ByThe United States has a huge market, and starting a business in this country can lead to great success. However, it’s understandable if you feel a bit overwhelmed and unsure of where to start. The truth is that creating a company in the U.S. isn’t very complicated, but it does require organization and a clear understanding of what’s needed to make it happen.
Advantages of Starting a Business in the USA
For startups, the main advantage of incorporating in the United States is access to capital markets. Additionally, some foreign companies seek to become U.S. companies to gain access to capital. The reality is that U.S. banks are more reluctant to lend money to small businesses compared to foreign banks. However, once a foreign company has operated in the U.S. for at least two years, it will have the same access to national bank financing as any other local company.
But that’s just the beginning. Having your own company in the U.S. offers many benefits, such as:
- Opening online accounts to sell on marketplaces like Amazon
- Open bank account online in the U.S. to make transactions with American customers more easily
- Amplify your business’s reputation, both in your home country and in the U.S.
- Facilitate sales to the U.S. market, from the perspective of customers and taxes
- Potentially reduce corporate taxes
What Is the Process to Incorporate Your Business in the United States?
Not being familiar with the legal and tax system in the U.S. can make the process challenging. What should you keep in mind? First, understand the requirements and stages to start a business in the U.S.
Write a Business Plan
A business plan helps you clearly define how your company will operate and its short- and medium-term goals. If you don’t know where to start, you can begin by asking yourself these questions:
- What is my company’s focus? Its goals?
- What does my company offer? How does it compare to competitors?
- How many people do I need to operate? Who will handle what?
- Where will the company be located?
- What materials will I need?
- How much money do I need to get started?
Choose a Business Structure
This step is very important because it will affect your tax payments and the responsibilities or risks your business will assume. Deciding which type of entity is right for you depends on many factors. For example, many startups register as C Corporations, primarily because venture capitalists prefer to invest in them over LLCs or other corporations. The following are the most common structures:
- Sole Proprietorship: The business is controlled by one person, and the business’s assets and liabilities are the same as personal ones.
- Partnership: This consists of two or more people.
- Limited Liability Company (LLC): This type separates personal responsibilities from those of the business, meaning your assets won’t be at risk in case of bankruptcy or lawsuits.
Choose a Name and Register the Business
When thinking of a name, the first thing you should do is ensure it’s not already registered. You can check this on the website of the Secretary of State where you want to start the business.
Once you have this ready, you can register your business. The way and place to do this will depend on where your business is located, i.e., in which state. Most small businesses only need to register their name with the state and local governments.
Obtain Federal and State Tax IDs
Get an Employer Identification Number (EIN) for your business from the Internal Revenue Service (IRS). An EIN is used for paying federal taxes, hiring employees, and more. You’ll need one if your business has more than one owner. Requesting one is free, and you can do it through the IRS website.
After obtaining the EIN, you’ll need to open a bank account. State tax obligations vary by state. Check the official website of your state to determine your specific requirements.
Apply for Licenses and Permits
Depending on the type of business activity, you’ll need certain permits and licenses. Most businesses require a combination of state and federal licenses and permits. Again, these authorizations vary depending on the state and the industry. For example, opening a restaurant differs from starting an eye clinic.
Open a Business Bank Account
You need to open a business bank account separate from your one. This is recommended if you want extra protection. A business bank account will allow you to receive payments from U.S. customers, pay taxes, process payroll deposits, and conduct business in the country.
File Annual Reports
Keep your business in good standing by filing its annual reports, paying franchise taxes, and submitting federal income taxes. When you incorporate a company in the U.S., you’ll typically need to file an annual report that includes information on its directors and the company’s capitalization.
Now that you know how to start a business in the U.S., take advantage of all the opportunities the U.S. market offers, and don’t wait any longer! All you need is a clear understanding of your goals and a well-planned, committed approach to each step. Success is just around the corner!
