STARTING A NEW BUSINESS IN THE U.S.
Incorporation is the key to safely starting a new business in the U.S., because incorporation provides the asset protection and stability you need when starting a new business. Failure to incorporate properly, on the other hand, exposes you personally in the event that someone files a lawsuit against your business. Incorporation protects you from being personally liable for problems that may arise from the operation of your business. In order to be successful starting a new business in the U.S., you will need to understand all the requirements for incorporation, the options available, and plan meticulously for starting a new business in the US.
You can use the following checklist to guide you in planning your new business venture. The list should not be construed to be either U.S. legal support or U.S. accounting advice. It should be used only to guide you in discussions with your lawyer and accountant.
BUSINESS ENTITY START-UP CHECKLIST
- Are you a foreign national wanting to start a U.S. business? See “Setting Up a U.S. Business as a Non-U.S. Resident.”
- Choose the type of business entity that you want for starting a new business in the U.S.
- Determine who will own the company, how much each person will invest, and what they expect to get in return.
- Determine who will manage the company:
- for corporations, select the officers and directors
- for limited liability companies (LLCs), select the managers or members
- Choose a state of incorporation
- Choose a name for your company by researching corporate indicators and name availability.
- File the incorporation papers.
- Hold an organizational meeting and adopt bylaws (for corporations) or the operating agreement (for LLCs)
- Obtain an Employer Identification Number (EIN). Your company must have its own identification number in order to pay U.S. taxes at the federal, state, local levels, including payroll, sales and income taxes.
- Open a U.S. business bank account. Because you and your business are separate legal entities, must never mix your business bank account and your U.S. personal bank account.
- Obtain any necessary additional financing.
- Establish a location for your business. The simplest way to do this is to lease an office.
Every state requires a registered agent in the USA to represent your company within the state where the company is incorporated or authorized to do business.
HOW TO SET UP A U.S. COMPANY AS A NON-RESIDENT
Although the steps for starting a new business in the U.S. are virtually the same for a non-resident as a resident, there are additional requirements. For most non-residents, observing international tax law, obtaining visas and opening a U.S. bank account present the greatest problems. Each of these topics is very complicated.
The steps outlined below cover the critical steps that must be addressed before a business can be launched.
- The type of company is being set up
- S Corporation
CHECKLIST: HOW TO SET UP A U.S. COMPANY AS A NON-RESIDENT
STEP 1: DETERMINATION STAGE
In this step, you need to determine:
- Where to establish your U.S. business
- Where to incorporate your U.S. company
- Your need to protect your intellectual property
- Your need to obtain any special licenses
- Your need for visas or other immigration documentation
- Your need for staffing for the business
- Your need to access the capital markets in the U.S.
- Your need for marketing, supply chain and other support services
- Understanding U.S. taxes and tax incentives, and what options are available to minimize your tax burden
Free business planning templates are available from the Service Core of Retired Executives (SCORE). You can use the lean canvas designed to organize the strategy for starting a business in the U.S. It’s free for 30 days, and very useful. (We are not related to this group or its website in any way).
STEP 2: PLANNING STAGE
In the Planning Stage you will determine such practical matters as:
- The name of the company
- Whether to be a corporation or a limited liability company
- Which state to incorporate in and which state(s) to register in
- Determine the capitalization of the company
- How many shares at what par value
- How much each shareholder will contribute to the company as their capital contribution
- Determine who will be the shareholders, officers and directors
- Determine the roles and responsibilities of the company’s officers and directors
STEP 3: ACTION STAGE
After completing the Planning Stage, the Action Stage should move along quickly and smoothly.
Essentially you will provide the necessary documents to:
- Form the company
- Register the company in other states as needed
- Hold the organizational meeting, appointing the officers and directors, issuing shares to the shareholders and taking other actions as necessary
- Obtain the federal EIN
- Open your U.S. personal bank account and your U.S. business bank account
- Start business: buy, lease or rent office space, hire employees, market your products