Recently we received this question from an international business man and thought that if one person was wondering how to establish a foreign business in the United States, then there must be many others who would like to know the answer also.
“Hello, I work for a Lebanese company and we are considering opening an office in San Francisco. As a foreign company are we required to set up a legal entity or can we set up there as division of a foreign company? Please advise and thank you!”
U.S. citizenship and residency are not requirements for starting a business on American soil. Those who are non-U.S. citizens are free to start a new business venture or expand an existing one in the United States with the same requirements that citizens are required to fulfill. According to the U.S. Small Business Association, “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.”
So to answer the question directly, a foreign business needs to set up a legal entity. The first step is deciding which type of legal incorporation you would like to file for such as a limited liability corporation (LLC), C corporation, or nonprofit corporation. Next you’ll need to register your business name that will go on all of your documentation. Employers with employees, business partnerships and corporations, and other categories of organizations are required to acquire an Employer Identification Number (EIN) from the U.S. Internal Revenue Service which is also known as an Employer Tax ID and Form SS-4. Finally, you’ll need to secure your tax ID’s and any licenses or permits (especially pertaining to imported goods) that are required depending on your industry.
Starting a business in the U.S. can be quite lucrative while also quite daunting. As a foreign entrepreneur, it would be in your best interest to contact a startup lawyer who is familiar with the legal procedures in creating a U.S. company along with the details of remaining a citizen and paying taxes in your country of origin.