Tips for Foreigners Starting a Business in the US: Choosing the Right Company Structure and Business
Starting a U.S.-based business as a foreigner can be a long road, but we want to make it easier to register your company and open your business.
Learning English is a basic requirement if you plan on doing business with Americans, but other aspects such as filing for your Employer Identification Number (EIN), and choosing which type of company you want to be, can make matters more confusing.
But we prepare this following guide to help you.
Choose your company’s structure Before even beginning the formation process, you need to evaluate the types of company structures available in America. The two most important corporate structures in the US are limited liability company (LLC) and C Corporation. The type of structure you choose will impact the way you conduct your business and the way you’ll pay taxes in the US. Main differences between LLCs and C Corps
Taxes: LLC members (owners) do not need to pay corporate taxes, but personal income tax only. On the other hand, C Corps have to pay taxes on a corporate level, while shareholders would have to pay on their own as well. This is known as double taxation and is one of the reasons entrepreneurs seek to start an LLC in the US.
Stock market: C Corps can issue stocks while LLCs can’t. This means that only C Corporations are allowed to trade and participate in the stock market. The only way for LLC members to do something similar is to trade ownership interest on a securities exchange.
Financing: raising capital for a C Corp is easier than for an LLC. C Corps can sell their shares and have unlimited shareholders financing their operations. On the other hand, LLCs are limited to offering debt (liquid money, returns) or equity (ownership). Similarities of C Corps and LLCs
Liabilities: in both structures, companies are treated as separate entities from their owners (members for LLCs and shareholders for C Corporations). This means that your assets cannot be seized in case the company incurs legal liability.
Tax filing: Both LLCs and C Corps have to file their taxes quarterly.
Type of owners: Individuals and corporations, either domestic or from abroad can be members of an LLC. The same goes for shareholders of a C Corporation. Although LLCs are limited to 100 members while C Corps are unrestricted in this regard.
What’s the best structure for foreign entrepreneurs
Both LLCs and C Corps offer advantages to domestic or international business owners. One key aspect is that of raising capital. C Corps offer much more flexibility and security to external investors, therefore it’s easier to get capital for a new venture. Now, when it comes to taxes, LLCs have the obvious upper hand by avoiding double taxation. This is one of the most appealing aspects of the entire American economic ecosystem, which also ends up attracting more foreigner-owned businesses. In conclusion, if your company is already successful in your local market and you’re just expanding your horizons.
Now, on the other hand, if you’re looking to open a company in America as a non-citizen for the advantages the country offers to raise capital, then a C Corp could be better for you. Either option would yield incredible amounts of advantages to your business in the global scenario and would give you access to the best of the American commercial landscape. You’d be able to sell your products and services in the most profitable market in the world and on platforms such as Stripe and Amazon without any problem.
What documentation do you need to open a business in the US?
You don’t need to come to the US to start a business as a non-citizen. You don’t even need to get an American visa. Owning a business is not the same as being employed by it, thereby you’ll only need a US visa the moment you start actually working in your company. So you can do it all in baby steps at first. Company’s address
The first thing you need to do is to get a physical business address, the place where your company’s headquarters are to be located. In case you don’t have access to any place, you have Globalfy’s Virtual Address service, by which you can register our mail room as your business address and get your mail shipped to your country, EIN
Then you’ll need to apply for an EIN, the Employer Identification Number of the IRS. In case you have a social security number or Individual Taxpayer Identification Number you can apply online. In case you don’t have any of these documents, the process will take longer but you can still do it. You’d have to fill in the Form SS-4 and wait for a few weeks for it to be processed. US business bank account
After completing the steps mentioned above, you need to get a US business bank account to manage your money.
When starting a business in the United States as a foreigner, it is important to consider business insurance.
Business insurance can protect your company from potential financial losses due to property damage, lawsuits, and other unforeseen events.
There are several types of business insurance available, including general liability insurance, property insurance, and workers' compensation insurance. General liability insurance can protect your business from third-party claims for bodily injury, property damage, and personal injury. Property insurance can cover your business property and equipment in case of theft, fire, or other damage.
5 Types of Insurance Needed for Small Businesses
What insurance do you need for a small business? This question is often asked, but there is no simple answer. This is because the types of business insurance coverage you need for your small business depend on what your business does and the state you are in. In fact, state laws require certain small business insurance policies and it's up to you to make sure you have the right coverage.
Without the right types of small business insurance, you may have to pay out-of-pocket for claims. Many small businesses don't have the resources or capital to cover claims, which means they may not survive. This is why small business insurance is an important investment to protect your business.
The 5 most common and Required by law types of insurance that small businesses need are:
1. General Liability Insurance
General liability insurance helps protect your business from claims that you caused bodily injury or damage to someone else's property. For example, if a customer slips in your store, this coverage can help pay for their medical expenses. Liability claims for work performed off-site may also be covered by a coverage known as completed products operations coverage.
Many small business owners also obtain a general liability insurance policy that includes products liability insurance. This can help protect your business from claims of bodily injury or property damage caused by your products.
2. Professional Liability Insurance
Professional liability insurance helps cover claims related to errors in the professional services your firm provides. Say your accounting firm makes a mistake on a client's financial statement and they have to pay a fine. If they sue your firm, professional liability insurance can help cover their legal costs.
Investing in this coverage can help you save on claims costs. This coverage is also known as errors and omissions insurance or E&O insurance.
3. Business Income Coverage
Business revenue coverage, also known as business interruption insurance, can help replace lost revenue if you are unable to operate due to covered property damage. This includes damage from fire, storms, or theft.
4. Commercial Property Insurance
Commercial property insurance helps protect your rented or owned building and equipment used to operate. So if someone breaks into your building and steals your company's computers, commercial property insurance can help cover the replacement costs.
5. Workers' Compensation Insurance
Workers' compensation insurance provides benefits to employees if they suffer a work-related injury or illness. For example, if an employee develops carpal tunnel syndrome, he or she may be injured.
It is important to consult with an insurance professional to determine the type and amount of insurance that is appropriate for your business. Different states may have different requirements for business insurance, so it is important to research the regulations in your state.
Besides business insurance, it is also important to have a solid understanding of the legal and tax requirements for starting a business in the United States. Consulting with an insurance agent and a lawyer can help ensure that your business is set up properly and in compliance with all applicable laws and regulations.
Do I Need Liability Insurance for My Small Business?
The quick answer is yes. Most businesses need liability insurance for small business. But there are several different types of liability coverage to choose from. The most common are general liability and professional liability.
Getting the right business insurance coverage isn’t any different than protecting your home with homeowners insurance – they’re both some of the most important investments you’ll ever make.
Combining insurance with bonds like surety bonds can add to your protection. To learn more about the business insurance coverage you should have, get a quote today.
We make it easy for you to customize your policy to get the best small business insurance coverage you need. For more customization to your base coverage, insurance riders can help you do that.
What Insurance Do I Need To Start My Own Business?
When you’re starting your own business, some types of coverage you should make sure to have are: general liability insurance, professional liability insurance, and workers’ compensation insurance. The actual types of insurance and whether you need additional coverage depends on what your company does and the state laws where you are.
Do All Small Businesses Have Insurance?
If you’re still wondering, “Do I need insurance for my small business?” The answer is yes. Most small businesses need some type of coverage for protection from various risks, like bodily injury, property damage, car accidents, and lawsuits. Without coverage, you’ll have to pay out-of-pocket for claims reported against your business.
Having to pay these costs on your own can cause severe financial losses that can shut down your business. We have been helping small businesses protect themselves with comprehensive insurance for years. Contact us today to learn how we can help you protect your business.
Don't wait, take control of your small business journey and contact us now to learn more!
EPIA Inc. boasts decades of experience in find the best insurance options for businesses and families, with a focus on Taiwanese and Chinese immigrants. Beginning as a small business owned by an immigrant family in the US, the company is committed to providing the best care for both your family and business.
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