Registering Your Business in the United States as a Non-Resident: Do's and Don'ts

If you're a non-resident looking to start a business in the United States, there are some key steps you need to take to ensure your business is legally compliant and financially sound. Registering your business is one of the most important steps you need to take, but it can be a complex process for non-residents. In this article, we'll discuss some do's and don'ts to help you navigate the process of registering your business in the United States.

Before all that let me introduce myself and clarify that: My name is Ugur, I am not a tax expert, a notarized representative in any state, I was fortunate enough to have a start-up that helps non-US residents to start and run their companies in the right way, over the last 6 years I worked with thousands of entrepreneurs from 150+ countries, I believe I’m the one who has the highest experience and expertise when it comes to running a business in the US as a non-American

So let’s get to the topic:

Do's:

Choose the Right Business Structure

One of the first things you must consider when starting a business in the United States is the business structure. There are several options available, including sole proprietorship, partnership, limited liability company (LLC), and corporation. Each business structure has its own advantages and disadvantages, so it's essential to choose the one that's right for your business needs. For example, if you're looking for liability protection and flexibility in managing your business, an LLC may be the best option, if you’re planning to do eCommerce such as common Shopify dropshipping or selling on Amazon and so on LLC will be the simplest. If you’re planning to go for Venture Capital, raise money, be acquired in the future, or issue stocks, C-Corporation will be the best option for you.

Register Your Business in the right state

Once you've chosen your business structure, you'll need to choose a state. Each state has its own differences, so it's important to research the specific requirements for the state where you'll be operating. In general, you'll need to file Articles of Incorporation or Articles of Organization with the state's Secretary of State which are gonna be essential business formation documents along with your certificate of formation/incorporation, my personal recommendation for the states is, if you’ll be operating physically in any state and move there, pick the state where you’ll be based, or else there are common options: Delaware, Texas, Florida, New Mexico, Wyoming which you don’t pay state taxes when you’re not physically residing in the state as a non-resident. Out of them all, if you’ll go for venture capital aka raise money, US investors almost only invest only in Delaware C-Corps, if you’ll just have an eCommerce business, selling things online, the most underrated state is New Mexico, it’s the cheapest and fastest to start with, formation only takes 2-3 days, and unlike all other state’s there isn’t any annual renewal responsibility or cost, unlike others, for example, since Delaware is so popular, regular formation take 64 days, unless you choose expedited with the state. And annual franchise tax aka their Netflix membership fee is $300 for the LLC’s.

Obtain a Tax ID Number

Before you can register your business in the United States, you'll need to obtain a Tax ID number. This is also known as an Employer Identification Number (EIN) and is used to identify your business for tax purposes. Additionally, as a non-resident, since you’ll not have an SSN, you also need to have a substitute called ITIN, which is basically an individual tax identification number for non-residents. Without these tax ID’s you basically can’t set up US Business PayPal, Stripe, or set up your Amazon Seller Accounts, or file your taxes, and so on..

Hire a Registered Agent

Most states require businesses to have a registered agent, which basically a company registered with the state that receives legal documents on behalf of your business. As a non-resident, you may not have a physical presence in the United States, so hiring a registered agent can help ensure that you receive important legal documents in a timely manner and pretty much you to have a US business address.

Comply with All Federal and State Regulations

As a non-resident, it's important to comply with all federal and state regulations when registering your business in the United States. This includes registering for state and federal taxes, it’s the duty of your registered agent to remind you to have good standing and compliance with everything you need to follow up.

Don'ts:

Don't Rely Solely on Online Legal Services

While there are many online legal services that can help you register your business in the United States, it's important to be cautious when using these services. Some online legal services may not provide you with the level of support and guidance you need as anon-resident. The biggest incorporations such as LegalZoom, NorthWest Registered Agent, RocketLawyer, and IncFile are made for US citizens, and residents aka SSN owners. Some of these companies don’t even accept non-US payments, make sure the one you’ll work with does have a relationship and support for the non-resident, the simplest thing you can do to check this is to see whether they issue ITIN or not..

Don't Ignore State and Federal Tax Obligations

As a non-resident, you may be subject to state and federal taxes, even if you don't have a physical presence in the United States. It's important to understand your tax obligations and comply with all federal tax laws. Failing to comply with tax obligations can result in penalties and legal issues down the road. Remember you operate a business in the US.

Don’t rush, cut corners, it all takes time, be patient.

Do not expect everything to get started with a snap of a finger, plan ahead, all your process especially since your Tax ID numbers will take time, for example, EIN alone takes around 30 days and ITIN takes about 8-14 weeks, these are the time durations by the IRS which has nothing to do legal service providers, you try to sign up to the payment providers before the tax ID numbers will result in getting rejection and even maybe the payment providers Stripe PayPal or selling platform Amazon will even be red flagging your company name, your information domain and so on. So don’t rush it, read, watch, learn and move as professionally as you can.

Where to do it all, how to launch it in the right way?

If you’re a non-resident since I’m the one who understands you the most, who’s been in your path years ago we have the ultimate US formation package including your ITIN.

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Best of luck on everyone’s entrepreneurial journey!

Ugur Yuruk

Owner of the TheITIN

Mar. 19, 2024