How to Start a Business in the U.S. as a Foreign National?
Starting a business in the U.S. as a Foreign National can be challenging but I can walk you through the process. Currently, I have a Canadian client who wants to buy a hotel in the USA. Normally if a client already owns a flagged hotel it would be some what easy to provide funding to buy an additional location. The client would need 10% down, 2 years experience in the industry, and a credit score of at least 650. Unfortunately, this client only owns hotels in Canada. My client wants to buy a new location in Ohio and live in one of the Hotel Units while managing the location. In this case as with most foreign nationals when buying in the USA the L.T.V's tends to be a little lower. Unfortunately, since this client has no US tax returns, US credit score, and owns no properties in the USA. The deal becomes more challenging due to the lack of a US foot print. We have funded other foreign national scenario's in the past which required more of a down payment than normal. Example: Hotel Purchase for $2,000,000 FL (20-25% down. 5-6% 15-30 am) 75-80 ltv. (L.T.V is slightly lower for foreign nationals) Unless the buyer has some sort of foot print already established in the USA.
Being non US citizen doesn't preclude anyone from getting capital, although banks may enforce more stringent eligibility requirements.
Aside from US citizens or natural citizens, clients with the following immigration status can start a business in this country.
- Green card Holders
- EB- Investor green Cards
- Other Immigrant and Non Immigrant Visas
After attaining a green card you would take the same steps that any US citizen would take when applying for a business loan.
How to structure your US Business? When applying for a sole proprietorship, L.L.C, Corporation, partnership, or S Corporation. I feel its important to understand and attain advice about the ownership status and tax ramifications of your chosen entity.
How to Attain a US Bank Account? One of the first things i request all my Foreign national clients to do is attain a tax ID Number and a government issued document bearing a photograph. In order to start a business bank account he or she will have to also provide their articles of incorporation, US Business address, etc. Finally, this is how a new business owner would establish a business bank account.
Next step is to speak to a tax practitioner who understands business tax law. Business tax Filing and payments. All non resident aliens must file and pay state and federal taxes on business income. You will be taxed at regular US corporate rates but only on income from US sources that is connected with that business, and at 30% on income not connected with that business. It all depends on the extent of the non US person's presence in the US. The US Tax system is complicated so please consult with an expert.
Depending on what type of business, you may also be obligated to pay sales tax, self- employment, social security, and medicare taxes, make estimated tax payments, pay duties, etc
E.I.N Number. Earlier, I mentioned that in order to open a business account you need a tax id number. All US business require an employer identification number (E.I.N) from the IRS to support tax filling and reporting. This ID identifies the business entity . Its basically the equivalent of a business social security number.
Getting access to financing? Most foreign nationals who purchase, refinance, or start a business in the US. Normally choose to hire an experienced commercial mortgage broker to process and underwrite the loan.