Wondering if you can start a business in the U.S. without citizenship? The short answer is yes! The longer answer, though, is that there may be certain restrictions on the type of business entity a non-resident can form.
But before digging into those restrictions, you'd be wise to consider the extra steps you'll need to take when forming a corporation or LLC for non-U.S. residents.
Requirements for Forming a Corporation or LLC as a Non-Resident
For U.S. citizens and residents looking to start a business, their first steps are relatively straightforward. They likely already have a Social Security Number (SSN), so they simply need to start by obtaining an Employer Identification Number (EIN).
But if you're a non-U.S. citizen who wants to form an LLC or corporation in the U.S., you might need to take a few extra steps:
- Apply for a visa with the U.S. government. If you intend on working in the business that you are planning to form in the U.S., you’ll need a visa. This may be an E-2 Treaty Investor visa or an EB-5 Immigrant Investor Program visa, depending on your needs. An E-2 visa will allow you the opportunity to travel to and from the U.S. for work as long as you're a national of a treaty country. Alternatively, the EB-5 visa is geared toward foreign nationals investing in a U.S. business that will also employ at least 10 American workers.
- Get an ITIN. Non-U.S. citizens might not be able to have an SSN, but they can apply for an Individual Taxpayer Identification Number (ITIN) through the U.S. Internal Revenue Service (IRS). Once you have an ITIN, you can apply for an EIN using Form SS-4 without needing to provide an SSN.
- Choose a Registered Agent. Although you can list an address outside of the U.S. as your business address, you will still need to assign a Registered Agent who resides in the state where you formed your business to accept all of your important documents. If you don't have anyone in mind, you might benefit from using a Registered Agent service.
- Check for unique state requirements. This step applies to all prospective U.S. business owners, not just foreign ones: Be sure to check the individual requirements of the state in which you're starting your corporation. Each state's provisions can vary greatly from one another, so remember to do your due diligence beforehand.
Once all of your ducks are in a row, you're ready to make things official and apply to start your business. After your application is approved, you'll officially be the owner of a U.S. business — that fact alone will surely make all your hard work worth it.
Types of U.S. Businesses a Non-Resident Can Form
Generally, there are no citizenship or residence requirements for ownership of a C Corporation or an LLC — yes, a foreigner can be part of an LLC in the U.S.
The same, however, can't be said for S Corporations.
According to the IRS's S Corp requirements, non-resident aliens are not permitted to be S Corp shareholders, but resident aliens are. In other words, a non-U.S. citizen who resides in the U.S. (i.e., a resident alien) can own an S Corp, while a non-U.S. citizen who is also a non-U.S. resident (i.e., a non-resident alien) cannot own an S Corp. That's because an S Corp owner must reside in the jurisdiction, or have a physical presence, in order to be incorporated.
Not sure if you're a resident alien or not? The IRS states that in order to qualify as one, you must meet either the green card test or the substantial presence test for the calendar year.
Opening a Bank Account and Paying Taxes
A key step for any business owner, whether they're a U.S. resident or not, is opening and maintaining a business bank account.
But if you want to open up a bank account in the U.S., then you'll need to provide the proper paperwork. In the case of a non-resident, that will include business formation documents, a legal address, your EIN and proof of identity, which would be satisfied with a passport.
Foreign business owners must also be sure to pay taxes and remember to file their tax returns on time. It's easy to see why: Failure to do so will result in fines and penalties and may even lead to the dissolution of the business.
When it comes to regular business maintenance, the requirements for citizen and non-citizen corporation owners are very similar. Depending on the individual requirements of the state where the business was formed, you may be required to perform tasks such as:
If you stay on top of your corporation's reporting and compliance requirements, you'll be able to keep your business running like a well-oiled machine for many years.
Make Your Dream of Owning a U.S. Corporation a Reality
At the end of the day, being a non-citizen cannot keep you from following your dreams and starting a corporation or LLC as a non-U.S. resident. However, there are rules you'll need to follow if you want to make that “American dream" come to fruition. That's why it's so important to consult with an immigration attorney or professional who's qualified to help you navigate through the business formation process.
Want to make the process of starting your business as easy as possible? Form your C Corp or S Corp with Incfile. We've helped hundreds of thousands of entrepreneurs start U.S. businesses (including foreign nationals), and we'd love to help you too.