The U.S. Small Business Act defines a small business as a business:
- One that employs no more than 500 people;
- Which does not exceed $5 million in assets;
- The annual profit of which does not exceed 2 million dollars.
State authorities encourage citizens to open their own business and provide quite loyal conditions for doing business. In the network there are rumors about inadequate taxes or excessive additional payments, but this is all nonsense. The real level of taxes is only slightly higher than in Russia. At the same time, the entire tax system is absolutely transparent and understandable for a businessman.
For non-residents the conditions for opening a business are absolutely the same as for citizens.
Step 1: Choosing a business organization
There are 4 main forms of legal organization of business in the USA. Each of them has its advantages and disadvantages, so before registration it is necessary to decide what is suitable for you.
Sole proprietorship. This type of business is the simplest in terms of legal formalities. Various papers will have to fill out much less than in other types. SP is ideal for the service sector. It is most often chosen by lawyers, accountants, private doctors, hairdressers, manicurists and other service professions. But there is a serious disadvantage here – unlimited financial liability. This means that fines and court compensation can affect the personal property of the entrepreneur. And banks are also very reluctant to give IP loans for business development.
Partnership – collective management of a business. It is divided into 2 main subtypes: general and limited liability. General partnership strongly resembles SP – all its participants bear full financial responsibility. And in a limited liability partnership, the participants risk only their own contribution to the company – personal property is not subject to fines and other payments. A partnership is ideal for teams of peer specialists – lawyers, auditors, seoshnikovs, programmers, etc.
Corporation (Corporation) – a universal type of business, which is suitable for almost any business. But it is the most bureaucratic – there is just a huge amount of official paperwork to fill out and maintain, so it is impossible to understand it without an experienced consultant. At the same time, American investors prefer to invest in corporations. Because it is easier to monitor the use of funds in them.
Limited liability company is the most common type of small business. It combines most of the advantages of a corporation and a partnership. It has less paperwork than a corporation. We recommend that entrepreneurs starting a small business in the United States choose this type of legal organization. The only disadvantages are different conditions for doing business in different states, so you just need to study the laws of the state where the company is registered.
Step 2: Check the title
US law is very tough on plagiarism. Including in company names. Therefore, before registering, you should be sure to check whether there is no trademark with the same name in your state.
You can do this in 5 minutes and for free. On the state’s website, find the section “Business name availability” or similar. Then you simply need to submit a verification request, which will be processed within 3 days. For example, here you can check the name availability for the state of California.
Step 3: Apply to start a business
You can register a business online, you don’t need to be present in person. In the application form, you need to provide the name of the company, information about the founders and the legal address of the business.
The cost of a cell is about $100 per year. The service is available on many sites, so it is not difficult to find a cell. For the registration procedure itself on the website of the secretary of the state, you need to pay a fee. In different states, its size differs: from 80 to 130 dollars.
Registration of a company in the standard mode takes 25 working days. But on many sites there is a service of urgent registration for an additional fee. In this case, the process will take from 1 to 10 days, if all the documents are executed correctly.
Step 4: Registration with the tax service
To be able to pay taxes and run your business legally, you need to register a tax identification number. This is where you are in for a bit of a disappointment. While U.S. citizens can fill out an online form, non-residents need to mail in printed documents. They take much longer to process than the online application, so it can take a while. But there is a little trick. You can use the services of an intermediary in the United States. Authorized representatives have the right to submit online applications, so the waiting period can be reduced.
Step 5: Open a bank account
Most businesses and companies prefer cashless settlements, so a bank account is essential for a full-fledged business. If the previous steps could be solved remotely, without coming to the U.S., it will not work that way. After all, to open a current account for the company requires personal presence.
Some banks offer remote account opening, but we do not recommend using it. It is too much of a hassle. At the same time, you have to wait at least 28 working days for a decision, and the refusal can be justified by any reason – even the most ridiculous. If you open an account in person, the decision is made within a few hours.
To open a company account, you need to provide a document on the registration of a legal entity and a tax identification number. But remember that banks may also request additional documents. We recommend that you find out their list in advance on the website of your chosen bank or by calling the hotline.
When registering, you will be asked to deposit up to one thousand dollars into your account. It is not recommended to deposit more – the bank administration may have unnecessary questions about the origin of the funds. If you need more money on your account, you can easily deposit it in a few days.
Step 6: Obtaining licenses and permits
The last step before the full-fledged launch of the business is obtaining business permits. Even working as a hairdresser in many states requires a license. There are serious fines for running a business or working without such a document.
Each state has different license requirements, and you can check them on the official state website. Here, for example, is the official website of the U.S. Dept. of Business and Economic Development.
To find out exactly what licenses and permits you need, you need to specify the state in which you intend to do business and the nature of the business activity. For example, a hairdresser or a lawyer. The system will give you a complete list of documents you will need, as well as the addresses of all organizations where you can get them.
The site will also select establishments where you can get assistance with licensing. The number of permits required depends entirely on the type of business. Opening a car wash requires only a permit from the local government, but opening a law office requires a huge number of licenses.
Opening a business in the U.S. – a long process if you do it on your own. But if you value time, we recommend using the services of intermediary companies, which will help you to collect all the documents for the start within a few days. Success to you in opening a business in the USA!