How to Start a Business in the United States: A Guide for Foreign Businesses

Expanding your business internationally can be a game-changer, and the United States remains one of the most attractive markets for foreign entrepreneurs. However, to build a successful venture, it’s critical to understand the legal, financial, and operational steps. 

This guide will walk you through everything you need to know to start a business in the U.S., from choosing the right business structure to compliance requirements, helping foreign businesses manage the process with confidence and clarity.

Key Highlights:

• Discover why the U.S. remains a top destination for global founders seeking growth and international opportunities.
• Learn essential market, legal, and tax considerations to prepare before launching your business in the U.S.
• Understand hiring, banking, and operational requirements to successfully manage your U.S.-based business.
• Explore strategies on how to start a business in the U.S. while staying compliant and scaling globally.

Why Foreign Entrepreneurs Choose the U.S.

The U.S. offers a vast market with over 340 million residents as well as access to more than 615 million people across North America, paired with a $30.5 trillion GDP in 2025. Funding opportunities are abundant here, with venture capital investment surging this year, particularly in tech, healthcare, and biotech.

The White House reports massive investments across key U.S. sectors. Leading companies have invested significantly in emerging ventures, including: 

• $500B+ into AI infrastructure by OpenAI, NVIDIA 
• $600B in advanced manufacturing by Apple
• $200B in chip production by Micron
• Tens of billions in healthcare R&D and energy infrastructure

While incorporation in the U.S. is a promising prospect, managing ongoing multi-jurisdictional compliance can be complex. Commenda offers a scalable solution for smooth international expansion, providing a solid foundation for your venture and supporting growth every step of the way.

Understanding Market Entry Strategy in the U.S.

A successful expansion begins with a well-defined market entry strategy tailored to the U.S. business environment. To stay focused and avoid missteps, you should rely on a clear, structured checklist covering the essentials of market understanding and localization.

Key components of the checklist should include:

• Market research: Evaluate demand, consumer behavior, pricing expectations, and long-term growth potential within your target niche.
• Sector analysis: Identify industries open to foreign investment and review any restrictions or approval requirements.
• Competitive ecosystem: Map out direct and indirect competitors, pricing models, value propositions, and market gaps you can fill.
• Localization needs: Adapt products, contracts, website content, and customer support to U.S. cultural norms, legal standards, and communication styles.
• Operational positioning: Outline distribution models, sales channels, and partnership opportunities that align with U.S. customer preferences.

With the right preparation and strategy, you can confidently start a business in the U.S. and build a strong, sustainable presence in one of the world’s most competitive markets.

Minimum Capital and Investment Options for Foreigners

The U.S. does not impose a mandatory minimum share capital for most business structures, making entry flexible for foreign founders. LLCs and corporations can generally be formed with any nominal amount, though founders often contribute practical working capital to support operations.

Foreign entrepreneurs can choose from multiple funding paths, including:

• Venture capital and private equity: Strong presence across tech, healthcare, manufacturing, and clean energy.
• Angel investor networks: Active groups in major hubs like Silicon Valley, New York, Austin, and Miami.
• Government-backed support: Programs like SBIR/STTR grants for innovation-focused businesses.
• Visa-linked investment routes: Options such as the E-2 (treaty investor) or EB-5 (investment-based green card) for qualifying founders.

Understanding these capital requirements and investment pathways is essential for a successful business set up in the U.S., ensuring founders enter the market with the resources needed to grow.

Choosing the Right Business Structure

Selecting the right legal structure is one of the most important early decisions when you start a business in the U.S. Each option affects ownership, liability protection, taxation, and long-term flexibility, so it’s important to understand how they work and where they differ:

• Sole Proprietorship: A simple, low-cost structure for single owners. It offers full control but no liability separation; personal and business assets are legally the same.
• Partnership (LP/LLP): Ideal for multi-owner ventures. LPs include one fully liable general partner, while LLPs give all partners limited liability and protection from each other’s actions.
• Limited Liability Company (LLC): Combines liability protection with pass-through taxation. Flexible and widely used, though rules on membership changes vary by state.
• Corporation (C Corp / S Corp / Benefit Corp / Close Corp): Offers the strongest liability protection. C Corps face possible double taxation but attract investors easily. S Corps avoid double taxation but must meet IRS eligibility rules. Benefit and Close Corporations add mission-driven or simplified-governance features.
• Nonprofit Corporation: Structured for charitable or educational missions, eligible for tax-exempt 501(c)(3) status.
• Cooperative: Member-owned entities where profits are shared among users, with democratic voting rights.

Evaluate each structure carefully and choose the one that best aligns with your expansion goals, operational needs, and long-term vision for the U.S. market.

Legal, Residency, and Immigration Requirements

Starting a company in the U.S. requires founders to understand the legal framework surrounding residency and ownership. Foreign nationals can own 100% of a U.S. business entity; U.S. citizenship or residency is not required to form and own a company. A local director or resident is generally not mandated at the federal level, though many states do require a registered agent with a U.S. address for service of process.

Visa and residency pathways:

• The E-2 Treaty Investor Visa allows nationals of treaty countries to invest and operate a business in the U.S. (ownership of at least 50% required) and is renewable.
• The EB-5 Immigrant Investor Visa provides a route to permanent residency by making a significant investment and creating jobs for U.S. workers. 
• The International Entrepreneur Rule offers founders parole for their companies if they demonstrate rapid growth potential.

Understanding these legal and immigration requirements ensures your U.S. entity is properly structured, owned, and compliant from the start.

Foreign Investment Restrictions and Business Incentives

Foreign investors entering the U.S. market must also understand where investment is restricted and where the government actively encourages participation.

• Restricted Sectors: Strategic industries like defense, telecommunications, and critical infrastructure face heightened scrutiny under CFIUS reviews.
• Incentivized Sectors: The U.S. strongly encourages investment in technology, renewable energy, and clean export industries. Under the Inflation Reduction Act, there is around $369 billion in incentives for energy, R&D, manufacturing, and more.
• Green Energy Credits: Foreign investors in solar, wind, geothermal, and other clean tech can benefit from tax credits like the Investment Tax Credit (ITC) and Production Tax Credit (PTC).
• Grants & Loans: The U.S. also offers clean-energy grants and support via DOE, USDA, and other agencies.

Understanding both restrictions and incentives is key when you start a business in the U.S., allowing you to balance compliance with the opportunity to benefit from generous federal support.

Opening a Bank Account and Managing Cross-Border Payments

For foreign founders looking to start a business in the U.S., opening a bank account requires careful preparation, as most banks require standard KYC documentation. This typically includes:

• FEIN confirmation letter: Your FEIN notice or Form SS-4 is needed for tax reporting.
• Corporate documents: This may include your Articles/Certificate of Incorporation, operating agreement, bylaws, organizational minutes, Certificates of Good Standing, or Certificates of Incumbency.
• Beneficial ownership information: Details of anyone owning 25% or more of the business, plus the individual with significant control.
• Photo identification: Usually two IDs for all beneficial owners and the representative opening the account (one must be a photo ID).
• Proof of address: Banks often prefer foreign bank statements, though utility bills may also be acceptable.
• U.S. business address: Many banks require a physical U.S. address, but some accept a registered agent address or virtual mailbox, depending on the business model.

To streamline global operations, many founders opt for multi-currency accounts to handle both domestic and cross-border transactions and integrate with U.S.-based payment gateways.

While opening a bank account is usually a simple process, non-resident founders often face challenges such as in-person verification requirements, variations in bank policies, and delays in cross-border fund flows. Commenda simplifies this process by coordinating compliant banking setup, guiding you through documentation, and helping ensure smooth global accounting from day one.

Taxation and Compliance for Foreign-Owned Businesses

When you enter the U.S. market, understanding your tax and compliance obligations is key to a successful business venture. There are key considerations to keep in mind:

• Corporate & income tax: Domestic corporations typically face a federal corporate tax rate of 21%, and you must file annual returns for income derived from U.S. operations.
• VAT/GST and import duties: While the U.S. doesn’t have a national VAT/GST, businesses must manage state sales tax and import duties when bringing goods into the country or selling across state lines.
• Filing timelines: Annual federal returns are generally due April 15.
• Tax residency & treaties: Foreign-owned entities may be taxed on U.S.-source income or “effectively connected income”, while tax treaties can reduce withholding or avoid double taxation with your home country.
• Cross-border obligations: Non-resident owners must often file information returns such as Form 5472 (for U.S. LLCs with foreign owners) by the due date and adhere to reporting under FATCA/FBAR rules.

By mastering these tax and compliance requirements early, you can operate smoothly in the U.S. market while minimising risk and protecting your global business position. However, if you need assistance, don’t hesitate to reach out to an expert.

Manage your U.S. Sales Tax, EU VAT, and global tax registrations in one dashboard, powered by Commenda.

Hiring Employees and Payroll Compliance

While compliance with tax regulations is important, another key element is understanding how to hire and comply with payroll obligations.

Employment law basics:

• Contracts & classification: Ensure employment contracts reflect either employee or independent contractor status; misclassification risks fines.
• Minimum wage & overtime: The federal minimum wage is $7.25/hour, but states may set higher rates. Overtime pay of 1.5× applies beyond 40 hours in many cases.
• Employer social contributions: Employers must match Social Security (6.2%) and Medicare (1.45%) under FICA, and pay FUTA unemployment tax.
• Payroll tax withholding: Employers must withhold federal income taxes, state taxes (where applicable), and file forms like 941, 940, or 944 annually.

For remote employees in the U.S., consider using an Employer-of-Record (EOR) service to manage compliance and local employment liabilities.

Setting Up Operations and Staying Compliant

After completing the steps to start a business as a foreigner in the U.S., the next phase is establishing smooth day-to-day operations and meeting ongoing compliance requirements. This includes: 

• maintaining a registered office address for official correspondence
• setting up a reliable accounting and bookkeeping system 
• registering for state sales tax where your business has a nexus

You may also need general liability, workers’ compensation, or professional insurance, depending on your industry. Keep in mind that most states require annual or biennial reports and franchise tax filings to keep your entity in good standing.

To simplify this process, Commenda provides automated reminders, filing support, and compliance tracking to help ensure your U.S. entity stays fully aligned with federal and state requirements as you scale.

Maintaining Your Business in Good Standing

After setting up a business in the U.S., keeping it compliant requires consistent attention to federal, state, and local rules. Ongoing obligations typically include:

Key Compliance Requirements:

• Annual or biennial reports filed with the state of incorporation
• Renewal of business licenses and permits
• Federal, state, and local tax filings, including income, payroll, and sales tax
• Maintaining accurate financial records for possible audits
• Updating state authorities about changes in ownership, address, or management

Consequences of Non-Compliance:

• Penalties and interest
• Suspension of business activities
• Administrative dissolution of the company

Best Practices:

• Keep a compliance calendar of all filing deadlines
• Review state requirements annually
• Maintain clean bookkeeping and documentation
• Use automation tools, like Commenda, to manage filings and receive alerts to stay in good standing year-round.

Finding Local Partners, Accelerators, and Support Networks

Building strong local connections can significantly accelerate your U.S. market entry. Here are a few strategies to help you build a strong network of reliable partners:

• Many founders tap into chambers of commerce (like the U.S. Chamber or local city chambers) to meet industry peers and potential partners.
• Startup accelerators, such as Techstars, Y Combinator, and 500 Global, offer mentorship, investor access, and market exposure.
• Foreign-owned companies can also benefit from trade and investment agencies such as SelectUSA, as well as binational business associations that support international entrepreneurs.

Engaging with these networks helps you validate your strategy, access local insights, and build relationships that strengthen long-term U.S. growth.

How to Close or Sell Your Business in the U.S.

When it’s time to close or sell your company, follow these structured steps to ensure full compliance:

1. File a final tax return and related forms: Mark the “final return” checkbox on the return for your entity type, and file appropriate forms such as Form 1120 for corporations or Form 1065 for partnerships.
2. Take care of your employees: Pay all final wages, make federal tax deposits, file Form 941/944 (employer’s quarterly or annual federal tax return), and Form 940 (unemployment tax) if applicable.
3. Pay the tax you owe: Ensure all federal taxes, including employment and income taxes, are paid in full.
4. Report payments to contract workers: Issue Form 1099-NEC for any contractors paid $600 or more, and submit Form 1096 if filing paper returns.
5. Cancel your EIN and close your IRS business account: Send a letter to the IRS with your business’s legal name, EIN, address, and reason for closure once all returns and taxes are filed.
6. Keep your records: Retain business records for as long as required; employment tax records must be kept at least four years.

By following these steps systematically, you reduce risks and ensure a smooth closure or sale of your U.S.-based business.

Challenges Foreigners Commonly Face

While expanding into the U.S. is often rewarding, there are certain hurdles you might face. Here are the most common challenges and how to overcome them:

• Complex regulations: Handling federal, state, and local rules can be overwhelming.
  Pro Tip: Use a compliance calendar to track registrations and deadlines.
• Banking delays: Non-resident founders often face stricter KYC reviews.
  Pro Tip: Prepare all corporate documents and proof of address in advance.
• Tax registrations: Multi-state taxes, sales tax nexus, and federal filings add complexity.
  Pro Tip: Determine your tax footprint early to avoid penalties.
• VAT/GST confusion for global sellers: Cross-border requirements differ widely.
  Pro Tip: Centralize global tax management in one dashboard.

Commenda helps eliminate these roadblocks with end-to-end compliance, banking, and tax support.

Why Choose a Cross-Border Platform Instead of Local Agents

Working with separate local accountants, lawyers, and agents often leads to inconsistent advice, duplicated costs, and slow turnaround times. Each provider focuses only on their jurisdiction, leaving you to coordinate the rest.

A cross-border platform like Commenda removes this fragmentation. You get one unified system for incorporation, tax registrations, sales tax/VAT compliance, banking support, and ongoing filings across 30+ countries. This means consistent guidance, faster execution, and a single source of truth for all your global operations.

At Commenda, we help you scale without the hassle of managing multiple advisors.

How Commenda Helps You Start and Scale Globally

Commenda gives founders a single, unified platform to launch and grow across borders. You can incorporate in multiple jurisdictions with one click, manage U.S. Sales Tax and global VAT from a central dashboard, and stay ahead of deadlines with automated compliance tracking.

A dedicated cross-border support team ensures your business entity stays fully compliant as you expand into new markets. We proactively monitor new regulations and guide you through every compliance requirement as your global footprint grows.

Start your business in the U.S. and scale globally with Commenda, your single platform for incorporation, tax, and compliance. Book a free demo today.

FAQs

Q. Can foreigners own 100% of a company in the U.S.?

Yes. Foreigners can fully own LLCs, C Corps, and other U.S. entities. No local director, resident shareholder, or U.S. citizenship is required.

Q. What are the visa or residency requirements to start a business?

You can form a company without a U.S. visa or residency. But to work or manage operations from within the U.S., visas such as the E-2 (investor), EB-5 (immigrant investor) may apply.

Q. What’s the minimum capital needed to start a business in the U.S.?

There is no mandatory minimum share capital for LLCs or corporations. Founders typically contribute practical working capital to support early operations.

Q. How are foreign-owned companies taxed in the U.S.?

Foreign-owned U.S. entities must comply with federal and state taxes. Key obligations include corporate income tax, payroll taxes (if hiring), and Form 5472 for foreign ownership disclosure. Tax treaty benefits may reduce withholding taxes.

Q. What incentives are available for foreign investors?

Incentives vary by state and industry. Common programs include R&D tax credits, renewable energy grants, export assistance, and job-creation incentives for manufacturing, technology, and clean-energy sectors.

Q. How can I open a bank account as a non-resident?

Banks generally require an FEIN confirmation letter, corporate formation documents, proof of address, photo ID, and beneficial ownership details. Many banks also request a U.S. business address.

Q. What are the ongoing compliance obligations for foreign businesses?

Annual reports, franchise taxes, corporate tax returns, bookkeeping, license renewals, and sales tax registrations are typical. Missing deadlines can lead to penalties or administrative dissolution.

Q. How does Commenda simplify cross-border incorporation and global tax compliance?

Commenda provides a centralized platform for incorporation, U.S. Sales Tax, EU VAT, and global tax registrations. Automated alerts and expert support keep every entity compliant across multiple jurisdictions.