BUSINESS IN THE USA

Opening your own business in the USA is a super idea for millions of foreigners from different parts of the world. Many foreign businessmen do manage to achieve great success. The widely known ‘American dream’, in other words, the unshakable belief that absolutely anyone with the right level of diligence and labour can achieve prosperity in the USA is a powerful motivating factor that has not lost its relevance over the years.

The United States of America holds a strong position in the global markets for goods and services, in 2024 the economy is still the largest in the world, although competition with China is gaining momentum. By the way, this gives an additional incentive to the American government to attract foreign investments into the country and not to create unnecessary barriers for entrepreneurs from abroad. The US has a free market economy based on the development of high technology in a wide variety of industries, ranging from space and military to agriculture.

Business in the USA

A transparent legal system and fair courts guarantee foreign businessmen the safety of private property and equal conditions for doing business on an equal footing with local citizens. Business immigration to the USA will allow not only to increase prosperity, but will also give an opportunity to stay in the country forever, i.e. to obtain American citizenship. The state has created comfortable living conditions, US universities are considered the best in the world, health care system, infrastructure, social guarantees – all at the highest level.

CONTENTS

Tips before starting a business in the USA

Entrepreneurial activity of foreigners in any country of the world is based on a number of preparatory measures that allow you to assess the chances of success and minimise losses in case of failure. Here are some tips for setting up a new business in the United States.
Be sure to visit the United States on a tourist visa or any other legal way. Familiarise yourself with the peculiarities of the business environment, take part in business forums and meetings. Americans are quite open-minded people, try to make as many contacts and connections as possible.
The US is the home of start-ups, young entrepreneurs and fresh ideas are highly valued in the country. Gather as much information as you can about the local market. Assess the supply and demand depending on the state. Analyse the data and come up with a worthwhile business idea.
It is almost impossible to start a business without two major components – financial resource and hired labour. The initial cost projection tends to increase and the planned income level is slower to be achieved. Keep this in mind.
Carefully study all the points related to immigration to the USA – requirements and conditions for opening a business, the procedure of company registration, types of business visas and so on. It is quite likely that you will not be able to open a business in the United States on your own and will need the help of American specialists or specialised companies.

How to open a business in the United States

Every year millions of migrants strive to get to the American territory. The lion's share of such people try to enter the USA illegally. This forces the local government to take rather strict measures and improve immigration legislation. There are special visas for each method of official relocation, such as temporary stay, tourist trips, study or for work in the USA.

Accordingly, in order to legally and fully conduct business in the United States, a foreigner must first open a visa that allows him or her to stay in the United States and operate his or her own company. Failure to do so can result in heavy fines and deportation from the country. In theory, it is allowed to start a business, be a shareholder and director of an American company remotely, but in practice this option is rarely used.

Types of business visas to the USA

US E-1 Visa. The E-1 trader visa is available to foreign entrepreneurs from countries whose governments have signed special bilateral agreements with the US. The full official list of countries can be found here. To obtain a visa it is necessary to own at least 50% of the shares of an American company, in addition, more than half of the trade agreements must be related to the home country of the businessman.

US E-2 Visa. The E-2 investment visa also requires a co-operation agreement between the United States and the entrepreneur's home country. A great way to set up or buy a small business in the United States. The main condition for obtaining the visa is that the foreigner's ownership interest in the U.S. company is at least 50% and substantial investment. In practice, the amount of funds in cash equivalent should be more than 100 thousand dollars, although the specific amount is not set. It is also equally important to create at least 3-4 new jobs for Americans.

US EB-5 visa. The most costly way of business immigration to the United States is to apply for an EB-5 visa. On the other hand, unlike the two previous visas, this is the most realistic option to obtain a Green Card, which allows you to freely carry out professional activities and live permanently on American territory. Basic requirements:

Investment in the US economy of at least $1 million or $500,000 in special zones where rural areas are predominantly rural or the unemployment rate is 1.5 times the national average.
Creation of at least 10 full-time jobs for U.S. citizens within a maximum of two years.

For more details on types of business visas in the USA and requirements for foreigners, please visit the official website of the U.S. Citizenship and Immigration Services – uscis.gov.

Procedure for registering a company (business) in the USA

In the annual report of the agency Doing Business of 190 countries of the world on the ease of doing business, the United States ranks 6th. Of course, it is quite difficult to take into account all the procedural aspects that foreign entrepreneurs face when registering a company. It depends on many factors, including the location and scale of the business, type of activity, form of ownership, the need for a special licence and so on. Most likely, the help of local lawyers and consultants will be needed.

Let's outline the main and mandatory stages of business registration in the USA on the example of New York City.

Reservation of the name for the new company. It is carried out online within a day through a special website – dos.ny.gov. The cost of services includes $200 in the form of state duty and $75 for service.
Applying to the U.S. Internal Revenue Service for a federal identification number to make tax payments. The procedure is free and takes no more than one day if registered online. The link to the website – irs.gov.
Register with the State Department of Taxation and Finance as a sales tax payer. It is done for free in less than a day through the website – tax.ny.gov.
Registration with special departments responsible for social insurance of employees in case of unemployment and disability. This is done free of charge within a few days.
Depending on the field of activity, it is necessary to obtain a licence or special permission from the relevant departments (if applicable).
Publication of information about the new company in the media (copy of the charter), after which the businessman is issued a special certificate. Each state has different requirements, costs and terms. For example, in New York it must be done within 4 months after registration, and in several newspapers. Payment is up to $450.

Once again, we note that in different American states the procedure for registering a company may differ, but basically the steps presented above are provided.

Forms of business ownership in the United States

Choosing a form of ownership for a business in the United States depends on many things. From the amount of investment, to the degree of involvement in the management of the company and the amount of taxes. Some types of business, such as sole proprietorship, do not require federal registration, which makes it much easier to start a business in the United States. In any case, the legal form of the company is allowed to change over time.

The most popular forms of ownership in the USA are:

Corporation. Shareholders are liable within the framework of contributions to the authorised capital, but in case of bankruptcy of the company additional costs are possible. Mandatory filing of annual federal tax returns is required. The assets of the corporation are legally separate from the shareholders.

Authorised directors are chosen to manage the company. Despite the organisational complexity and many formal peculiarities, the corporation is considered the most acceptable form of ownership in the USA for foreign businessmen.

Limited Liability Company (LLC). The liability of the owners is strictly limited to the amount of contributions. The taxation system is quite flexible. In the case of a single owner, there is no federal tax return.

The company is managed by the owners, whose rights and responsibilities are spelled out in the operating agreement. According to statistics, for foreign entrepreneurs, LLC is not the best option for opening a business in the USA.

Taxes in the USA

The US has a very complex, but at the same time flexible tax system. To run your business efficiently and minimise costs, you will definitely need the help of an American specialist. In this country, even ordinary citizens prefer to use the services of tax consultants, not to mention businessmen.

In addition to federal taxes, each state has local and city tax levies, i.e. there is a multi-level system in place. On 1 January 2018, a number of dramatic changes came into force in the sphere of US taxation, in particular, the corporate income tax was reduced almost twofold.

Rates of major taxes in the US in 2024

Corporate income tax – 21%

Sales tax. Each state has a different rate, on average from 2.9 to 7.25%.

Income tax. The progressive rate ranges from 10 to 37% depending on annual income. For a single person, the following tax scale is provided:

Annual income from $0 to $11,600 – 10%
Annual income from $11,600 to $47,150 – 12%
Annual income from $47,150 to $100,525 – 22%
Annual income from $100,525 to $191,950 – 24%
Annual income from $191,950 to $243,725 – 32%
Annual income from $243,725 to $609,350 – 35%
Annual income over $609,350 – 37%

The $4,150 minimum amount of funds that is not taxable in the U.S. has been cancelled as of 2018.

Regarding the prospective direction for business in the USA, it is very difficult to advise something specific. It is indeed a country of great opportunities. It is better to pay attention to the geographical feature, that is, the state. Assess competition, availability of skilled labour, infrastructure, quality of life, peculiarities of local laws and taxes. Think about it and start taking action.

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