Today you are going to learn how to start a business successfully and legally. Bear in mind that this is usually a long process and you may need a lawyer and an accountant for optimum results. So without further ado let’s delve in.
TABLE OF CONTENTS
Tips To Succeed.
Opening a business in the United States has lots of benefits, no wonder why most people opt to open a business in the US because of the following perks:
- By opening a business in the US you’re obliged to open a US bank account which is a win-win.
- You get access to US payment processing accounts like Stripe, Amazon FA, and others.
- You get to enter the profitable US market
- You also get to brand your start-up on a global scale for both US-based and international customers.
Now you’ve discovered some profits of running a business in the US I’m pretty sure your mouth must be watering but don’t get your hopes up just yet as I mentioned before the process is very long and you’ll need to go through several compulsory processes to be eligible to open a business in the US. These processes are arranged in order of personal preference you may consult a lawyer if you don’t know where to begin. The process includes:
Choose your business structure.
Decide where to form your business.
Get a Registered Agent.
Get your EIN (Employer Identification Number).
Open a US Bank Account.
Open a Business Merchant Account.
Get an ITIN (Individual Tax Identification Number).
Meet Tax Requirements.
CHOOSE YOUR BUSINESS STRUCTURE
Choosing the right business structure for your business is highly imperative because the type of business structure you choose will have a direct impact on your income tax, daily operation of your business, and liability. They include:
Sole Proprietorship: This is the most simple structure as it does not require any formal registration because it involves single ownership. Just because it’s the most simple structure doesn’t make it the most, in fact, it’s the most unrecommended structure to choose. Because along with the total profits you also own all losses, liabilities, and debts., So if your business was sued or went bankrupt or destroyed you would have to give up your assets to make up for the losses. It is, for this reason, it’s not usually recommended.
LLC (Limited Liability Company): Contrary to the former the latter protects your assets from liabilities. That means if your business went bankrupt or was sued or was unable to pay up its debts your assets(personal bank account, house, cars, etc) won’t be affected. This is also the most common registered structure because of it’s simple and affordable taxation structure. It has a “Pass-through” taxation system which is suitable for companies with less than 80 thousand dollars per year in revenue. It is also the most common registered structure by foreigners, and as a result of the “Pass-through” taxation accountants don’t have to file a separate tax form for the company which saves in cost.
C-Corp (C-Corporation): This type of business structure is quite considerable for non-US citizens as it eliminates liabilities, the shareholders and business are considered separate entities so their assets won’t be affected by liabilities. It is also suitable for companies aiming to have shares and hoping to attract investors to their business. It’s also better for investors as they won’t be bothered about tax consequences until when they want to sell them. The downside of this type of structure is double taxation, as the company will be taxed first for making profit secondly when dividends are distributed to shareholders.
S-Corp (S-Corporation): This type of business is the most recommended for US citizens as it eliminates double taxation. Businesses registered under this structure will only be taxed once thus saving cost and you get to avoid self-employment tax which can consume up to 15% of your income. The downside of this structure is that it is only available to US citizens, non US citizens will have to choose from the other 3.
See Also: How To Ship Products From USA To Nigeria
DECIDE WHERE TO FORM YOUR BUSINESS (LLC OR CORPORATION)
US citizens are advised to form their business in the state where they reside. If they decide to form their business in another state other than the state where your business operates, they’ll have to register their business in that state as well thus end up paying taxes for both states. Non-US citizens who do not plan to have a physical presence in the US (operation from outside the US via a US bank account). You are advised to form your LLC in Wyoming as it is the best and most business-friendly state for non-US residents. Delaware is an ideal state if you plan to establish a physical branch. As a non-US citizen before choosing a state to form your business you should check if it allows the following:
Non-US citizenship requirements.
No member listings with the state.
Cheaper annual report fees.
No state, personal, corporate, or capital gains taxes.
More foreigner-friendly laws.
GET A REGISTERED AGENT
If your business is an LLC or Corp you need a registered agent in your state before you can register your business. A registered agent receives official papers and legal documents on behalf of your company. The registered agent must be located in the state where you register your business.
Many business owners prefer to use a registered agent service rather than do this role themselves as it cost only $50-100/year recurrently.
The requirements for registered agents include :
The agent must be physically located in the state of incorporation/formation.
Must be present at the address during business hours.
Must have their names and address kept current with the state.
Must be okay with their address becoming public and searchable.
GET YOUR EIN (EMPLOYER IDENTIFICATION NUMBER)
EIN is a tax ID issued by the IRS to identify a business. Without an EIN you won’t be able to start a business, open a bank account, hire and pay workers, and even get a business license.
For residents who have Social Security Number, it’s possible to apply online through an online form on the IRS website.
Non-residents should get a business lawyer to act as their third-party designer who will file the application and receive the number on your behalf.
GET A US-BASED MAILING ADDRESS
A US-BASED mailing address is required to open a bank account. Ideally, you need a US address to get a US-Based mailing address but if you don’t have one you can use any of the following companies:
Keep in mind that you will be required to submit form 1583 from the United States Postal Service (USPS).
OPEN A US BANK ACCOUNT
This process is usually the most daunting part for most Non-US citizens. Non-US citizens can open a US bank account by first consulting the headquarters of your desired bank telling them you would like to open a US bank account via their local branch in your country then you’ll be asked to provide means of identification (usually a passport and a driver’s license) at your local branch. According to the Patriotic Act; all foreigners trying to open a US bank account have to undergo necessary anti-laundry and anti-terrorism checks. Bank of America, Citibank, and Wells Fargo are the most preferred.
The documents you’ll most likely need will be:
EIN letter from IRS.
Tax Identification Number and Social Security Number (TIN&SSN).
ITN(Individual Tax Number) for non-US citizens.
Articles Of Organization.
OPEN A BUSINESS MERCHANT ACCOUNT FOR ACCEPTING CUSTOMER PAYMENTS.
You’re going to need a merchant account for accepting customers’ payments via either debit or credit card transactions.
It’s free to do so. After getting your EIN you can easily open a merchant account like stripe, Authorize.net, Payoneer, and PayPal (if you have an SSN).
The federal government and some state governments require businesses especially ones with employees to acquire insurance which usually includes unemployment, disability, workman’s compensation, etc. Note that these laws vary across each state.
GET AN ITIN ( INDIVIDUAL TAX IDENTIFICATION NUMBER)
This is the Tax ID number issued by the IRS which requires individuals paying taxes without SSN to fall into the system. All US banks either ITIN or SSN to open bank accounts with them. It is also essential for creating PayPal or Stripe accounts, applying for a mortgage loan, financing cars, apartment rental, complying with US Federal Tax for earning income in the US, filing tax returns if taxes are owed, or even helping employees to get a job.
MEET TAX REQUIREMENTS
If you run an LLC your company won’t be taxed directly rather the profits and losses of the business pass through to its owners, who report them on their tax returns. This makes America one of the biggest tax havens.
It’s also possible for your LLC to earn income without being taxed in the US if you have no physical presence in the US.
You can only be taxed if you have a dependent agent who works exclusively for you and furthers your business in the US, as opposed to administrative agents along with a US-based office.
When you work and pay taxes in your home country in other cases, tax treaties will circumvent the US rights to taxation. All foreigners with LLCs must file 5472 US tax returns for disclosure even 8f they don’t own taxes. This is for companies with reportable transactions like the exchange of money or use of LLC properties by foreign owners, related parties. Annual fees should also be paid on time.
If your business is an LLC, corporation, or non-profit organization, you’ll probably need to register with the state where you conduct business activities. You are said to be conducting business activities in a state when:
Your business has a physical presence in that state.
Any of your employees work in that state.
A significant portion of your company’s revenue comes from that state.
You usually have in-person meetings with clients in that state.
Some states allow online registration others request you to file paper documents in person or through the mail. Most states require you to register with the Secretary of State office, a Business Bureau, or a Business agency.
Most times, the total cost to register your business will be under $300 but fees vary depending on your desired state and business structure.
The information you’ll normally need includes
Registered agent into.
Number and value of shares ( if you are a corporation)
The documents you need will vary based on your state and business structure. The entire process usually takes from 1 business day to 4 weeks depending on the state you form your business and your business structure.
TIPS TO SUCCEED
Have A Well-Thought Business Plan: The importance of a well thought and carved plan cannot be overemphasized. How good your plan is will have a large impact Success on your business from your chosen location to your marketing strategy aim for nothing but the best, because your future competitors won’t be willing to let go of their customers.
Have An Effective Marketing Strategy: Unless you are selling lightning and thunder whatever niche you choose will always have competitors so you need a marketing plan that can make you stand out. If you don’t know how to create an effective marketing plan you can seek expert advice.
Keep Your Personal and Business Account Separate to avoid ambiguity, confusion, and hassle.
Focus on the success, mission, integrity, and quality of goods sold and services rendered to keep customers coming.
Always try to aim for 100% customer satisfaction. Remember they’re always right.
Acquire exceptional sales skills.
Hire qualified employees and train them.
Consult a business lawyer if you need help with legal issues.
There’s no sure way to succeed in business, anything can happen. But the fact that there are successful businesses yours can be successful if you look past the money and focus more on the name and success of your business. Be persistent and always conduct market research to observe the market trends and changes, who knows you might become the next Walmart.Buy and Sell Bitcoin in Nigeria - Register for free on Luno
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