This is a detailed guide on how to start a business in USA from Nigeria.
Having a successfully running business is one of the sweetest experiences of entrepreneurs.
It comes with a lot of advantages. One of which is having enough free time to work on other things of personal interest and so on.
While this sounds interesting and inviting, kick-starting a business from the scratch is not a child’s play – It requires more than ordinary.
Statistics have it that about 90% of start-up businesses fail within the first five start-up years.
This is not to instill fear in you, but to let you become aware that starting a business requires some tactical knowledge and information.
This knowledge is very much essential when you are starting a business in a foreign country like the USA.
So in this post, I will be sharing with you every information you need on how to start a business in USA from Nigeria.
Can You Start A Business In USA From Nigeria?
You might be confused about how feasible it is to start a business in USA from Nigeria, but you are not alone.
I know a few people as well who are amazed at the possibility of this fact.
You can start a business in a foreign country, but the focus of this post will be on starting a business in the USA.
You will see how a non-US citizen can start a business in the USA, and I will address the factors that will make it easy to start a business in America.
Corporate Entities In the USA for Non-citizens
The Non-citizens of the USA can start either of the three corporate entities made available for them.
The three types of corporate entities in the US are the Sole Proprietorship, the Limited Liability Company (LLC), and Corporation (C-Corp).
Although there is a third option that is usually recommended to foreigners is the S-Corporations.
The benefits, advantages, or downsides of the three major corporate entities are stated below.
- The simplest advantage of the sole proprietorship is that it does not require formal registrations.
- Sole Proprietorship is the most unrecommended corporation for noncitizens because you can easily lose your personal assets if the business goes bankrupt.
- Businesses under the Limited Liability Corporation are shielded from personal liability for business decisions and actions.
- Personal assets of the business owner are safe peradventure the company incurs debt.
- LLC businesses are free from strict recordkeeping which is necessary for businesses under C-Corp and S-Corp.
- Some of the benefits of the C-Corp are as follows:
- Businesses have the ability to expand by offering unlimited stock
- It protects businesses from close I.R.S. involvement. Although, it makes them pay double tax.
- Proper tax planning can be used to cancel out the double tax payment.
Steps To Start A Business In USA From Nigeria.
When you follow the right processes to start your business in the USA, making a profit will become easier and you will not be doing anything illegal.
1. Choose A Desired Corporate Entity
Before taking full steps to start your business, you should be very sure of what you want to do.
It is easy to start a business in the USA, you just have to take the right steps towards achieving it.
Therefore the first thing you should do is to decide on what corporate entity to build.
You will recall that I have earlier talked about the available corporate entities available for Non-citizens in the United States.
So keep in mind that whatever type of entity you want to run will reflect on your profit, your tax, your assets, and your liability.
Therefore you need to choose wisely and carefully before you start out.
2. Choose Your Business Location
You can take this step as the first before choosing your corporation, what matters most is deciding on it early before executing your plans.
In the United States, if a citizen wants to start a business in a different state from where they reside, such person(s) will pay taxes in their state of residence and also in the business location.
So it is best for them to start their business where they reside.
For Non-citizens, if you will reside in the country to run your business, you will pay double taxes.
But if you want to run the business from your own country (Nigeria in this case) you will only pay taxes for the business.
To choose your business location, you need to consider the following factors:
- The requirements for non-US citizens in each state.
- States with cheaper annual report fees.
- States that give you more privacy.
- The state’s taxation structure.
- States that have more accommodating laws and acts.
3. You Should Get A Registered Agent
This is a huge step towards getting your business registered.
Before you can start your business as a legal entity, it is very advisable to register it with the state of your choice.
After you must have decided on which state to start your business, you should get a registered agent that resides in the state to help process the registration of your business.
This is necessary since you will not be physically present at the location of your business.
A registered agent will represent your company in tendering paperwork to the government of the state, they will also recieve every official document in your absence.
4. Get An Employer Identification Number
The Employer Identification Number is also known as EIN is a tax ID that is issued by the Internal Revenue Service (IRS) of the United States.
This identification number is issued to identify and distinguish businesses.
If you start your business without this identification number, you would be restricted from:
- Getting a business license
- Opening a bank account
- Hiring and paying workers.
Since you would not be present in the state, you will need to hire a lawyer who will help you process this.
5. Get An Individual Tax Identification Number
Another very important step to start a business in USA from Nigeria is getting a Tax Identification Number. Just like your EIN, Individual Tax Identification Number (ITIN) is issued by the IRS.
The number aids you to pay your tax and also how the authority to identify your business tax record.
The number is required when you want to open a US bank.
You can also use it when creating online payment gateway accounts like PayPal and others.
6. Open A United States Bank Account
The next step to take in starting a business in the United States is to open a United States Bank Account.
You can’t possibly use your Nigerian bank for your business finance.
To open a US bank account, you can go to the headquarters of your preferred bank in Nigeria for inquiries.
The Nigerian branch of that bank will instruct you and ask for the requirements.
Note that you must go to the branch of your preferred bank.
This means it may not be too easy if a US bank you want does not have a branch in your country.
Some of the requirements you will need to provide are:
- A letter of confirmation of your Employer Identification Number (EIN) from United States IRS.
- A United States-based mailing address.
- Individual Tax Number
- Your Passport.
7. Insure Your Business
Another step to start a business in USA from Nigeria is to insure your business. It is a requirement in some states to insure your business.
It is a federal government requirement, but it varies from state to state.
8. Register Your Business
To have a legally recognized business, you must register with the government.
The process of registration depends on your location – your preferred state.
While some states in the US permit online business registration, some others require you to fill paper documents physically.
Also, the cost of registering your business depends on the state and the type of business structure.
Likewise, the documents for registration still depends on your preferred state.
Some of the required information to register a business are:
- Business name.
- Business location.
- Business structure.
- Registered Agent
- The number and the value of shares.
That is all on how to start a business in USA from Nigeria.
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