Start a business as a foreigner

[MariaG9]

Hello,

Is it possible to start a business as a foreigner in Florida?

I've read online I would only need my passport to register a business, then apply for the EIN. However, I've also read about needing an ITIN, is it really necessary to start a business?

I'm also wondering if I can RUN a business as a foreigner, without any type of visa.

Thank you!

 

[FlyingRon]

What do you mean "as a foreigner?"

Are you physically present in the US? If you are, on what basis did you enter?

 

[MariaG9]

I have a tourist visa. I do not intend to remain in the US all the time as the business will be online.

 

[LdiJ]

I have a tourist visa. I do not intend to remain in the US all the time as the business will be online.

Then why not just organize your business in your home country?

 

[MariaG9]

Because in my home country there are more taxes and I would have to deal with change of currency. I intend to sell my product in the US and be paid in dollars.

 

[Zigner]

Because in my home country there are more taxes and I would have to deal with change of currency. I intend to sell my product in the US and be paid in dollars.

In other words, you're trying to hide your income. This forum will not help you commit illegal acts. Also, If your home country is anything like this country, you will be taxed on your income worldwide.

 

[MariaG9]

I'm not trying to hide my income. I just want to open a business in the US. All business in the US have to pay taxes. I haven't lived in my home country for over 5 years.

 

[Taxing Matters]

Hello,

Is it possible to start a business as a foreigner in Florida?

Yes.

I've read online I would only need my passport to register a business, then apply for the EIN. However, I've also read about needing an ITIN, is it really necessary to start a business?

The EIN and ITIN are not needed to start a business. However, you will need an EIN and/or ITIN to file and pay US federal income and other taxes that you will owe from your business activities in the US. What you need will depend on the way you organize the business.

I'm also wondering if I can RUN a business as a foreigner, without any type of visa.

If you can run the business without you being physically present in the US then you don't need a visa. The visa is only needed to allow you to be present inside the US.

In other words, you're trying to hide your income. This forum will not help you commit illegal acts. Also, If your home country is anything like this country, you will be taxed on your income worldwide.

That's not a logical leap to make from what the OP said. You need to realize that most countries in the world do not tax the worldwide income of their citizens/residents like the United States does. The US is one of only a handful of countries that do that. Thus, for many non US persons, it is quite possible to structure their business operations outside their home country in a way that LEGALLY avoids paying tax in their home country.

 

[MariaG9]

I understand the business will have to pay taxes which is what I need the EIN for. But is it really necessary to get the ITIN? Because I won't get an income as an individual, the business will.

 

[doucar]

You are not going to pay yourself a salary or take any money out of the business. Why would you do that?

 

[Taxing Matters]

I understand the business will have to pay taxes which is what I need the EIN for. But is it really necessary to get the ITIN? Because I won't get an income as an individual, the business will.

That depends on how the business is organized. If you are the only owner of the business then in the US you have three choices in organizing the business.

First, you can run it as a sole proprietor, in which case you are the direct owner of the business and all the income of the business is your income. You'd need an ITIN for yourself in that case to file your federal income tax return and pay the income tax you owe. If you had any employees in the U.S. you would also need an EIN to do the employment taxes for your employees.

Second, you can organize the business as a corporation. If you do that, then it is the corporation that owns and runs the business, and it is the one that has the income from the business. The corporation would need an EIN to file its federal income tax return and pay the tax. If it had employees that same EIN would work for the employment taxes, too.

Third, you can organize the business as a LLC. Then the LLC owns and operates the business. But the LLC is a hybrid between a sole proprietor and a corporation. Thus, under federal tax law it can be treated either as a sole proprietorship of the single member owner of the LLC or it can be treated as a corporation. A single member LLC created or organized in the U.S. is by default treated as a sole proprietorship of the single member that owns it. In that case, you need the ITIN because the LLC income is considered your income for federal tax purposes. And, if you have employees, you'd need the EIN, too.

However, you can file an election with the IRS to treat that LLC as a corporation instead. In that case, the LLC needs an EIN to file and pay the corporate income taxes, and the same EIN will be used for any employment taxes for employees, too.

There is something important to know about using a corporation (or LLC that you elect to be taxed like a corporation). That corporation will pay US federal income tax, of course, on the income it gets on its operations anywhere in the world. And then when it pays you any dividends you will end up paying US federal income tax on that too, at a rate of 30% (unless your home country has a treaty with the US that reduces that rate). And the corporation must withhold that 30% from the dividend payment. So, if the dividend was to be $100, then the corporation would send you $70 and send the IRS the $30 in tax you'd owe on that dividend.

You could pay yourself a reasonable salary for the work you do for the corporation, which reduces the income on which it pays tax and thus would be a way for you get cash out of your business without paying that 30% tax on the dividend, and so long as that work was performed outside the US and you are not a US citizen or resident that salary you get would not be taxed by the US and would not need an ITIN. But doing that may subject that salary to tax in whatever country you are living and doing the work. However, any payments over that salary will first be treated as dividends to the extent of the company's accumulated earnings a profits and thus be subject to that 30% dividend tax.

For a foreign person wanting to set up a business in the U.S. there are a lot of things to consider, including the interaction of US tax law and the tax laws of the country in which you are living or are citizen. There are a variety of ways to set up the business to best achieve the business goals and minimize the total tax you pay to all the countries involved.

 

[MariaG9]

Thank you very much for all the information!

 

[FlyingRon]

You could create a business, what you can't do on your B1/B2 visa is acutally work in the US as a part of your business or anywhere else.

 

[Taxing Matters]

You could create a business, what you can't do on your B1/B2 visa is acutally work in the US as a part of your business or anywhere else.

I can see that as being read two different ways. For the OP's clarification, the visa is needed to work in the US, whether for himself/herself or for someone else. It is, however, perfectly fine to work for his/her business outside the US without a visa. For an internet business there may be no need to do any actual work in the US.

 

[LdiJ]

Because in my home country there are more taxes and I would have to deal with change of currency. I intend to sell my product in the US and be paid in dollars.

I believe that you are going to make this more complicated for yourself in the long run if you do it that way. You will need a business visa in order to run the business yourself. You will want that if you plan to have bank accounts and an inventory of merchandise located in the US. You don't want someone else to be managing that for long periods of time.