Many noncitizens are unaware that they can operate a business in the United States, but there are some limitations regarding how they can form the business.
Here's what you need to know about filing an LLC as a noncitizen, whether you intend to do business from the U.S. or your home country.
Business Requirements for Noncitizens
There's no requirement for citizenship to operate a business in the U.S., so long as it's the right form of business. This means that a noncitizen can operate a limited liability company (LLC) or a C corporation, but not an S corporation.
Likewise, there's no residency requirement for noncitizens to operate a U.S. business. However, they need to have a U.S. address or appoint an agent in the U.S. who can accept service of process in the event someone sues the business.
Getting a Visa or Green Card
Before filing for an LLC, a noncitizen should make sure they can stay in the U.S. If you're a noncitizen and want to work in the U.S., you'll need to either get a green card or a work visa. There are all types of visas and green cards, so you must become familiar with what you need in your situation. If you have any doubt, review the U.S. Citizenship and Immigration Services (USCIS) site.
Some types of visas are temporary work visas or visas based on the type of work you want to do, such as agriculture or seasonal work. There are H1-B visas, which are usually granted to noncitizens with bachelor's or master's degrees, and there are green cards based on employment, refugee status, and family-sponsored green cards, among others. You can also get a green card by investment, but the amount you must invest is substantial.
Because there are different types of visas and green cards, it's a good idea to check with an immigration attorney to see how you can get either of these documents. You don't necessarily have to live in the U.S. to own the business, but you'll need a registered agent with a U.S. address who can take service of papers, if necessary, and who can help you perform some of the start-up operations for your company. You can also choose to have a registered agent service act for you instead of a single individual.
Filing for an LLC
Most of the LLC filing requirements are the same for noncitizens as they are for citizens, with a few exceptions.
The steps to filing an LLC as a noncitizen are as follows:
- Choose a state carefully in which you'll do business. Taxes are often a difficult issue for noncitizens. If you work in a state that doesn't have income taxes, you'll only have to worry about federal taxes. Some of the best states to start your LLC in are Florida, Texas, Nevada, and Wyoming. Delaware is another popular option. As of 2021, there are nine states that don't have state income taxes.
- Choose a business name and make sure no one else in the state has it. Make sure you can get an online website address, or domain, that has the name you want so people can find your business. Also, make sure the state in which you choose to have your primary place of business allows that name. If you are doing business under a name other than your company's name, you may have to register your DBA with the state too. Each state has different rules, so check with the state's secretary of state.
- Instead of getting an EIN, you'll need a TIN. If your LLC is going to make money, you'll be paying taxes even as a noncitizen. You can't file an EIN as citizens do, but you must file a taxpayer identification number, or TIN, with the IRS (Form W-7) so you can do business in the U.S. and be taxed accordingly. The process to get a TIN is not difficult, but it can take many weeks.
- Pick a registered agent or registered agent service. See if your agent will perform some of the tasks on this list for you, especially if you're not physically present in the U.S.
- File Articles of Organization. Some states refer to this document as a Certificate of Formation. Check with your secretary of state as to what you need to file, or get legal assistance. Pay any required fees.
- Open a savings and checking account for the LLC. The LLC needs its own accounts because you must keep your personal accounts separate from the LLC's accounts. To open accounts as a noncitizen, you'll need a physical address in the U.S. Get a U.S. address, and have documents showing your address so you can apply for bank accounts. If you can't open an account yourself, try hiring a professional service to do it for you. Opening a bank account is probably your biggest challenge as a noncitizen.
- Create an Operating Agreement. This document is important in that it's a roadmap for how you'll run the LLC. It should detail who does what job, who are the owners, known as members, what percentage of the LLC each member owns, and any other details about the day-to-day operation of the business. Some states require Operating Agreements, while others don't, so check the state's law or with a business attorney.
- Get business licenses and necessary permits. If you're not sure what you need, a business attorney can help you.
- Have your local paper publish information about your LLC. Some states require publication but not all states do. Still, it's a good idea to let the public know about your new business.
- Prepare reports and file the proper tax returns. You'll likely have to prepare an annual report for the state in which your business is located. You'll also need to file a U.S. Nonresident Alien Income Tax Return form (Form 1040-NR) after you've operated your business for part of or an entire calendar year. You may also have to file a U.S. Return of Partnership Income form (Form 1065)—an accountant can help you.
You don't necessarily have to work from the U.S. You can work from your home country if you can run the business from there. To work in the U.S., you'll need to get the proper visa or green card, but once you do, and once you set up your LLC, you'll be able to operate an LLC in the U.S. as if you were a citizen, with the few exceptions listed here.