Starting a business is always an adventure—and doing so from abroad adds an extra layer of excitement.
As a leading domain registrar, we’ve helped countless businesses establish their online presence, and through this, we’ve gained invaluable insights into every aspect of starting and growing a successful business. Our expertise goes beyond domains—we’re here to guide you through each step of your entrepreneurial journey in the United States.
In this blog, we’ll go over the essential steps to make your U.S. business from abroad dream a reality. We’ll go over the U.S. business structures, where to incorporate, how to get a federal tax ID, and other essentials to get your venture off the ground.
What are the different types of business structures?
Each business structure in the U.S. brings its own set of unique benefits and responsibilities, and fits different needs based on liability, tax benefits, management style, and operational flexibility.
The most simple business structures—sole proprietorships and partnerships—don’t need to file special paperwork with the state to get started. Instead, these types of businesses are usually just an extension of you (or you and your partner), so you can just get going without the formal filing. However, if you want to use a business name that’s different from your own, you might need to file a “Doing Business As” (DBA) name with your local government.
- Sole Proprietorship: Cost-effective and offers pass-through taxation (income “passes through” to the owners’ individual tax return), but you’re personally liable for business debts.
- Partnership: Similar to a sole proprietorship but shared between two or more people.
Limited liability companies (LLCs) and corporations are created at the state level by filing paperwork with the state’s business registration division, typically called a Secretary of State or a Corporations Division.
- Limited Liability Company (LLC): Combines the liability protection of a corporation with the pass-through taxation of a partnership. This is the most popular formal business structure in the US.
- Corporation: Offers robust limited liability protection and growth potential, but has more regulatory requirements and double taxation (tax on the same income twice: once at corporate level and again at the individual level).
- S Corporation: An S corporation is an IRS tax election—it’s not an entity structure. The S corp election is available to most LLCs and some corporations.
Each state has its own filing requirements for each of these structures—one state might require an additional information filing alongside the formation filing, while another state requires a special tax reports shortly after formation. Additionally, every business entity formed with the state must designate a registered agent who will be responsible for receiving legal documents and official state correspondence. Research and possibly consult with a local state attorney to understand which is best for you.
How do I choose the right state to form my business in?
When it comes to setting up a U.S. business from abroad, non-U.S. residents usually find themselves drawn to three key states: Delaware, Wyoming, and Florida—Delaware for its legal perks, Wyoming for its privacy and low fees, and Florida for its tax benefits. While Nevada and Washington State also make an appearance on the list, these top three shine with their user-friendly filing processes and management from overseas.
Although it’s possible to establish your U.S. company in any state, Delaware, Wyoming, and Florida are favored due to their international recognition and their overall business-friendly climate.
How do I get a federal tax ID from the IRS?
You’ll most likely need to register your business with the country’s tax agency—a.k.a., the IRS—and you can do so without stepping foot on U.S. soil.
Known as an Employer Identification Number, or EIN, this unique number is assigned to your business for standard operations: opening a business bank account, filing federal and state taxes, hiring employees, or applying for business licenses.
As a resident of another country (without a U.S. Social Security Number), you’ll need to use Form SS-4 to obtain an EIN from the IRS. You’ll fill out basic information about your business—name, entity type, location—then mail or fax the completed document to the IRS. The IRS recommends sending Form SS-4 at least four to five weeks before you will need to use your EIN (you can read IRS instructions for Form SS-4 on the IRS website).
While you don’t technically need a U.S. address to obtain an EIN, using an address within the U.S. might be helpful later on when it comes to opening a U.S. bank account. You can use a professional service (like ours!) to provide you with an address for your registered agent that you can also use for filing Form SS-4.
Do all the states have similar regulations and compliance laws?
Research is your best friend at this stage—different US states have significantly different regulations and compliance laws, and their own fun bureaucratic nuances. What flies in some states might not even get off the ground elsewhere.
Furthermore, there are federal laws that differ from the state laws. If you open up a physical operation with employees and assets onsite, the local county and city will have applicable laws. There are many agencies that govern business in the U.S.—but very few of them actually talk to each other or care about your status with the other. If you are just forming a holding company to take advantage of our low business income tax rates, you’ll likely only deal with the federal laws.
Here are some steps to get you started:
- Research city, county, and state licensing requirements. City requirements might include zoning permits and local business licenses, while county regulations could involve health and safety permits, and state licenses often cover industry-specific standards and tax registrations. Depending on your business type, you might need several permits.
- Look into employment laws if you plan to hire employees. Employment laws vary by state and can cover a range of issues including wage and hour regulations, workplace safety, anti-discrimination policies, and employee benefits. Consult the U.S. Department of Labor for specifics.
- Consult local experts. Hire a local lawyer or business consultant. They can help translate complex regulations, assist with drafting contracts, navigate any legal disputes that arise, and help you understand local employment laws to help you devise strategies to comply with local laws efficiently.
In general, if people transact business with good moral intent and keep their personal assets and personal business separate from work assets and work business, there is a lot of protection with having a U.S. company.
How long will it take to start my U.S. business?
The processing times for getting your business up and running can differ quite a lot from state to state. So, a bit of research is needed to figure out the timing for wherever you’re setting up shop. Many states offer an “expedited” option if you’re in a hurry—you just pay a bit extra on top of the regular filing fee. For example, in Nevada, you can speed things up by adding $125 to the state fee, and your formation documents will be processed in just 24 hours.
On average, you might expect anywhere from a few days to a few weeks to get all your paperwork sorted and your business officially registered.
Once you’ve successfully formed your business, you’ll have a lot more to tackle before you’re fully operational. One crucial step is establishing a robust online presence, which is essential for reaching potential customers and building your brand. This involves setting up a professional website and securing a domain name that aligns with your business identity. As a trusted domain registrar, we can help simplify this process for you. Let us take care of your online presence so you can focus on growing your business from abroad—start the search for your perfect domain.
Starting a business from abroad is a bold move, but with the right preparation and mindset, it can be incredibly rewarding. Good luck on your journey!