Business

Kavan Choksi Discusses How to Start a Company in the United States As a Foreigner

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Establishing a business based in the United States as a foreigner can be a long road, but the country has made it pretty simple to register a company and open a commercial venture here. Kavan Choksi, a reputed business expert, mentions that people need to plan what type of a company they want to set-up, in which state it shall be incorporated, as well as its need for licenses, registrations, permits, etc. Learning English is also a basic requirement for people planning on doing business with Americans. Due to its flourishing economy, opening a company in the U.S. can be a great choice for many.

Kavan Choksi shares key insights into establishing a business in the United States as a foreigner

When starting a business in the United States, foreigners first need to decide on the company structure. The majority of foreign nationals tend to establish a C corporation that can be expanded by offering unlimited stocks. Such companies are quite attractive to outside investors, even though their profits tend to be taxed twice, once at the corporate level, and then as dividends to shareholders. The advantages are pretty clear to the corporate shareholders as they are able to qualify for a lower dividend rate. The corporate parent will not pay capital gains when it sells the U.S. affiliate, as long as the U.S. Company does not primarily hold real estate. As the structure shields them from direct IRS scrutiny, most individual foreign owners are best off with a C corporation. Tax planners can additionally use pension expenses, salaries, and other costs to cut down the corporate income and eliminate a good level of double taxation.

Depending on the specifics of one’s native tax laws, there are also instances where foreign nationals choose to go for a limited partnership. In such a business structure, partners without management control have limited liability. The profits are subsequently passed through the members who pay income tax on their individual tax returns.

After choosing the company structure, foreigners have to zero on the U.S. state they want to register their company in. The type of business one operates should ideally determine its location. A number of foreign nationals also go for low-burden states that have corporate laws providing generous protections to directors and shareholders, while maintaining outsider-friendly rules. The forms and other requirements for establishing a company tend to differ from one state to the other.

Kavan Choksi points out that foreigner wanting to start a company in the United States also need to get an Employer Identification Number (EIN). This number is required not just for hiring workers, but also to pay taxes, open a bank account, or even to get a business license in some cases. Unless the principal officer or responsible party of a U.S. company has already obtained a separate Taxpayer Identification Number from the agency, they might not be able to apply for an EIN online. Once the EIN has been obtained, one must open a bank account that manages to fulfill their needs.

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