How to Start a Business in the U.S. as a Foreigner in 2025: Costs and Steps Explained

Launching a business in the United States as a foreign entrepreneur can seem challenging, but the process is designed to be accessible and straightforward. While mastering English is essential for effective communication, understanding key steps such as obtaining an Employer Identification Number (EIN) and selecting the appropriate business structure is crucial to your success.

Choosing the Optimal Business Structure

According to Richard Hartnig, an international tax advisor and attorney at Schwartz, most foreign investors prefer forming a C corporation. This structure allows unlimited stock issuance, making it appealing to investors despite the double taxation on profits—once at the corporate level and again as dividends to shareholders.

Corporate shareholders benefit from lower dividend tax rates, and if the company does not primarily hold real estate, the parent corporation avoids capital gains tax upon selling the U.S. subsidiary. For individual foreign owners, a C corporation offers protection from direct IRS scrutiny, making it a preferred choice despite the tax implications. Tax strategies involving salaries and pensions can often mitigate double taxation.

Alternatively, depending on your home country’s tax laws, a limited partnership might be advantageous. This structure limits liability for passive partners and allows profits to pass through to members, who then report income on their personal tax returns.

Selecting the State for Incorporation

Your business activities should guide your choice of incorporation state. If your market is concentrated in a specific state, it’s best to register there to comply with local business obligations. For businesses without a dominant state presence, Delaware is often recommended due to its flexible corporate laws, shareholder protections, and business-friendly regulations. Nevada is another popular choice for its low regulatory burden.

Delaware’s corporate law is accessible in multiple languages and does not require a local physical address or bank account, simplifying the process for foreign entrepreneurs. Many tax professionals prefer Delaware because of its well-established legal framework.

Incorporation Process

Incorporation procedures vary by state, but here is a simplified overview based on Delaware’s model:

• Choose a unique business name.
• Select a registered agent authorized to receive legal documents. In some states, a physical address is required for the agent.
• File a certificate of incorporation detailing the company name, registered agent’s information, authorized shares, and incorporator’s contact details. Filing fees start at $89 and increase with capital raised or stock issued.

After incorporation, businesses must file annual reports (starting at $50) and pay franchise taxes (from $175). While online services can assist with filings for additional fees, many states provide clear online guidance to help you complete the paperwork independently.

Obtaining an Employer Identification Number (EIN)

An EIN is essential for hiring employees, opening bank accounts, paying taxes, and securing business licenses. You can apply for an EIN free of charge directly through the IRS. Avoid paid online services that mimic government websites.

If the company’s principal officer does not have a Taxpayer Identification Number, you must apply for the EIN by mail or fax, entering “foreign/none” where asked. Once you have your EIN, compare business bank accounts to find one that offers the best rewards, access to physical branches, online services, convenient cash deposits, and competitive interest rates.

Final Thoughts

For most foreign entrepreneurs, establishing a U.S. domestic corporation is the best path forward. It is highly advisable to consult with tax professionals familiar with both U.S. and your home country’s tax laws to navigate complexities and optimize your business setup.

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