When it comes to starting a business in the US, there are a lot of opportunities and a wealth of information available to entrepreneurs. Whether your plan is to open a daycare or seize construction opportunities, the options available to you in the US are seemingly endless. This article will cover some of the basic information regarding starting a small business in the States. For more detailed information and suggestions on starting your own business, check out the US Small Business Administration’s website.What are my visa options for business?
There are two separate visas for business purposes, and your choice of visa will depend upon whether you already have an established business or you are moving to the US in order to set one up.
The first option is the L-1A visa, which is available to individuals with established businesses that have been in trade for at least 12 months and employ four or more people. This type of visa is most helpful to those who plan to expand their business by moving to the US.
The second option is the E-2 visa, which is available to those individuals who do not already have an established business. In order to qualify for this visa, you must be coming from a country that has an existing treaty of commerce and navigation with the US and be willing to invest a significant amount of capital on US soil. This visa application requires an in-depth business plan in order to be processed successfully.
In order to decide which visa is best for your entrepreneurial purposes, it may be best to sit down with an immigration lawyer and discuss your options.
What do I need?
Starting a business anywhere requires three major components: planning, funding, and registration/licensing. Registration and licensing requirements will vary by state (in some states, it may even vary by county) and are dependent upon the type of business you’re running. Requirements are different for a liquor store than they are for a pharmacy, for example, so it’s very important to know both the state and federal requirements before opening your doors. In order to ensure that your business is following those requirements, it may be in your best interest to hire or retain a business lawyer who is familiar with the policies in your target area.
Once your business plan is finalized, funding the business is the next major obstacle. There are state and federal grants available, most of which require that you match their funding with either personal capital or money obtained from a small business lender. Tread carefully, though – state and federal grants are funded by taxpayer money and have extremely stringent application and spending requirements, and they can be difficult to obtain. There are also a number of state and federal programs which help entrepreneurs to find loans and venture capital in order to start their businesses without the stress of grant-writing.
After your plan is finalized and your funding is in place, it’s time to look at how you want your business to be structured. That is, what do you want or expect your tax obligation to be?
The five types of US business structure
US small businesses fall into one of five tax obligation brackets: sole proprietorship, partnership, C corporation, S corporation, and limited liability company (LLC). More information on these brackets is available at www.irs.gov, but we’ll cover the basics here.
In a sole proprietorship, you own an unincorporated business by yourself. It’s possible to be the sole proprietor of an LLC, but if you run that LLC as a corporation, you cannot claim sole proprietorship. As a sole proprietor, you may be obligated to pay income tax, self-employment tax, social security/Medicare taxes, federal unemployment tax, and excise taxes.
Partnerships require two or more people jointly carrying on business. There are no income taxes in a partnership and members are instead required to file an annual information return, which reports the movement of capital through your business. The partnership itself may be liable for employment and excise taxes. Individuals within the partnership can typically expect to pay income tax and self-employment tax.
C corporation taxes tend to be more complicated because of the fact that their income is dependent upon the speculation and movement of capital between the corporation and its shareholders. C corporations are seen as one taxpaying entity and may be responsible for income, employment, and excise taxes.
S corporations pass their tax liability off to their shareholders, which means that shareholders are required to pay taxes on their individual shares in the business. Tax obligations for shareholders are limited to income tax, whereas tax obligations for the business itself include income, employment, and excise taxes.
Finally, the limited liability company (LLC) label is dependent upon state regulations, meaning its tax obligations vary depending on what the state in question defines as an LLC. Foreign LLCs have their own specific rules as well, so be sure to discuss your tax obligations with a tax lawyer prior to filing for your business license.
Keep in mind that any business must pay both state and federal taxes, so your tax obligations will change depending on the state in which you choose to operate. State taxes can include sales and property tax, among other obligations.
Putting it all together
Starting a business can be a truly eye-opening experience, and the opportunities in the US are endless. Always remember to consult your immigration lawyer to find what’s right for you. In order to ensure that you reap the most benefits from your business, thoroughly research any location you may be considering and look into the tax obligations of each state before moving forward. Consult extensively with tax attorneys to be sure you know what you can expect your obligations to be, and meet with employment attorneys to discuss labor laws in your area. Best of luck to you in your business ventures!
Have you set up a business in the US? Do you have any advice for other expats? Share your thoughts in the comments!