Business in the USA. How to start a business if you are an immigrant
You can open your business in the United States without citizenship and even without a Green Card. However, even for immigrants who have gone through a lot for their status in the United States, it is often difficult to understand the process of starting a business.
The process of starting a business in the USA
The classic steps primarily include: analyzing the market, choosing a location, drawing up a business plan, and other rather individual things, which depend on whether you rely on luck or adhere to strict rules?
Immigrants often have a choice between the two most suitable types of business structures:
- Type C Corporation (C Corporation)
- Limited Liability Company (LLC)
This type is beneficial for foreign businessmen with its tax and legal benefits:
- The corporation has its rights and obligations under the law.
- It is a separate legal entity from its shareholders. It leads to an existence independent of its owners, that is, for example, retirement or the death of a shareholder will not affect its activities in any way.
- conversely, owners have strong personal liability protection.
One of the main disadvantages of this option is the payment of double tax. That is, first you deduct income tax, then – income tax on dividends. Besides, opening a Type C corporation is more expensive than other structures.LLC
As a mixed business, the American prototype LLC has its advantages on the list:
- Pass-through taxation, that is, the firm does not pay taxes at the enterprise level, but only through the owner’s income tax return.
- Flexibility in resource allocation. The owner decides for himself how the company’s profits will be spent.
- Less bureaucracy. Since this form of organization does not imply a board of directors and a joint-stock company, there will be much less work with documentation.
The disadvantage of such a choice is that some states of America may require the dissolution of the LLC or reorganization if one of the owners leaves the company or a new one appears.
In addition to these, the most popular and convenient solutions for foreign businessmen, it is also worth remembering the existence of Sole Proprietorship, where personal assets are not separated from business resources, and they are not so willing to issue loans. The advantages of individual entrepreneurs in America are sole ownership and the opportunity to take risks and implement any of their ideas, due to their relative cheapness.
Besides, you can consider the option with a partnership: sole (Limited Partnership – LP) and limited liability (Limited Liability Partnership – LLP). In the first case, one of the co-owners will have unlimited liability, and all the others will have limited control over the company, in the second, all participants have limited control. This form is perfect for dealing with multiple persons, as well as professional groups of persons (lawyers, etc.).
States for business. Which is better?
The next step in starting a business is choosing the location of the company. Of course, if a particular state dominates the market with your specifics, then the decision is obvious. But if the search is not limited to any specific criteria, then you should start from the following:
• No government taxes (sales tax, government corporate income tax on goods and services sold, personal property tax, value-added taxes (VAT), business taxes, or taxes on shares or share transfers).
• Low tax on LLCs and franchises (many states charge an annual tax based on income, while others charge low or flat fees)
• Corporate confidentiality (each state establishes its laws on the format for the use of personal data of owners, shareholders and the protection of their personalities, in general)
Top 10 states that are considered tax havens in America:
Does not include personal income tax, corporate income tax, or gross income tax.
Also exempt from individual and corporate tax.
Does not levy personal income tax or state sales tax.
Offers low tax on unemployment insurance, and there is no individual income tax.
Its constitution limits sales tax to a threshold of 4%.
There is no state sales tax in this state.
There are no corporate, franchise, or individual taxes.
The state also does not deduct corporate, individual, and franchise tax rates.
Does not charge sales tax, but has one of the highest interest rates for individual income.
Utah and Indiana
All major taxes are levied but at very low rates.
Registering a name for a new business in the USA
If the name of the new company is not the name of the owner, then it is worthwhile to start selecting a trading name. Here it is worth remembering the violation of trademark rights, therefore, it is necessary to conduct thorough market research for the absence of the same name.
4 ways to protect your business:
- Entity name. It can protect the name of the company at the state level. Registration may be required depending on the type of business or state.
- Trademark (Trademark). It guarantees the protection of the company, goods, and services at the national level. Trademarks do not allow others in the same (or similar) industry in the United States to use your trademarks. You can check the registration of the selected name for the product or service on the website of the United States Patent and Trademark Office.
- “Carrying out activities as …” (Doing Business As – DBA or Trade name). Another type of company name may need to be registered depending on the chosen way of starting a business, its location, etc.
- Domain Name. Almost every business has its website. A business card of a company or a platform for displaying goods and services – in any case, after registering a domain name, no other company will be able to use it.