- How to open a company in the USA
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- The United States is a market of enormous potential, so it is natural to wonder if it is possible to open a company in that territory being a foreigner and, if so, what is the process to follow.
- The United States is the largest market in the world, so, naturally, it is every entrepreneur’s dream.
- You can open a company in the United States without being a U.S. citizen or resident, and the process is more accessible than in many other countries.
- Basic steps to open a company in the USA
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- 1) Obtain the B1 visa: there are more than 30 temporary and permanent visas, but if for any reason related to the company you must travel to the U.S., then it is advisable to apply for the B1 visa since this is the business visa. This way, your identification document will be valid for signing contracts, and you avoid any possible legal problems arising from entering with another type of visa and doing business.
- 2) Decide the location of the company: to decide on the site, you must consider the company’s objectives and goals, which must be included in the business plan.
- For companies from Spain that are internationalizing, the state of Florida is recommended, specifically the city of Miami. The reasons for this are the cultural similarity and the large number of Spanish speakers, which can favor the growth and expansion of the business.
- 3) Find the best tax strategy for the company: in the USA, there are states with lower taxation than others and cities with lower tariffs than others within the same condition. However, the cost of establishing in those territories, which can be much higher, must be considered.
- 4) Hire an authorized agent or registered office. When the partners and managers of the company are not U.S. residents, a person or representative (who must be a U.S. resident) must be the company’s contact with the U.S. administration.
- The function of this authorized agent or, in such case, registered office is to be the one with whom the administration interacts for the company’s affairs, i.e., filing documents, receiving communications, and responding to the administration’s requests.
- 5) Main steps to open a company in the USA: the U.S. regulations establish the following fundamental steps for the incorporation and registration of a company.
- a) Choose the name of the company.
- b) Select the territory where the company will be established.
- c) Choose the authorized agent or the registry office to communicate with the administration.
- d) Obtain the EIN (equivalent to CIF or tax identification number). This step is necessary for hiring employees, opening a bank account, paying taxes, and obtaining a business license.
- e) Choosing the structure of the company: it is essential to determine the type of company to be formed; for this, there are several options, but for this case, the most common are Corp (Corporation) or LLC (Limited Liability Company), there are many legal structures with distinctive characteristics, to select the most appropriate one is required to consider the business model, the number of partners, how to provide the initial capital, among other things.
- The following are the main structures for forming a company:
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- -Sole Proprietorship(sole proprietorship): it is the one with the simplest and cheapest structure and does not have many requirements. The owner has unlimited liability. The disadvantage is that if the company makes losses, the owner must personally respond to them. It is not recommended for foreign entrepreneurs.
- -Corporation: This type of entity is independent of its owner. The shareholders are only liable for what they have invested in the corporation. There are two types of corporations (“S” and “C” Classes), and they are distinguished by the tax obligations to which they are subject. The S-Class is recommended when there is only one owner and the C-Class when there are several partners and potential investors.
- *S-Corporation: there is no double taxation in this case. The partners have limited liability. This structure is more complex and expensive than the LLC but has similar advantages.
- *C-Corporation: also a good option, especially if there are several partners and potential investors. The disadvantage is that profits must be taxed twice.
- Corporation shareholders qualify for a lower dividend rate compared to other structures.
- Although there is double taxation, the corporate and partnership tax management strategies can be used to increase expenses, reduce profits and, therefore, partially reduce double taxation.
- -LLC (Limited Liability Company): a combination of a corporation and a limited liability company is the most flexible business structure. Therefore, it is an attractive option for a new foreign company.
- One or more members can manage the LLC. They are not personally liable for the obligations of the company. The company’s profits are transferred to the members, incorporating them into their income for the individual tax return.
- -Partnerships (Parnetships): are formed by several persons or entities that own and manage the company. The partners share profits, losses, and management. In addition, taxes are the individual responsibility of the partners.
- f) Incorporation: The company must file its incorporation application with the state department or Division of Corporations of the respective state. The incorporation form must have the following items: name of the company, selected structure, physical address, name and address of the registered agent, and par value of the shares authorized to be issued by the corporation, its members, and officers. It is also necessary to pay a fee to the state for incorporation.
- What is the cost of opening a company in the U.S.?
- Now that we have outlined the general steps to follow to open a company in the USA, we will discuss the cost. In the U.S., the laws vary from state to state, so the rules for setting up a company also differ from state to state.
- Many companies offer prices of around $500 to start a business. These prices only include the procedures mentioned in the previous point and are usually for the LLC type.
- The cost varies according to the state; for example, we can cite that while in New Mexico, to establish the company costs 50 dollars and has no annual fee, in Delaware, you have to pay a fee of 300 dollars.
- There is also the cost for the authorized agent, which can range from $75 to $400 per year. It would be best if you also considered the cost of renting a physical space to establish the business.
- In addition, your company will require lawyers to represent it.
- It is essential to adapt the structure to the needs of the regulations to avoid surprise costs. Legal costs for litigation are very high.
- You are getting financing to open your company in the U.S.
- In the previous point, we have exposed part of the essential cost of opening a company in the USA. Now we will talk a little bit about how to handle the issue of getting financing for this.
- Opening in the USA using own funds
- The company allocates part of its funds for this activity.
- Opening in the USA using loans
- The company borrows from banks, partners, or liquidity providers to obtain the necessary resources in exchange for interest.
- Opening in the USA through grants
- Currently, there are European funds for the internationalization of companies, state aid, and private aid.
- For this reason, it is essential to have a previous study to be able to present it and obtain more funds.
- There are several ways to finance the internationalization of your company, and which one suits you best will depend on the economic situation of your company.
- Other elements to take into account for the company
- We have already discussed the necessary steps to open the company in the USA and the cost that this entails, as well as different options to finance the opening of the business. Now we will introduce you to some other elements you should consider.
- Accountant
- An accountant is necessary to comply with tax regulations and meet tax obligations. This will prepare the annual tax returns and advise the company on tax issues and sales tax returns, among other things that may arise along the way.
- U.S. companies pay federal and state income taxes that are adjusted according to the state in which they are located. In addition, state and local governments may impose income taxes.
- Licenses
- It is necessary to apply for and process the different licenses that vary according to the type of business. These are required by the city, county, or sometimes by the state.
- It is advisable to hire someone with experience who can advise on this matter.
- The issue of licenses is critical; dealing with the matter well and on time avoids paying high fines.
- Bank account
- The company must have a commercial bank account; banks usually offer services and benefits not provided to personal bank accounts. Besides, it is a tool that helps the company’s management and is a sign of its seriousness.
- Possibility of immigration
- Although it is not necessary to immigrate to open and manage the company, and we had already dealt with the subject of visas when we mentioned obtaining the B1 permit to be able to travel and make the required procedures without having legal problems, it is also necessary to consider from the beginning the possibility that one or several of the partners wants to immigrate to the USA; For this, it is required to be advised by an immigration lawyer, who will present the numerous options of visas for business people and investors and the process necessary to obtain them.
- Conclusion
- Regardless of whether the motivation to establish your company in the U.S. is merely economic or fiscal, as we have seen throughout this article, the cost of installing your company in the U.S. is not high, as long as it is done correctly.
- On the other hand, it is necessary to carry out a previous analysis at different levels and to have a business plan. It is also essential to make a legal analysis of the regulations governing your product, choose the best local and international partners, and have a strategy.
- It is a country with a large population, most of which has good purchasing power and tends to be very consumerist, so from the beginning, you can see the vast potential that can be exploited by establishing a business in one of its states; this is generally true regardless of the type of business that your company manages.
- As you probably noticed when reading this article, the process of opening the company is quite simple and is not as expensive as you might imagine. So if you want to internationalize your company by establishing a headquarters in the USA, you already have the necessary background information.
- Remember to make a market analysis before starting this big step and be very clear about your strategy; these are vital points no matter which state you choose.
- Pay special attention to taxes and make sure you hire a qualified accountant. This point, as simple as it may seem, is critical for your company’s future.
- These steps must be followed no matter how big or small your company is or how old it is.
- Remember always to hire trained personnel, treat them well and not just your customers, and no matter what your product or service is, remember to offer the highest quality. These are critical points for success.
- Without further ado, we thank you for reading the article from beginning to end and wish you a happy day.
