How to Start a Business in the US as a Foreign National: Legal Structures and Visa Options

Foreign nationals can legally start and own businesses in the United States. There is no law preventing non-citizens from forming a company. However, owning a business and having legal work authorization are separate matters. Understanding the intersection of business formation, visa requirements, and tax obligations is essential for international entrepreneurs.

Choosing a Business Entity: LLC vs C-Corporation

The two most common business structures for foreign nationals are the Limited Liability Company (LLC) and the C-Corporation. LLCs offer flexibility and pass-through taxation for U.S. tax residents. C-Corporations are preferred for foreign nationals who are not U.S. tax residents, as they avoid complications with pass-through income taxation.

C-Corporations are also the standard structure for businesses seeking venture capital or planning to go public. LLCs are more suitable for smaller operations, service businesses, and real estate investments by U.S. tax residents.

Selecting a State for Incorporation

Delaware and Wyoming are popular incorporation states due to their business-friendly laws, strong privacy protections, and well-established corporate legal frameworks. However, if your business will operate primarily in one state, incorporating there may be simpler and more cost-effective.

New York, for example, requires LLCs to publish formation notices in two newspapers, adding $500 to $2,000 in costs. Delaware has no such requirement and charges lower annual fees. Many businesses incorporate in Delaware and register as a foreign entity in their operating state.

Visa Options for Business Owners

Simply owning a U.S. business does not grant the right to work in the United States. Foreign business owners typically need an E-2 Treaty Investor Visa, L-1 Intracompany Transferee Visa (if transferring from a foreign parent company), or an O-1 Visa for individuals with extraordinary ability.

The E-2 visa is the most common choice for entrepreneurs starting a new business. It requires a substantial investment, a viable business plan, and that the applicant is a citizen of a treaty country. The visa allows the owner to manage and direct the business operations.

Opening a U.S. Business Bank Account

Opening a business bank account typically requires an Employer Identification Number (EIN) from the IRS, articles of incorporation or organization, operating agreement (for LLCs), and personal identification. Some banks allow remote account opening for foreign nationals, while others require an in-person visit.

Major banks like Chase, Bank of America, and Wells Fargo serve international business owners. Fintech alternatives like Mercury and Relay offer online account opening processes that are often more accessible for foreign nationals.

Tax Considerations for Foreign-Owned Businesses

Foreign-owned U.S. businesses must comply with federal, state, and local tax requirements. C-Corporations pay corporate income tax (21% federal rate). Additionally, foreign owners may be subject to withholding taxes on dividends and may have reporting obligations under FATCA (Foreign Account Tax Compliance Act).

It is strongly recommended to work with a CPA experienced in international taxation. Tax treaties between the U.S. and many countries can affect withholding rates and reporting requirements.