How to Start Your Own Business in USA

in #blog3 years ago

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There are three main options for starting your own business in the US:

1. Continue doing business in America which you started in your country

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Senior managers and leading specialists who open a representative office of their company in the United States acquire the right to receive a L1 visa. With it, you can move to the US to work in your representative office, legally resides, and receive similar visas (called L2) for your spouse and children. L1 allows you to stay in the US for up to 7 years. If your representative office in the USA works successfully and pays taxes, then after 2 years you can apply for a Green card. The services of an American lawyer for obtaining such a visa are about 7 thousand dollars, but do not guarantee a 100% result.

2. Invest in the US economy

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Option for "moneybags". The so-called "investor visas" (E-2, EB-5). Not available to citizens of all countries. Allowed for residents of Ukraine, Moldova, Georgia, Azerbaijan and others. A full list of countries is here. The amount of investment is from $100,000 to $500,000 minimum.

For the E-2 visa, the amount of investment - at least $100 thousand in development and business management in the US. You can buy a ready business or a franchise. It is important to have at least 50% of the shares of this American company. This visa does not lead to a Green card. But in time, you can go to the EB-5 visa if you meet the conditions of the latter. And the EB-5 visa is already a direct way to permanent residence. At the same time, when a visa is transferred to EB-5, all funds already invested in business and created jobs are accounted for. For example, if you have invested another $400,000 in your development since the starting an enterprise for an E-2 visa, you can already apply for an EB-5 visa.

Direct application for visa E-5. It does not impose any requirements on nationality. But you must invest at least $500 thousand in the project of the US regional center. Not anywhere, but in the enterprise that is on the list. Usually these are newly created enterprises or objects under construction that are located in regions with high unemployment or are in rural areas. If you want to choose the object of investment yourself, you'll have to fork out $1,000,000 already. At the same time, it will be necessary to prove the legitimacy of the source of origin of the monetary amount. In the US, they are very scrupulous about monitoring money laundering. Plus, your investment should create 10 jobs in the US.

3. Start a New Business

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You can start a new business in the United States. If you are a resident and you have SSN, then everything is very simple. To start a business, a foreigner can, for example, be attracted to the co-founders of a US resident with the code Social Security Number. The most common ways of doing business are:

3.1. Solo Entrepreneur

The most common form. It is not required to take any formal actions to register as an entrepreneur (except for registering the name and obtaining licenses in cases where this is required). If you conduct any commercial activity as an individual, then automatically become an entrepreneur. If you work as a freelancer, freelance designer or translate texts on applications from the Internet, then you are already an entrepreneur and must pay taxes from your income.

Non-payment of taxes in the US is almost the most terrible crime. The famous Al Capone was not able to bring to justice for murder and looting, but was put in prison for tax evasion.

Taxes. As you and your business in a particular case are the same, the business itself is not taxed - you pay one tax on all incomes entirely.

Benefits:

  • A simple way with a minimum of initial costs
  • Full control over the business of its sole owner - simplified tax reporting
  • Having small skills, you will be able to submit tax returns with a large selection of understandable computer programs

Disadvantages - unlimited personal responsibility for debts with all personal property, as there is no legal separation between you and your business.

3.2. Partnership

Suitable for companies with more than one participant (founder). Since partnerships entail joint decisions, it is important to develop an agreement on legal partnership. This agreement should regulate: the adoption of business decisions, dividing profits, resolving disputes, changing the ownership (attract new ones or buy out a share of current partners), and also how to terminate the partnership. By law, an agreement is not required, but is strongly recommended.

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Three general types of partnership agreements:

  1. General partnerships assume that responsibilities for the distribution of profit, responsibility and coordination are shared equally among the partners. If you choose an unequal distribution, the percentages assigned to each must be documented in the agreement.

  2. Limited partnerships are more complex, allowing participants to have limited responsibility and contribution to management decisions. Such relationships are often applied to investors of short-term projects.

  3. Joint ventures act as a common partnership, but for a certain period of time or for a single project.

To create a Partnership, you must register a business in your state, which is usually done at the office of the Secretary of State. In the same place you register the name of your business.

Partnerships must register with the IRS for payment of taxes and obtain a taxpayer identification number. Annually, a report on "annual income", which indicates information about the arrival, deductions, profits and losses from business transactions. But the Partnership itself does not pay income tax. Instead, the business "transfers" (distributes) its profits or damages to the founders of the Partnership. The latter include these data in their annual tax returns.

The advantages of the partnership: a fairly simple business registration, the pooling of intellectual and financial resources to achieve a common goal, an incentive for hired employees to become partners, which attracts highly motivated and skilled workers.

Disadvantages of the partnership: the personal assets of all co-owners can be used to meet the Partnership's debt (apart from the Limited Partnership), there may be disagreements between partners.

Partnerships are manifested as a convenient form of combining highly qualified professionals who conduct business in the field of audit, law and other professional services.

3.3. Corporation

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A legal entity owned by shareholders. This means that the corporation itself, and not the shareholders owning it, are legally responsible for the actions and debts that the company has incurred. Corporations are more complex than other business structures. They have large administrative costs and have complex tax and legal requirements, are registered as large enterprises with a large number of staff. They have the opportunity to raise additional capital by issuing shares.

3.4. Limited Liability Company

A structure that combines the limited responsibility of the corporation with the efficiency of taxation and the operational flexibility of the Partnership. Depending on the state, LLC can be created by one participant or several participants, including Corporations and other LLCs.

LLC is not taxed as a separate economic structure. As in the partnership, all profits and losses are "transferred" to each LLC member who deposits them in their tax returns.

To register an LLC, it needs to come up with a unique (for the LLC registration office) name, which includes a reference to its limited liability. Some states prohibit the use of certain names in the LLC name (for example, "bank" or "insurance").

The LLC is registered by the state secretary, but in some states by other departments: the State Corporation Commission, Department of Commerce and Consumer Affairs, etc. For example, Arizona and New York require an additional step for registration - the publication of the announcement of the LLC in the local press.

There are other organizational and legal forms, such as Cooperative or SCorporation. But in practice they are rarely used. Fairly good and detailed information on the possible ways of doing business is presented on the website of the Small Business Administration.

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9 Steps to Starting Your Own Business:

Make a business plan. First of all, you need it yourself to understand the profitability of the new business, calculate the payback period of the funds invested, plan your actions on the way of creating and developing the started enterprise. In addition, you will need this plan if you are attracting third-party funding (bank loan or an investor's money). The lender will ask you for this document.

  1. Study in detail the specifics of the upcoming business. A lot of information in the current case does not happen. Textbooks, the Internet, training courses help you.

  2. Select the location. As American realtors like to repeat, only three things are important: "location, location and location".

  3. Solve the issue with financing. Starting a business will require considerable costs: registration costs, rental and preparation of premises, advertising, website creation and hiring of personnel. Do you have enough money or do you need an investor. With a good credit history, you can get a loan from a bank at a reasonable interest.

  4. Choose the form of organization of the enterprise you are creating. It is necessary to "try on" the forthcoming commercial activity in terms of reporting and taxation of various forms of business establishment.

  5. Register your company ("Doing Business As"). First, check the name of the future company. It must be unique on the territory of the state where you register. Check the uniqueness of the name and reserve it on the website of the state secretary. For example, in California it is the California Secretary of State. There is also a company registration (addresses in other states can be easily found on the Internet). The costs of registration are different by state and organizational-legal methods. But on average, the amount is from 80 to 150 dollars.

  6. Obtain an identification code (EIN for residents or TIN for foreigners). This code you will indicate in the tax reports. It is necessary for opening an account of an enterprise in a bank and hiring employees. The code can be obtained free of charge at the Internal Revenue Service (IRS). To become an owner of EIN, you just need to fill out the online form or send it in print by mail. For non-US residents, the form is slightly different and it also needs to be mailed along with other necessary documents. You can also apply through an authorized agent or seek help from one of the Taxpayer Assistance Centers. More information on taxes can be found on the IRS website.

  7. If licensing is required, you must contact the federal or state government for appropriate approvals. Licenses are: transport and logistics services, commercial fish farming, alcohol trade, and much more. List of types of entrepreneurial activities at the federal level, see here, the licenses issued by each state are listed by this link.

  8. You start hiring employees. This process is not simple and requires compliance with a number of legal requirements. In detail, you can read all the stages of hiring employees on this site.

  9. Do not hesitate to contact the local offices of the US Small Business Administration for support. Often render real help and do it for free. In the US, there are many state agencies and public organizations that are called upon to help startups.

You should also read this article: https://napoleonofbusiness.com/starting-your-own-business/

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