Do you want to start your own company in the USA? Then you should first become familiar with the American business world. Learn about applications, company forms, authorities, taxes, and insurances, to set up your own company in the United States.
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No matter if you have already specialized in one business area or if you are still looking for the right business model for your fresh start in the United States: you need to do extensive research before setting up your company in the USA.
Address questions about the right location for your business, write a business plan, and then get started with registration, necessary licenses, and all taxes and business accounts issues.
Some businesses (such as a marketing agency or tax consulting firm) can easily be opened in any US location, as their services can be provided regardless of where they are based.
However, if you plan to open a bakery, auto repair shop, or other location-based business, identify the right state and city for your headquarters before you incorporate. A thorough market analysis will help.
To find out which locations are best for your business startup in the United States, learn about the following factors in your preferred regions:
To run a profitable business and gain access to partners, investors, and government funding, you need a good business plan. This should include at least the following items:
The goal of the American business plan is to provide a clear overview of resources and prospects for success. Therefore, the document should act as a roadmap through all startup phases, ongoing operations, and growth.
If you are starting a business for the first time, we recommend attending special training for the American market. The U.S. Small Business Administration works with different consulting firms that you can find through the SCORE search engine.
Once you have found the right location for your company, you need to decide which form of business is best suited for your venture. You can choose from the following legal forms:
The LLC (limited liability company) offers attractive tax benefits. Therefore, the legal form of the LLC is very common (for example, for one-person companies).
A corporation distributes profits to shareholders. Just like with the LLC, liability is limited. Corporations are divided into C corporations (taxed separately from their owners) and S corporations (whose shareholders report income and losses on their tax returns).
The establishment of a sole proprietorship is limited to a single person responsible for all business operations. All required to establish this form of business is a name registration in the municipality and the acquisition of the appropriate license.
Businesses or trading companies consisting of several persons can be established as a partnership. Each of the founders contributes capital, time, or skills to the company and shares in profits and losses.
There is a distinction between a general partnership (in which all partners are jointly and severally liable) and a limited partnership (there may also be limited liabilities and passive partners).
The legal form for your company in the USA should depend on your business and personal circumstances because this decision also affects the taxes you will have to pay in the USA. If in doubt, seek advice from a specialized attorney's office.
The documents needed to register your company in the United States vary depending on your company's type and legal form. In all cases, have the following documents ready:
To register your company in the USA, go to the relevant tax authority in your state. The U.S. Small Business Administration (SBA) search engine will tell you which website to use for your business registration.
Along with your business registration, you can also apply for an EIN. This number is required to hire employees in the United States and open a company bank account.
If your US state does not allow applying for the EIN at the same time as your company registration, you can apply for the number on the IRS (US Internal Revenue Service) website.
An alternative to the straightforward Green Card is the E-2 investor visa for the USA. However, this visa is subject to strict conditions. For instance, you must provide the following evidence for an E-2 visa:
If you do not qualify for either a Green Card or an E-2 visa, it is also possible to start a business from your home country. However, such a "remote incorporation" means an enormous additional administrative burden and does not provide you with a residence and work permit for the USA.
You will need an appropriate license to do business in the United States. Business and sales licenses for the USA relate, for example, to the trade of goods or certain services. Examples:
There is a distinction between "state licenses" and "federal licenses" in the USA. The overarching Federal Licenses can be obtained from the major US authorities, e.g.,
"State licenses," which are issued independently in all US states, include, for example, professional licenses for your company's employees (e.g., nurses, physical therapists, accountants, veterinarians, attorneys, engineers, architects, and real estate agents).
There may also be additional permits due around your business property, your work processes, or the safety of your operation. These include:
Check with your US state, county, and city regulations, as industry requirements vary widely.
Your company is taxed at the federal, state, and local levels in the USA. Ensure you comply with all Internal Revenue Service (IRS) requirements and consult a US tax advisor if in doubt.
US companies generally pay between approximately 20 % and approximately 27 % "corporate taxes." The following taxes may be relevant to you:
In addition to licenses, certificates, and permits, your company in the USA should have good insurance coverage for personnel, company property, cybersecurity, and (product) liability.
Worker's compensation insurance covers your staff against temporary disability due to workplace accidents. This insurance provides wage replacement and medical benefits in the event of an injury.
Although worker's compensation insurance is not mandatory for all employees in all US states, it gives you a big advantage when it comes to recruiting good employees. Offer a generous insurance package as part of benefits negotiations with your prospective hires.
Your business inventory, including equipment and stock, should be protected by commercial property insurance. This kicks in in the event of damage or loss due to fire, severe weather, earthquake, vandalism, or water damage.
You can get an extension of coverage to your fleet of vehicles with a commercial auto insurance policy. This covers the costs of accident-related expenses such as medical bills, repair shop costs, or court costs.
Lawsuits due to business mistakes are not uncommon in the USA. Therefore, protect yourself from the financial burdens of civil lawsuits with professional liability insurance.
Attacks on corporate IT infrastructure are more common than most business owners think. That's why you should look into cyber security insurance to protect your company from the consequences of hacker attacks, phishing, and damage caused by malware and other malicious programs.
Through the United States Centers for Medicare & Medicaid's Health Insurance Marketplace, you can arrange health insurance for yourself and your employees. While you are not legally required to do so, you can show off in recruiting if you have a good offer for prospective employees and may even contribute to the cost.
If you have employees in the US, you must also pay the employer's share of the pension insurance (12.4 %) for them. You can also set up a good, low-cost retirement plan for yourself, thanks to the Simplified Employee Pension (SEP) and the popular 401(k) plans.
As a business owner, you pay half of Social Security and Medicare contributions for your employees. In 2022, the Social Security tax rate for employees and employers is 6.2 % of salary each, for a total of 12.4 %. The Medicare rate is currently 2.9 %, so 1.45 % each for employer and employee.
For yourself, as a self-employed person, you pay the "Self Employment Tax," which covers both the employee and employer contributions to Social Security. The tax rate is 15.3 % (12.4 % for Social Security and 2.9 % for Medicare).
Do you have a business idea for your company in the USA that is of great social value? Then you may have a chance to get government grants. On the grants.gov and benefits.gov websites, the US government manages thousands of grants for all types of businesses.
We wish you every success with your new company in the USA! And once you're in the saddle, be sure to check out the US government's H-1B Lottery, which can help you get highly skilled professionals. You may soon be one of the best employers in the United States!