how to start a business in the U.S. as a Foreigner

Good news: You don’t need U.S. citizenship, residency, or even a visa to form a U.S. business. The process is surprisingly straightforward once you understand the steps.

International entrepreneurs choose the U.S. for good reasons. American customers trust businesses with U.S. addresses. Payment processors like Stripe and PayPal work more smoothly with U.S. entities. Banks take you more seriously. Venture capital flows more freely to Delaware corporations.

This guide walks you through everything: choosing the right business structure, picking the best state, filing paperwork, getting your tax ID, and opening a bank account. We’ll be honest about what’s easy (forming the business) and what’s challenging (banking and taxes).

Expect the entire process to take 4-8 weeks from start to operational.

Which Entity Type to Choose

You have three main options: LLC, C-Corporation, or S-Corporation. For most international founders, the choice is simple.

LLC (Limited Liability Company)

This is our recommendation for 90% of international founders. An LLC protects your personal assets from business debts, just like a corporation. But it’s much simpler to maintain.

LLCs have “pass-through taxation” (profits and losses pass through to the owners’ personal tax returns). For foreign owners, this often means no U.S. income tax if you’re not physically working in the U.S. You’ll still need to file paperwork with the IRS (Form 5472), but the tax burden is usually minimal.

LLCs are flexible. You can have one owner or many. You can change the ownership structure easily. You can elect to be taxed as a corporation later if needed.

C-Corporation

Choose a C-Corp if you plan to raise venture capital from U.S. investors. American VCs strongly prefer Delaware C-Corps because they’re familiar with the structure.

C-Corps also qualify for QSBS (Qualified Small Business Stock) benefits, which can provide significant tax advantages for investors. If you’re building a high-growth tech company, this matters.

The downside: C-Corps have “double taxation” (the corporation pays tax on profits, then shareholders pay tax on dividends). They also require more paperwork and formal governance.

S-Corporation

Skip this option. S-Corps can’t have foreign owners, so you’re not eligible unless you have U.S. citizenship or permanent residency.

Single-Member LLC Tax Considerations

If you’re the only owner of your LLC, the IRS treats it as a “disregarded entity” for tax purposes. This sounds scary but it’s actually simple: the LLC’s income and expenses go on your personal tax return.

For non-U.S. residents, this often means minimal U.S. tax liability if you’re not physically present in the U.S. But you still must file Form 5472 annually. Miss this filing and you’ll face penalties starting at $25,000.

Which State to Form In

You can form your business in any U.S. state, regardless of where you live or operate. Don’t worry about having a physical presence in the state you choose.

Wyoming (Our Top Pick)

Wyoming is ideal for most international founders. It has no state income tax, low annual fees ($52 per year), and strong privacy protections. You don’t have to list your name publicly as the owner.

Wyoming is business-friendly with minimal compliance requirements. The state processes paperwork quickly and efficiently.

Delaware

Choose Delaware if you’re forming a C-Corp and plan to raise venture capital. Delaware has the most sophisticated corporate law in the U.S., and investors are comfortable with it.

Delaware charges higher fees than Wyoming ($175 for LLCs, $89 plus franchise tax for corporations). For most small businesses, Wyoming is a better choice.

New Mexico

New Mexico offers similar benefits to Wyoming: privacy protection, low fees ($50 annual fee), and no state income tax for most businesses. It’s less well-known than Wyoming but equally effective.

States to Avoid

Don’t form in California or New York unless you actually have employees or offices there. Both states impose high taxes and fees on businesses, even if you never set foot in the state.

California’s LLC annual fee starts at $800 and can reach $11,790 based on revenue. New York charges $9 per $1,000 of LLC capital. These costs add up quickly.

Step by Step: How to Form Your U.S. Business

Step 1: Choose Entity Type and State

Based on what we covered above, most international founders should choose an LLC in Wyoming. This gives you maximum flexibility with minimal cost and complexity.

Time required: 1 day of research
Cost: $0

Step 2: Choose a Business Name

Your business name must be unique in your chosen state. Check availability on the state’s Secretary of State website. For Wyoming, search at sos.wyo.gov.

Your LLC name must include “LLC” or “Limited Liability Company.” Corporation names must include “Corp,” “Corporation,” “Inc,” or “Incorporated.”

Avoid trademark conflicts by searching the USPTO database at uspto.gov. Don’t worry about getting a perfect name – you can always file a “Doing Business As” (DBA) later to operate under a different name.

Time required: 1-2 hours
Cost: $0

Step 3: Appoint a Registered Agent

Every U.S. business needs a registered agent with a physical U.S. address. This person or company receives legal documents and government correspondence on your behalf.

You can’t use a P.O. Box. You need a real street address in your formation state.

As an international founder, you have two options:

• Hire a registered agent service (we provide this for $99/year)
• Ask a U.S. friend or relative to serve as your agent

Professional registered agent services are worth the cost. They’re reliable, provide mail forwarding, and won’t move or become unreachable.

Time required: 30 minutes to set up
Cost: $99-150 per year

Step 4: File Formation Documents

For an LLC, you file “articles of organization” with your state’s Secretary of State. For a corporation, you file “articles of incorporation.”

These documents are usually one page and include basic information: business name, registered agent address, and management structure.

Most states accept online filings. Wyoming processes LLC filings immediately online. Some states take 1-2 weeks.

Time required: 2-5 business days for approval
Cost: $52-175 depending on state

Step 5: Get Your EIN from the IRS

Your EIN (Employer Identification Number) is like a Social Security number for your business. You need it to open bank accounts, file taxes, and handle most business activities.

Non-U.S. residents must apply by fax using Form SS-4. You cannot apply online or by phone without a Social Security number.

The IRS takes 4-8 weeks to process faxed applications. This is often the longest part of the entire process.

We handle EIN applications for international clients because the form requires specific language and formatting that the IRS expects.

Time required: 4-8 weeks
Cost: $0 (IRS fee) plus service fees if you use a provider

Step 6: Draft Operating Agreement or Bylaws

LLCs need an Operating Agreement. Corporations need Bylaws and corporate resolutions. These documents aren’t filed with the state, but banks and investors will ask for them.

Your Operating Agreement should specify:

• Ownership percentages
• Management structure
• How decisions are made
• What happens if an owner wants to leave

Don’t skip this step. Generic templates from Google often create problems later. Investment in proper documentation pays off when you need to open accounts or bring in partners.

Time required: 1-3 days to review and finalize
Cost: $0-500 depending on complexity

Step 7: Open a U.S. Business Bank Account

This is the hardest step What Is. U.S. banks are cautious about accounts for non-resident business owners.

We’ll cover this in detail in the next section because it deserves special attention.

Time required: 2-4 weeks
Cost: Varies by bank

Opening a U.S. Bank Account — The Hard Part

Let’s be honest: this is where many international founders get stuck. Traditional banks often require you to visit in person or have substantial deposit amounts.

But it’s definitely possible. Here’s what works.

Online Banks for International Founders

Several online banks specialize in business accounts for non-resident LLC owners:

Mercury accepts international founders and offers modern banking features. They require your formation documents, EIN, and Operating Agreement. The application is entirely online.

Relay works with international business owners and provides multiple account options. They’re particularly good if you run an e-commerce business.

Wise Business (formerly TransferWise) offers multi-currency accounts and low-cost international transfers. They’re ideal if you’re moving money between countries regularly.

Each bank has different requirements and timeframes. Apply to multiple banks to improve your chances.

What Banks Require

Every bank will ask for:

• Articles of Organization (your formation documents)
• EIN letter from the IRS
• Operating Agreement
• Government-issued photo ID
• Proof of address in your home country

Some banks also require:

• Business license (if applicable in your industry)
• Initial deposit ($100-1,000)
• Phone interview with a banker

Traditional Banks

If you plan to visit the U.S., consider opening an account in person. Chase, Bank of America, and Wells Fargo all work with international business owners, but they usually require a branch visit.

Call ahead and ask which documents to bring. Make an appointment rather than walking in.

Payment Processors as Alternatives

If banking proves difficult, consider starting with payment processors. Stripe and PayPal Business often approve international LLCs faster than traditional banks.

You can use these services to collect payments while you work on getting a full banking relationship. Many successful businesses operate this way for months.

Tips from Successful International Founders

• Apply to multiple banks simultaneously
• Have all documents professionally prepared
• Be patient – expect 2-4 weeks for approval
• Consider making a larger initial deposit to improve approval odds
• Get a U.S. phone number (Google Voice works) for easier communication

Tax Obligations for Foreign-Owned U.S. Businesses

Important: This section is educational only. Tax rules are complex and change frequently. Always consult with a CPA who specializes in international taxation.

Single-Member LLC Requirements

If you own 100% of your LLC, you must file Form 5472 annually with the IRS. This form reports transactions between your LLC and foreign related parties (mainly you).

Form 5472 is due March 15th (or September 15th with extension) regardless of whether your business made money. The penalty for not filing starts at $25,000. Yes, that’s twenty-five thousand dollars.

You might not owe income tax if you’re not physically present in the U.S., but you absolutely must file the paperwork.

Multi-Member LLC Requirements

LLCs with multiple owners must file Form 1065 (partnership return) annually. Each owner receives a K-1 form showing their share of income, losses, and deductions.

C-Corporation Requirements

C-Corps must file Form 1120 annually, regardless of where the owners live. The corporation pays tax on its profits at U.S. corporate rates.

Getting an ITIN

You might need an ITIN (Individual Taxpayer Identification Number) from the IRS. This is different from your business EIN. An ITIN identifies you personally for tax purposes.

Apply using Form W-7. The process takes 8-12 weeks.

Tax Treaties

Many countries have tax treaties with the U.S. that can reduce or eliminate certain taxes. These treaties are complex and vary by country.

A qualified international tax CPA can help you understand how treaties affect your situation.

Hire a Professional

International taxation is genuinely complex. Hire a CPA who specializes in this area. The cost (usually $1,000-3,000 annually) is small compared to the penalties for getting it wrong.

Don’t try to handle this yourself with TurboTax. You need someone who understands both U.S. tax law and your home country’s rules.

Ongoing Compliance

Forming your business is just the beginning. You’ll have ongoing requirements to keep your business in good standing.

Annual State Filings

Most states require annual reports. Wyoming charges $52 per year for LLCs. Delaware charges $175. These are due by specific dates – usually the anniversary of formation.

Miss the deadline and your state may dissolve your business or charge late fees.

Federal Tax Filings

Remember Form 5472 for single-member LLCs. This is due annually regardless of business activity.

Registered Agent

Keep your registered agent service active. If you cancel it, appoint a new agent immediately. Never let your business operate without a registered agent.

Business Licenses

Some businesses need licenses or permits. Requirements vary by industry and location. Research this early – some licenses take months to obtain.

Maintaining Corporate Formalities

Keep your business and personal finances separate. Open business bank accounts. Sign contracts in the business name. Document major decisions.

This protects your limited liability protection. Mix business and personal affairs, and you risk losing legal protection.

At BusinessFormations.com, we offer compliance tools specifically designed for international clients. We track deadlines, prepare required filings, and send reminders so you never miss important dates.

Common Mistakes International Founders Make

We’ve seen thousands of international founders start U.S. businesses. Here are the mistakes that cause the most problems:

Using Random Addresses Instead of Proper Registered Agents

Never use a UPS Store or random address you found online. States require reliable registered agents who can receive legal documents. Use a professional service.

Applying for Bank Accounts Before Getting an EIN

Banks require your EIN before opening accounts. Don’t waste time applying to banks until you have your tax ID number from the IRS.

Choosing the Wrong State

Don’t automatically choose Delaware because it sounds prestigious. For most small businesses, Wyoming or New Mexico offer better value. Delaware makes sense for C-Corps raising venture capital.

Ignoring Form 5472

This is the most expensive mistake. The IRS penalty for not filing Form 5472 starts at $25,000. Set a calendar reminder for March 15th every year.

Thinking LLC Means No U.S. Tax Obligations

LLCs have fewer tax obligations than corporations, but they’re not zero. You still need to file paperwork and potentially pay taxes depending on your business activities.

Using Personal PayPal Instead of Business Banking

Mixing personal and business finances creates tax problems and can pierce your liability protection. Open proper business accounts even if it takes extra effort.

Not Planning for Tax Obligations

Start working with an international tax CPA early. Don’t wait until tax season to figure out your obligations.

Choosing Generic Business Names

Pick names that aren’t already trademarked. Do basic research before filing. Changing your business name later requires amendments and paperwork.

Frequently Asked Questions

Do I need a U.S. visa to start a business?

No. You can form and own a U.S. business without any visa, residency, or citizenship. However, if you want to physically work in the U.S., you’ll need appropriate work authorization.

How much does it cost to start a business?

Budget $500-1,500 for the basic setup:

• State filing fees: $50-175
• Registered agent: $99-150/year
• EIN processing: $0-300
• Operating Agreement: $200-500
• Bank account: $0-100 minimum deposit

How long does the entire process take?

Expect 4-8 weeks from start to having an operational business with a bank account. The EIN application (4-8 weeks) and banking (2-4 weeks) are usually the longest steps.

What if I can’t open a bank account?

Start with payment processors like Stripe or PayPal Business. These are often easier to obtain and let you begin collecting payments while you work on traditional banking.

Do I need a U.S. partner?

No. You can own 100% of your U.S. business as a non-resident. Having a U.S. partner might make banking easier, but it’s not required.

Can I use my home address for business registration?

No. You need a registered agent with a U.S. address in your formation state. This is a legal requirement in all states.

What ongoing maintenance does my business need?

Annual state filings, federal tax filings (at minimum Form 5472 for single-member LLCs), and keeping your registered agent active. Budget $500-2,000 annually for compliance and professional fees.

Can I change my business structure later?

Yes, but it involves paperwork and potential tax consequences. It’s better to choose the right structure initially. Most international founders find LLCs provide the flexibility they need.

Conclusion

Starting a U.S. business as a non-resident is entirely achievable, but success depends on getting the details right. Most international founders should form an LLC in Wyoming for the best combination of simplicity, privacy, and low costs.

The key challenges are obtaining your EIN (allow 4-8