Starting a Business in the U.S. as a Foreign National

By Nicole D

Breaking into the U.S. market can be a rewarding venture for many foreign businesses.  Because U.S. citizenship and residency are not required, foreign nationals are able to start or expand on U.S. soil without experiencing much more red-tape than an American-born business owner would.


Steps to Starting Up a Foreign Business in the U.S.:

- Foreign business entities are incorporated at the state level in the U.S.   The process will vary from state-to-state, but generally involves two steps: applying to register in that particular state, and establishing a registered agent with a valid address in that state (no PO Box numbers).  A registered agent can be either the business owner or another person who is authorized to receive legal papers on behalf of the business, such as an attorney or secretary.

- The rest of the steps to starting up are similar to those that an American citizen would take.  The breakdown of 10 Steps to Starting a Business includes information on naming your business, requirement licenses and permits, and tax matters.  

- Establishing an online retail presence in the U.S. is a popular choice for many foreign business owners.  You can read more about general resources for online businesses, including privacy and advertising regulations, here , along with specific information on international sales.


Importing Goods into the U.S.:

- The Department of Commerce's Trade Information Center provides information and web links to importation procedures.

- Working with a licensed customs broker could be a valuable asset to your import plan.  A customs broker prepares all the documentation required for importing goods. To learn about laws and regulations applying to custom brokers, including licensing requirements, and importing procedures, visit the Transportation and Logistics Guide.

- Many imported and exported products are regulated by federal agencies and may require specific licenses and permits. Check here to see if you need to obtain additional paperwork.


U.S. Tax information for Foreign Businesses:

- The U.S. tax code can be confusing even to life-long citizens.  Violation of any tax - sales, payroll, income, etc. - can incur fees and penalties.  The IRS offers a guide specifically on International Business,  but if you are still left with more questions, it is always safe to check with a qualified attorney or accountant.

- U.S. citizens will likely need an Employment Identification Number to start up, a process that requires their social security number (SSN).  In the case of foreign businesses, an Individual Taxpayer Identification Number (ITIN) will suffice.  The IRS issues these 9-digit tax processing numbers to individuals who are required to pay US taxes but who are ineligible for a SSN, including resident and non-resident aliens and foreign nationals.  

- You may be required to file IRS Form 5472, which applies to US corporations with at least one foreign owner who owns 25% of shares, to account for the nature of monetary transactions.

- There are also special tax credits and incentives available to businesses, including foreign tax treaties.  The IRS offers a tax treaty overview and resources here.