Building a business from the ground level is something exciting and even more challenging. Every business will have certain rules and regulations that are to be followed for maintaining a proper business dialect within any country or state. Perhaps, for starting a business in the USA, there has to be a strong determination and strength that can bring high revenue. In this article, the step-by-step process of starting a new business in the USA is explained clearly.
Before going into the procedure, it is better to have an idea about the benefits that are attained by starting a company in the USA:
For opening a new company in the USA, the business owner may not be a citizen of America. Anyone can start or develop their business keeping in mind the benefits. The following are the benefits that most of the entrepreneurs experienced till today.
- LLC(Limited Liability Corporations)
It is a business type that don’t require a citizenship to start a business in the USA. These business types are similar to any foreign national individuals and any US citizen. The process involved in starting these businesses is simple.
- EIN(Employer Identification Number)
There is no need of having social security numbers for starting a business. In case of employing new candidates and filing the taxes, EIN helps even though if the individual lives in the USA or not. Apply for EIN and start pushing up the business in a bright way.
- Pass-Through Taxation
In terms of LLC, corporate income taxes are not encouraged. This eventually reduces the burden of double taxation and the effects of individual and group paying taxes.
- Small Business Admin Loans
The government based federal loans have flexible terms and conditions with low-interest rates. These are applicable for both the citizen and non-citizens of the USA.
- Legal and complaint revenue streams
Without a green card, foreign citizens cannot work in the USA. But can become a corporate officer or a director.
The detailed steps that help in starting a new business in the USA are:
- Decide the business type
It is the first most important step to have a basic idea of what type of business to start with. Deciding the correct type of business would be the more important because it influences every set of operations that are included in it. Depending upon the business goals and situation stick to one type of business that should be the only determination.
There are 3 types of general business types:
- LLC
- S-Corporation
- C-Corporation
- LLC
It is the most common type of business meant for those who are non-residents of the USA. LLC helps in taking care of the business lawsuits and debts. It means everything under personal conveyances are taken utmost care such as a car, home and bank accounts.
LLC offer cheaper and simpler methods for taxation purposes. It has pass-through taxation that passes the earnings to the personal income taxes. This reduces the accountant duties of maintaining a separate account for taxation.
2.C-Corporation
This has not pertained to the citizens of the USA. In case of non-citizen of the USA also, consider choosing S-Corporation. This is completely meant for investors who deal with the shares and invest lots of money in the business. However, they are responsible for handling all the worries of tax consequences until the end.
C-Corporation is not recommended because it is more concentrated on double taxation. Risk of baring all the responsibilities in shares and taxes being a non-citizen is not good for any type of company.
3.S-Corporation
It is eligible for all the domestic individuals that don’t look after double taxation. For making more than $80,000 in a year, it is recommended to start an S-Corporation business. In this, around 15.3% self-employment taxes are avoided.
A reasonable salary is been paid in S-Corporation which can be distributed into personal tax filings. Indirectly, with the average money in the business, the individual can save some personal taxes.
- Create a Business Plan
A business plan guides through each stage of managing the business. Create a roadmap that includes the basic elements of the business. The plan can bring the approximate funding that is needed while starting the business. The best business plan makes the investor convince in a smarter way.
Focus to summarize the key points of the business. For a detailed and complete structure of designing the plan, follow traditional plan ideas which include market analysis, company description, service or product line, organization and management, funding request, finance, and appendix.
For Lean startup plan format, the plan includes key activities, key resources, key partnerships, customer relationships, channels, cost structure, revenue streams and so on.
There are many tools available for making a better plan with the advanced options and settings.
- Pick the business location
Form a business in the place where physical presence is more. The business owners should concentrate on the Region-based business expenses, local zoning ordinances, State and regional taxes, State, local, and federal government incentives.
For a non-resident of the USA, physical presence is not required. They can solely start in any place. Wyoming is the best place for starting an LLC which is a business-friendly state.
In case, if the business is started in the states that don’t come under the USA, make sure to create it as a foreign LLC.
- Register as an LLC or S-Corporation
After the location and plan are decided, approach a responsible agent to register an S-Corporation or an LLC. Fill in all the necessary details and requirements for registering. Forming a corporation or LLC should conclude everything properly in order to reduce the complications that arise later.
All the process of registration takes 1-4 business days of time to finish. It may depend on the Secretary of State sometimes.
- Apply for EIN
Applying for EIN is a must for every business that is planned in the USA. It is issued by the US Internal Revenue Service for knowing and identifying the business. It is a social security for the business and it is given so as to conduct the business according to the USA laws of business activities
It is also used for opening a bank account and apply for a business license, hire employees, and for filing the taxes.
For the citizens of the USA, with SSN and ITIN identification numbers, it is easy to apply EIN.
But in the case of non-citizens, they should approach a business lawyer and they are responsible for generating an EIN with an IRS. The EIN identity number is given to the lawyer on behalf of the individual as a 3rd party designee.
- Open a bank account
For opening any business bank account, the person needs to visit the particular bank and should create an account with a proper EIN. It is also suggested to contact the bank before opening an account so that the required details and information can be known.
Do not make any fraud while creating a bank account in the USA. That can violate to the danger. Also, for those who are non-citizens of the USA, there are 4 choices:
- Personally go to the USA and open a bank account according to the procedure given. Make sure to provide proper and correct information.
Bank of America is one that is very helpful for business accounts. So search for it and create an account.
In the states like Philadelphia, Wilmington, and Delaware, Bank of America is available. It is also suggested to stay in that area where the bank is nearby.
Articles of Organization, Ownership Agreements and Passport are mandatory in submitting them to the bank.
2.With the existing bank, open a new business bank account. For suppose, if there is a personal bank account in any of the USA banks, then there is a chance of creating a business account by calling any of the bank authorities to get the access. There should be a proper point of contact and so the bank is responsible for verifying the account with the local branch. So make sure to inform the local branch about it before and get ready for the verification with the required identification documents.
Only if the identification check is performed properly in person with the local branch by the procedures of the Patriot Act, they are responsible for opening a new business account in the existing.
3.Create a virtual bank account with a specialist like Payoneer. Everything is taken care of by them from the initial steps. Only certain 3rd party certificates come into action with the individual name and address.
- Become a merchant
Open a retailer or merchant account for paying the customers and employees, it can be created with a proper EIN.
- Get insurance
Business insurance protects from unusual and unexpected costs that happen in the business. Accidental or natural disasters that may ruin the business. In such cases, insurance is the best choice.
Business insurance protects both the business-related assets and personal assets from accidental catastrophes.
- Take a Contact Number
Get a USA phone number particularly for the business purpose which is available for free and any business owner can request for a number with a proper passport and EIN. For LLC it is recommended to take free Google contacts or Skype accounts which run with an internet connection.
- Maintain secrecy
Keep the business assets separate from the personal assets which ensure that the LLC is firmly responsible for liabilities and debts. If not, they should face financial risks and burdens. Open a business credit card with the LLC name and use it for company only.
- Consider as an Affiliate or Reseller
After reaching certain years of experience, it is suggested to become a seller or Affiliate using certain funds that are received by the customers of the business. This helps in growing the business into the next level of improvement while gathering huge revenue.
Become a partner with the top-branding and existing business and tie up all the functionalities with them and start growing as a big company thereby.
Conclusion
All the steps discussed above will certainly be helpful for those who have certain goals in starting and developing a business in the USA. Follow all the above steps and eventually build a right choice.