You do not have to be a United States citizen to start a business in Massachusetts or the rest of the U.S. Plenty of large and small businesses in the state are owned, managed, or run by foreign nationals. However, there are some additional things that you will have to do before opening the business.
The business lawyers at the Katz Law Group have guided numerous foreign nationals through this process. Their legal advice has helped foreign nationals succeed in their venture in the U.S.
Here are five things that non-citizens should know about before deciding to open their business in Massachusetts.
1. You Need an Employer Identification Number
Obtaining an employer identification number, or EIN, is required for nearly all companies, even if it is a small business and you do not intend to hire any employees for it. U.S. citizens can get an EIN using their Social Security Number. Non-citizens, however, do not have a Social Security Number so the process is slightly different.
Even if you do not technically need an EIN, getting one for your business can still be important because it will let you:
- Hire employees
- Open a business bank account
- Obtain licenses or permits necessary to run the business
- Pay taxes
Like U.S. citizens, the process begins with Form SS-4 from the Internal Revenue Service (IRS), the federal agency that collects taxes in America.
Importantly, there are four different ways to file Form SS-4:
- Online,
- Over the phone,
- Via fax, or
- Through the mail.
Do not apply in more than one way, as this can lead to your business receiving multiple EINs.
In order to apply online, you must have a Social Security Number, an individual taxpayer identification number (ITIN), or a valid U.S. address. Foreign nationals who are not already legally residing in the States will have to apply some other way, which unfortunately can lengthen the processing time.
Applying over the phone can expedite the process, but applicants must also already have an ITIN. You do not need an ITIN to apply in the mail or by fax, though. Applications made through the mail are often processed in four to five weeks. Generally, you will have to provide a copy of your passport with the application.
2. You Need a Visa If You are Not Going to Operate the Business from Abroad
If you own a business in America but will not be physically present, you do not need a visa. However, to enter the country, you will need a work visa.
Most foreign nationals who open a business in the U.S. use E-2 visas. However, there are other options that may be more in your interests, like the:
- H-1B visa for specialty occupations
- O-1A visa for foreign nationals with “extraordinary abilities”
- F-1 visa for optional practical training
The U.S. Citizenship and Immigration Services has a guide that details the differences between these and other visas. However, you should strongly consider getting the legal advice of an immigration lawyer for this part of the process. Making a mistake in your immigration status can lead to deportation.
3. You Have to Register with the Secretary of State and Maintain It Every Year
Most states in the U.S. require foreign-owned limited liability companies (LLCs) to register with the secretary of state in order to do business. Massachusetts is one of them.
Registering is not difficult. You just have to fill out a form with your business' information and file it online or by mail. However, there is a filing fee of $500 in Massachusetts – the highest in the country – and you will have to provide a certificate of good standing.
Additionally, you will have annual obligations to meet in order to maintain your LLC's registration with the secretary of state. You have to:
- File an annual report with the Secretary of State's Corporations Division
- Pay an annual fee of $500
4. Make Sure You Comply With the Tax Laws of the U.S. and Your Home Country
Doing business in the U.S. and earning revenue in the country will trigger two sets of taxation laws: The United States' and those of your home country. It is up to you to comply with them both.
Revenue earned in the U.S. is subject to both state and federal taxation. However, your business structure determines whether it only gets taxed when your business pays out wages or whether it also gets taxed when the revenue is earned.
Additionally, foreign nationals may have to satisfy certain requirements imposed by their home country.
5. Complete the BE-13 Survey
Finally, there is the BE-13 survey by the Bureau of Economic Analysis (BEA). This is one of the most overlooked requirements for foreign nationals running a business in the U.S.
You have to complete the BE-13 survey if your company is new and is at least 10% owned by a non-citizen. It has to be completed within 45 days of the new business' creation. The minimum penalty for not completing the survey is a $2,500 fine. Willful violations carry larger fines and even the potential for prison time.
If you receive a letter from the BEA about the BE-13 survey, but you do not think that you are required to complete it, you can file a claim for exemption.
The Business Lawyers at the Katz Law Group in Massachusetts
These issues are just the things that non-citizens have to do in addition to the other steps that are required to open a business. Depending on what goods or services your company is providing, there may be numerous other things to worry about, from obtaining proper licenses to carrying business insurance to renting commercial real estate.
Additionally, there are also immigration concerns that non-citizens have to deal with. These often require the legal counsel of an immigration attorney from a law firm other than the Katz Law Group.
However, the obstacles are often more intimidating than they appear at first, and the benefits of running a business in the U.S. can be substantial. Call the business attorneys at the Katz Law Group at (508) 480-8202 or contact them online today to get the process started.
