Can a Foreign Citizen Start a Business in the United States?

One of the questions that many people ask about business ownership and startup companies is whether a foreign citizen can start a US-based business. The answer is yes, and the procedure for doing so is exactly the same as the procedure for an American citizen in many situations.

Why Do Foreign Citizens Start US-Based Businesses?

Foreign nationals set up businesses in this country every single day, and for a variety of reasons. America represents one of the largest and most integrated markets in the entire world, and it offers a very low tax rate, to boot. It’s easier to sell in the United States, at least as it concerns taxes and customs, and it gives foreign citizens access to venture capital, angel investors, and a variety of other public markets, too. Finally, starting a business in the US makes it easier to get a green card.

Are There Any Restrictions?

Generally speaking, there are no restrictions on foreign citizens who want to start businesses in the US. It’s the same as with an American citizen, except you don’t actually have to be a citizen of the US. In fact, you don’t even have to have a green card if you want to start or purchase a corporation or limited liability company (LLC) that is headquartered in the US. There is one main thing to consider, however; simply owning a business in the US does not provide work privileges.

Obtaining a Green Card

A foreign citizen can be listed as a corporate officer or director of a company, but he or she cannot work in the US or receive a salary or other compensation without a work permit, which consists of a green card or a special visa that is issued by the US government. As such, while it is possible for a foreign citizen to earn profits from their company given they pay the proper taxes on those profits, those citizens cannot physically work in the US or obtain a salary from their own companies. They can, however, receive compensation from a branch of the same company located in their home countries.

Other Things to Keep in Mind

Although the processes for starting or buying companies in the United States are relatively the same for US citizens and non-US citizens, there are a few things to keep in mind before making the decision.

·         Foreign citizens do not need a US address to incorporate a business in the United States.

·         If forming an LLC, a foreign company can own the US LLC.

·         An annual tax return (form 1120 or 1120s) is required, and most states will require incorporation renewal each year, as well.

·         Most foreign citizens choose to start LLCs rather than C corporations since C corporations are subject to double taxation on dividends.

Foreign citizens interested in starting companies in the US can certainly do so, and the processes are very much the same as those for US citizens. Keep in mind that foreign citizens cannot work in the US without green cards or permits, even for their own companies. While owning a US-based business might make it easier to get a green card, it does not provide a guarantee.