A source of income is crucial to one’s financial well-being, and with the current state of the economy, a great deal of Americans, as well as immigrants in the country, are turning to entrepreneurship for the answer.
That being said, starting your own business is no easy feat, and you’ll encounter many hurdles along the way, and this is particularly true for immigrants, who will be dealing with everything ranging from the language barrier to understanding the way the US market works.
In spite of all of this, immigrants have historically done well as business owners in the US, and if you look at the data, you’ll find that 30% of all small businesses between the 1990s and 2010s were owned by immigrants.
Of course, this doesn’t mean that starting your company as an immigrant in a foreign country is a piece of cake, and you’ll have to put in a lot of effort to keep things running smoothly.
Choose a company structure
Every journey begins with the first step, and in business, this means choosing the way your company will be structured.
Oftentimes, immigrants are only presented with two choices, those being a C-corporation or an LLC, or as it’s commonly referred to, a limited liability company.
The real benefits of both of these options lie in the fact that they can be run from outside the US at all times and don’t even require you to be a resident or have citizenship in the US to open one.
C corporations are favored among foreign business owners due to the tax and legal benefits this company structure can offer, as the corporation is considered to be a separate legal identity, offers limited liability to shareholders, and will live on even if you declare bankruptcy.
Unfortunately, this does come with a downside, that being the fact that C corporations face double taxation, as you’re forced to pay both the corporate tax for owning a company that generates profit and the income tax on all your earnings.
You can reduce the amount you’ll be paying with a few clever tricks, but it’s best to refer yourself to a financial advisor in that case.
Unlike a corporation, an LLC is considered to be a hybrid company structure, which means that by opening one, you’re practically getting the best of both worlds.
With an LLC, the company’s members aren’t held accountable for any of the debt or liabilities the business may have, which is a common thing with corporations.
Due to the LLC being nothing more than an entity for income to flow through, the profits are directed straight to you, meaning that you’re going to be paying your business’s tax with your own tax return.
On top of this, an LLC is a partnership, and the splitting of profits is jointly agreed upon by you and any of the co-owners of the company.
You should note that opening a US-based business isn’t viable in all countries, and you should first look into your country’s tax laws before committing.
Registering your business
Naturally, once you’ve figured out what type of company structure you’ll be opting for and what state offers the best tax benefits for you, all that’s left is to actually begin the registration process.
The first thing to keep in mind is that if you’re not registering a business using your own name, you must register it as a DBA name with your state.
A big issue most people face is copyright infringement, so make sure you’ve done your research before becoming too attached to a name you’ve had in mind.
Once that’s done, your next step is obtaining your individual taxpayer identification and employer identification numbers, both of which are required to run a business as an immigrant in the US.
With an employer identification number, you unlock the ability to open a bank account, file taxes and apply for business licenses with your company, and the biggest benefit is that applications are done online.
When you’re finally done with obtaining all the necessary paperwork and formalities, all that’s left to do is to register your company as a legal entity, which can be done by a registered agent in the state where you’re opening your company.
If you already have a physical address in the US, this can substitute as the agent, although people often choose to have someone else act on their behalf for this part of the process.
If you don’t have any connections in the area where you’re registering, you’ll want to look into any local agent services nearby that are willing to do it for you, and if you shop around for just a bit, you may be able to get a good deal on this service.