Key things for entrepreneurs to start their business in the USA

As a founder, you will have to make numerous critical decisions. One of the first is to determine which legal structure is best for your startup. There are numerous ways to incorporate, each with advantages and disadvantages. Before making a decision, you should have a basic understanding of the various types of incorporation to consider.

Types of company in the USA

In the United States, there are four general types of corporations: a sole proprietorship, a Limited Liability Company (LLC), an S-Corporation (S-Corp), and a C-Corporation (C-Corp).

1. Solitary proprietorship

To get started without VC funding, the simplest option for small business owners is to form a sole proprietorship. A sole proprietorship is an unincorporated business owned and operated by a single individual. There is no registration or application process, but you may want to pay a small fee to obtain a DBA ("doing business as") certificate. The DBA document protects your rights to a specific company name. However, once you've registered a business name, it's difficult to change it.

A sole proprietorship, despite its simplicity, has drawbacks. Many commercial banks, for example, including Silicon Valley Bank, will be unable to open accounts for you. And if you're working alone—say, coding prototypes—this is a good option, according to the founder of Accelerate Legal, a San Francisco law firm that specializes in tech startups. It may be prudent to consider a different type of legal entity at this point. Similarly, if you decide to seek VC funding, you must incorporate

2. Limited Liability Corporation (LLC)

An LLC, or Limited Liability Company, is another common company structure. An LLC is beneficial for several reasons:

• The price is reasonable.

• In your personal tax return, you record the company's financial results.

• Owners of an LLC are not personally liable for the debts and legal obligations of the company.

3. Limited Liability Companies (S corps)

S Corps are typically small businesses that combine the advantages of incorporation with the tax-exempt benefits of a partnership. You can pass income directly to shareholders, just like an LLC, without paying federal corporate taxes. S corporations have some limitations:

• There are only 100 shareholders.

• Only one type of stock may be issued.

• Are only available to US citizens or residents, specific trusts and estates, or tax-exempt organizations.

4. C Corporations (C-corps)

Most startups form as a C-Corp, the same structure used by Apple, Google, and virtually every other large company in the United States. A C-Corp is a completely separate legal entity that must pay corporate taxes and file annual reports. It is also required to form a board of directors. When you're just getting started, it may seem like more structure than you need, but if you plan to raise funds, a C-Corp is usually the best option. It is best to establish the C-corp as early in the life of your company as possible.

Step for U.S non-citizens to start their owned businesses

Foreigners do not need a green card to own a business or serve as a corporate officer or director of a U.S. corporation and earn profits, as long as they pay taxes. Individuals must have approval from the US government through either an E-2 Treaty Investor Visa or an EB-5 Visa to work in a business in which they have invested.

      1. E-2 Treaty Investor Classification

To be eligible for E-2 Treaty Investor status, a non-immigrant, non-citizen investor must:

• Be a national of a country with which the United States has a treaty of commerce and navigation

• Be actively investing (or have already invested) a substantial amount of capital in a legitimate U.S. company

• Be in (or seeking to be in) the United States solely for the purpose of developing and directing the investment enterprise. (Must have 50% ownership of the company or operational control via a managerial position or other corporate device.)

The E-2 classification allows non-immigrant investors to stay in the United States for up to two years. Extended stays of up to two years may be granted. While there is no limit to the number of extensions that can be requested, E-2 investors must plan to leave the US when their E-2 status expires (or has been terminated).

Remember that E-2 treaty investors may only perform the work for which they were approved when E-2 status was granted. As a result, non-immigrant, non-citizen business owners must exercise caution in their involvement in the business.

      2. EB-5 Visa Classification

The EB-5 Immigrant Investor Program is named after the employment-based fifth preference visa that program participants are eligible for. Foreign entrepreneurs who invest at least $1.8 million—or $900,000 if the entity is in a TEA (targeted employment area)—in a commercial enterprise and create ten new full-time jobs are eligible for EB-5 visa classification. As a result of their financial investment and commitment, foreign investors who qualify for EB-5 classification may be eligible for permanent U.S. residency and, eventually, citizenship.

Investors may also qualify for EB-5 status by investing through designated EB-5 regional centers, according to the UCIS. EB-5 regional centers are economic units in the United States, either public or private, that are involved in promoting economic growth.

Entrepreneurs will face additional work and potential challenges as a non-citizen. These challenges, however, are far from insurmountable when you enlist the assistance of trusted professionals to guide you through the process. I strongly advise you to seek the advice of accountants and attorneys who have experience assisting foreigners in establishing businesses in the United States. We can also provide valuable guidance as you explore entrepreneurship in this land of opportunity, as they have knowledge and experience with starting businesses in a wide range of industries.