Three main advice to doing business in the US: How to avoid legal mistakes
October 26, 2021
Three main advice to doing business in the US: How to avoid legal mistakes


Let’s face it: the United States and doing business sound almost like synonyms.  The US is considered to be the cradle of entrepreneurship and a place where innovation is encouraged at every level of education: from nursery school to Colleges all over the country.
Considering all this, it is fairly understandable that you may be thinking of establishing a division of your company in the States or even setting up an entirely new business in the US.
So, if you’re not American, lots of questions on how business is handled around here are probably arising. How should I lead the whole process? Which forms and paperwork do I have to fill in order to be compliant? Where do I need to pay taxes?
Here are our 3 main pieces of advice to doing business in the USA to answer all these questions, but remember, if you find yourself lost in the whole process, we can help you with our Cross-Border Platform.

Business advice #1 Where do I set up my business if it’s online or does not have a physical base?

This is very common doubt businessmen have, as new businesses do not always have a physical presence. Anyway, if you’re a non-US resident and are going to be operating from outside the country, you can choose whatever state you feel comfortable in… which will probably be Wyoming.
The decision must be made regarding whether the company will only be online or will it have some physical presence in one or more states.
Of course, this is a critical decision that should be made with all the information in your hands. Remember you can always receive guidance on this and other expats’ matters by contacting us here.

Wait, but… What is it with Wyoming, Nevada and Delaware?

They are the so-called business-friendly states, especially if you’re not resident in the US. At the moment this post is being written, those three states don’t have taxes on corporate shares and they don’t ask for minimum capital requirements.

Business advice #2 Is it mandatory to have at least one American business partner?

Nope. There are very few mandatory or forbidden things in the United States, a country known also for its freedom. So no, it is not mandatory to have a US resident business partner, but it is highly recommended, as they can mentor you all the way until the business is completely set up. They would also be familiar with how business is handled “the American way”.

Business advice #3 What paperwork and bureaucracy do I have to go through?

Setting up a business in a foreign country is harder than doing so at home. It is highly advisable that you hire a business and legal consultant so that you can have full guidance on everything that needs to be done.
But in order to give you a little bit of context, here are the few first steps that you can do on your own:

Registering as a business…if you choose to do so

The most common first step to take is to register your company. You need to know that there is also the possibility to do business as a sole proprietorship, one of the easiest ways to do business in the US, but not the best one. If you’re a sole proprietor, you will take full personal liability for everything business-related. What’s the meaning of being held liable as a sole proprietorship?
This means your business assets and liabilities are not separate from your personal ones. You can be personally held liable for debts and obligations of your business.

Business step #1 Having someone be the Registered Agent

Once you have decided which business form you want if you’ve chosen LLC or any of the Corporate forms, you will need to either hire someone to be the Registered Agent of your company or have someone in the company do that role. The Registered Agent will be responsible for all the official documents related to taxes or lawsuits.

Business step #2 Get your EIN

Strange as it may seem, there is one document you do need to have in order to start working in the US, and that is the EIN: Employer Identification Number. You really need to do this, as it is the number that will identify your company. You will need the EIN to open a bank account in the States, hire your first employees or apply for permits or licenses.

Business step #3 Open a bank account

One of the most energy-draining moments in the whole setting a business up process. You need a US mailing address to open the account, so you need to make sure you have one before you start any process with the bank.
Even with that point in mind, it is very difficult to open a bank account while living outside the US, so we recommend you to do this step once you’re already living in the States, or that you hop on a plane and arrange this and other paperwork from the United States. As for the opening of the bank account, be very reluctant to give access to your data and accounts to be able to get the bank account without visiting the US.
Besides, with the latest regulations, banks face huge penalties if they do not know their clients well (to prevent money laundering), so they will ask you to be present with them at least once or twice during the process.

Business step #4 Get your ITIN

If you are not a resident in the US, and you don’t have a Social Security Number, you need the ITIN: Individual Tax Identification Number. You will need the ITIN for tax matters, but also to get a loan, finance your business activity, or even to apply for an apartment rental.
Ok, so… let us face it: doing business in the US is not easy, and it can be overwhelming. Our recommendation is that you hire some legal advice and financial support to navigate all the processes.
We are building our Xpats platform to include all of the above, and a wonderful community of ex-pats just like you, that can help you establish not only your business but also your family in the country.
And if your concerns are around how to do business once you have your brand established in the country, keep your eyes on us: next week we’ll roll out some advice to deal with the cultural differences we may have when we negotiate or do business in the States.

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