of the factors to consider are:
– Demographics of your customer and/or staff
– Requirements of your supply chain
– Local competition
– Overhead costs including – labor, property purchase or rental, utilities, corporate taxes, incentive
– State and local laws, regulations, and taxes
– Quality considerations including, but not limited to: Labor skill levels, Labor flexibility (union/non-union, seasonality), Connectivity, Infrastructure, Risk, Quality of Life
All of these factors can also be broken down into sub-factors. Making a careful assessment of your priorities will help you make a smart and lasting decision on your location.
Further reading…
Choosing a state of incorporation
3 Techniques for finding where to start your new business
1.2 – YOUR NEED FOR PROTECTING YOUR INTELLECTUAL PROPERTY
We can recommend specifically vetted and qualified IP attorneys who specialize in the areas of intellectual property that pertain to your business – trademarks, logos, trademarks, logos, patents, trade secrets, etc.
1.3 – WHETHER YOU WILL NEED TO OBTAIN ANY SPECIAL LICENSES
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. Once you know which state or states you will operate your business in, you can check with that state’s government to find out what licenses or permits may be required for your company’s activities.
• Regulations around licensing vary widely across the US depending on local regulations
• We have seen an increase in PLLCs – Professional Limited Liability Corporations
• Two common incorporation locations are NY and Delaware: New York regs and Delaware Regs
Further reading…
Additional information by state
1.4 – 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.
You can start and own a US company without a visa, and without even coming to the US. Because managing a company can be considered a kind of employment, and to be employed to work within the US requires a work visa, if you intend to manage your business from within the US you will need a valid work visa.
You can be a director, as well as a shareholder, of a US corporation is allowed without any kind of visa, but being an officer and performing your duties within the US is generally not allowed. Working for your corporation or LLC within the US without a valid work visa is not allowed.
Further reading…
Intro to US business visas
Types of business visas
E-2 Visa country list
1.5 – 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.
• How many company officers are you planning to bring to the US for which you will need visas?
• Will you be hiring employees in the US?
• Are you planning on bringing employees from overseas?
– Bringing staff from abroad has become increasingly difficult over the past two US administrations unless those staff have highly specialized skills which you can prove are not easy to acquire by hiring US employees (i.e. your staff would qualify for an O-Series Visa 1, 2, or 3)
• The federal tax ID number issued for your business doubles as your EIN (Employer Identification Number)
• Here are two companies that provide payroll services and can file payroll taxes on your behalf: ADP and Paychex
1.6 – YOUR NEED TO ACCESS THECAPITAL MARKETS IN THE US
Are you self-funded or looking for loans, grants or direct investment?
• USA Corporate Services does not provide these services, but you should think through financing closely before bringing your business to the US.
• Who is going to own your US business and how much of your business will each person/entity own? (i.e. what is your capitalization table? Do you have a ledger of shareholders?)
– Securing a loan is difficult and very unlikely
– Equity investment and venture capital are also difficult but not impossible
More in our Free eBook: 7 Mistakes Non-Residents Make When Setting Up A US Company
1.7 – YOUR NEED FOR MARKETING, SUPPLY CHAIN AND OTHER SUPPORT SERVICES
Consider your service needs around:
– Transportation
– Importation
– Shipping
– Warehousing
– sales/brokerage
– travel
– repackaging
– RFID
– Product compliance with US regulations
1.8 – ARE THERE ANY TAX INCENTIVES AVAILABLE, AND WHAT OPTIONS ARE AVAILABLE TO MINIMIZE YOUR TAX BURDEN?
Should tax incentives be a factor in your decision?
Some states and cities will negotiate tax incentives to attract companies that are beneficial to their local economy — i.e. creating 100+ local jobs. Tax incentives should not drive your location decision-making unless your business is large enough or providing enough potential job creation to provide leverage with a locality.
• Good industries to possibly consider tax incentives in decision-making are film and manufacturing
• Any potential incentives would be negotiated on a local level
• If you are a small company, tax incentives should be a very minor factor
STEP 2: PLANNING STAGE
In the Company Planning Stage you will determine such practical matters as:
2.1 – CHOOSE THE NAME OF THE COMPANY
• Is your company name already taken in the US? You will need a full legal search before incorporating, but you can start on your own through this government database of registered trademarks. Keep in mind that you will not be allowed to have the same name as another company within the same product or service sector. Also keep in mind that copying a well-known name for your company will make it difficult for you to rank in search engines when customers look for you.
• Conduct a trademark search for your name and tagline if you have one. Keep in mind that companies have been sued for using the tagline of another company, i.e. a florist in Texas used “this bud’s for you,” but this was a registered trademark of Anheuser Busch’s Budweiser beer, and the florist was sued.
• Are you setting up a subsidiary of a parent company? Consider differentiating those names for clarity. For example, you may want to change “Ltd” to “Inc.” for the U.S. branch of a UK company.
• Do a search to determine if the URLs relevant to your company’s name are available for purchase?
• Last but not least, consider the intended audience for your company’s name? Does the name make sense to the US audience you want to reach? Does it have relevant associations in the US culture?