Can Foreign Nationals Start a Company in the United States?

Yes, non-U.S. citizens living outside of the United States can form U.S. business entities, like Limited Liability Companies (LLCs) or U.S. corporations. 

Opening a U.S. company is easy for non-U.S. citizens. Here are the steps you need to follow to start a business entity in the United States as a non-U.S. resident.

How to Start A U.S. Business: 5 Steps

Step 1.) Choose a State to Incorporate In

• Select a U.S. state to form your business entity.

The first step to starting a U.S. business is to pick a U.S. state to form a business entity in. The U.S. state where you choose to register your business will be the company’s legal home.

Delaware is the top choice for both foreign and domestic businesses because of its business-friendly laws, ability to operate anywhere, and no residency requirements.

Step 2.) Choose a Registered Agent

• Pick a reliable Registered Agent with a physical address in your chosen state. For non-U.S. residents, consider hiring a Registered Agent service like IncNow to represent your business.

Once you’ve decided on a state, you’ll need to choose a Registered Agent. A Registered Agent is a person or company designated to receive official notices and legal documents on behalf of your business.

A Registered Agent needs to have a physical address in the state where the company is incorporated. You can either appoint a friend, attorney, or professional Registered Agent service to fulfill this role.

Most individuals and businesses operating outside of the U.S. hire a Registered Agent service to represent their U.S. business entity. IncNow’s complete Delaware LLC and corporation packages include one year of Delaware Registered Agent Services. 

Make sure to choose a reliable and reputable Registered Agent. Your company’s Registered Agent is an important resource to help your company stay compliant with state laws and regulations.

Step. 3) File Incorporation Documents

• Submit the necessary documents to the state where you are forming your business.
• File a Certificate of Incorporation for corporations or Certificate of Formation/Articles of Organization for LLCs.
• Pay the required filing fees.

After finding a Registered Agent, you will need to file the necessary incorporation documents with the state to start the business entity.

For a corporation, this document is called the “Certificate of Incorporation.” For an LLC, this document has different names in different states. Some states, like Delaware, call an LLC’s public document the “Certificate of Formation”. Other states, like Florida, call this same document the “Articles of Organization.” 

The information that is required on the incorporation documents is different from state to state. However, incorporation documents generally include basic information about the business, such as its name, Registered Agent, and purpose. 

Filing incorporation documents typically requires paying a filing fee. Filing fees also vary by state and by the type of business entity you are registering. Delaware’s state filing fee is $110 for LLCs and $109 for corporations. 

Step 4.) Prepare Internal Documents

• Draft stock certificates and Bylaws for corporations or create an Operating Agreement for LLCs to establish rules and structure.

After filing your incorporation documents, you’ll need to create internal documents to establish the rules and structure of your company. For a corporation, this involves drafting stock certificates and Bylaws. Stock certificates represent ownership in the company, while Bylaws outline the governance and management structure.

For an LLC, you’ll need to create an Operating Agreement. This document sets out the ownership and management structure of the LLC, as well as the distribution of profits and losses among its members. While Operating Agreements are not typically filed with the state, they are essential for ensuring smooth operation and protecting the owners’ interests.

Step 5.) Get an EIN Number

• Apply for an Employer Identification Number (EIN) from the IRS for tax and banking purposes.

An Employer Identification Number (EIN) is a type of tax ID number used for business entities. U.S. LLCs and corporations need to obtain an EIN number from the Internal Revenue Service (IRS) in order to pay taxes. A business also needs an EIN number to open a business bank account with a U.S. bank. 

Getting an EIN number for a business requires completing and submitting the Form SS-4 application to the IRS. You can apply for an EIN number either online, by fax or by email. 

An online service, like IncNow, can help complete the application and submit the Form SS-4 for you. 

Non-U.S. citizens do not need a U.S. Social Security Number (SSN) to apply for an EIN. However, the IRS will only accept an EIN application by fax if you do not have an SSN. 

Why Incorporate in Delaware?

You can choose to incorporate a business entity in any U.S. state. However, entrepreneurs and business owners around the world know Delaware as being the best and most popular option for foreign and domestic businesses. 

Incorporate in Delaware: Top 3 Reasons for Non-U.S. Citizens

The top three reasons that make Delaware the most popular state to incorporate are:

Reason #1.) Delaware’s Business Friendly Laws –

Delaware provides the strongest legal protections for business owners and shareholders. Delaware has a dedicated business court that is known for resolving business disputes fairly and efficiently. 

Reason #2.) Operate Anywhere –  

Delaware LLCs and corporations can operate in any U.S. state or country. Whether you are doing business in California or India, you can take advantage of the protections of a Delaware business entity. 

Reason#3.) No Residency Requirement –

Almost anyone (other than individuals from restricted countries) can form a Delaware LLC or corporation. You do not need a physical address, virtual office, or bank account in Delaware to open a Delaware business entity. 

Entrepreneurs and business owners from all over the world incorporate their businesses in Delaware. Whether you are in California or India, you can take advantage of the legal and tax benefits that Delaware offers. 

 

Who Cannot Form a U.S. Business Entity?

Certain individuals are not able to form U.S. business entities for one of the following reasons:

1. They are nationals or residents of countries sanctioned by the United States government; or,
2. They are on OFAC’s Specially Designated National and Blocked Persons List (“SDN List”). 

The US Department of Treasury’s Office of Foreign Asset Controls (OFAC) is tasked with enforcing restrictions that prevent US persons from doing business with specific countries.

Examples of restricted countries include:

• Russia
• North Korea
• Iran
• Libya
• Syria

OFAC also maintains the Specially Designated National and Blocked Persons List (“SDN List”). The SDN List includes the names of approximately 6,300 companies, organizations, and individuals who are restricted from doing business with US entities.

OFAC typically places individuals on the SDN List due to having ties to groups or organizations identified as posing a threat to US national security. Companies providing incorporation or registered agent services are not allowed to do business with individuals or business entities included on the SDN List. 

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