Every day more and more foreigners are setting up new businesses all across the United States. Many investors are looking to take advantage of the world’s largest integrated market! Setting up a business in the Untied Stated can seem rather challenging at first. But with proper guidance from a professional CPA, those challenges can be less stressful.
If you are a non-resident that wishes to start a business in the U.S. it is important to familiarize yourself with the United States tax laws. There is much to consider before you risk foreign funds into American Investments. Non-residents have many additional steps that needed to be taken in order to invest in the U.S. As a foreigner, how much time you spend in the United States, no matter whether legally or illegally, will determine whether or not you will be considered as a foreigner or a taxable resident alien.
Steps to Becoming a U.S. Business Owner:
1) Prepare your own Personal Financial Plan to determine your ability for risk.
2) Prepare a Business Plan to determine your cost to invest and to meet your personal financial goals
3) Determine which state you will operate in and incorporate your business.
4) Determine the ownership, type of business entity and tax structures.
5) You must get a Foreign Employer Identification Number or the Individual Tax Identification Number.
6) Determine what U.S. legal agreements will be needed between owners, employees and vendors.
7) Set up their corporate bank account and transact business.
A foreigner must also determine their residency. A foreigner’s residency can drastically change the amount of taxes a foreigner is obligated to pay. A foreigner can be classified as a resident or a nonresident alien in the United States.
Resident Alien- Tax rates and income is determined in the same manner as a US citizen. They are taxed on their worldwide income derived from any source, but, may pay less in annual income taxes and for estate taxes.
Nonresident Alien- They are normally taxed only on income derived from a US source. US investment income is typically taxed at rates much higher than Resident Aliens.
Starting a US business as a foreigner can be challenging and rewarding at the same time. To ensure that you get a healthy start in your next business venture it is important to hire a professional CPA that specializes in International taxes to walk you through the United States tax laws and tax laws related to your country of origin. A great professional team can help you start a successful business in the United States.