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The American Dream – Starting a Business in the USA

The USA is the country of big business. Despite the rise in the ranks of Asia and Europe, for many global entrepreneurs America will always be the place to conquer.

According to the World Bank Group report ‘Doing Business’, the USA ranks number 7 out of 189 in the world in terms of how easy it is to start a company. The USA is the world’s largest national economy and the go-getting attitude amongst entrepreneurs and encouraging atmosphere within the business community means the USA is a hub for both small companies and big business empires.

But opening a business in the US for non-residents can sometimes be tricky – trying to sort out employment visas and Employer Identification Numbers as well as opening bank accounts can put a delay on launching a new business. So how does an international entrepreneur overcome those issues and start their own American Dream?

iBusiness Blog - Biz america

The Tax Sunshine States

Some states such as Delaware and California are particularly attractive for foreign businesses looking for a sunny start to their investments.

For those who want to get business off to a quick start with zero stress, Delaware is one of the most popular states for company formation. It only takes one week to incorporate a business and it’s not necessary to even have to visit the state.

Other reasons why foreign entrepreneurs are attracted to Delaware is there is no corporate income tax (provided you do not operate or trade in the state of Delaware). The same applies to sales tax too – as long as you are not actually doing business within the state you don’t have to pay sales tax.

And the tax benefits don’t stop there – shares of stock are not subject to Delaware state taxes if the owner resides outside of the state and there is no personal property tax.

You do however have to pay an annual franchise tax, but at the low cost of $75 for a flat fee or $250 for an LLC incorporation, the advantages normally outweigh the fee and most entrepreneurs are willing to take that budget bullet.

Delaware has been a particularly attractive location for corporations as the state operates a separate court system called the Chancery Court. Regarded as one of the most flexible and advanced courts in the country, complex business decisions are made by a judge (not jury) with expertise in corporate law. The legal system in Delaware is considered to be one of the finest in the country and the state legislature takes its role seriously in keeping up to date with the most recent business laws.

California

Although California doesn’t offer quite the same tax benefits, California does offer unparalleled value to international companies due to its business services, intellectual capital, financial structure, transportation systems and market access. Here are some of the requirements for opening a business in California:

Minimum share capital $1

At least one director is required but residency for directors is not required.

Directors are not required to be listed in the articles of incorporation.

Annual filing fee is $390

$800 tax billed by State within 90 days

Opening a bank account in the US

After the World Trade Centre tragedy of 9/11, opening a bank account in the US became much more complex. The authorities now insist on more items of identification and more paperwork to fill in.

In most cases, US banks need a meeting in person to check ID and signatures and meet the business owner face-to-face. But the most important piece of documentation you’ll need in order to open a bank account in the US is an EIN number – an Employer Identification Number – which is a tax office ID.

However, if you are a non-US resident, this can be hard to come by. And beware of illegal websites that promise you a cheap deal on opening an account without an EIN. You might find you’ll end up travelling all the way to the US to open a bank account and be turned away by the bank manager before you’ve even got a foot in the door. A specialist advisor can help you obtain an EIN number and also sort out employment visas for you.

Visas

There are a number of visa options available if you’re interested in starting or expanding your business to the US. A popular option especially among investors is the EB-5 Investor Visa.

Every year the United States Citizenship & Immigration Service (USCIS) sets aside 10,000 green cards to provide foreign nationals the opportunity to gain permanent residency in the United States.

To qualify, an investment of $500,000 must be made into a targeted employment area that is defined as either an area of high unemployment, or a rural area outside the main metropolitan cities. Your business must employ 10 US citizens within 5 years and you should be able to demonstrate how you intend to promote economic growth to the region.

If successful you can become a full US citizen within 5 years and will have the freedom to live anywhere in the US.

So once you have your company registered, your visa and a bank account, you’re ready to conquer the USA and build your own American Dream.

This post was written by company formation agent Euro Start Entreprises, helping businesses and entrepreneurs with company formation in the US, UK, Europe, and the Emirates.

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