Are you interested in starting a business in the USA? If YES, here is a complete guide to starting a business in the United States of America as a foreigner.
Okay, having provided an in-depth analysis of the top 50 best small business ideas in the United States and a series of industry-specific sample business plan templates; we will now analyze in detail the legal requirements, market feasibility and every other thing it takes to start a business in the USA. So put on your entrepreneurial hat and let’s proceed.
If you are looking to start a business in any part of the world at all, then you may want to look at the United States of America. If for nothing, you should be comfortable with the choice of the United States of America because of the large market and the myriad of indigenes and non-indigenes that reside there.
Starting a Business in the United States – A Complete Guide
The United States is the world’s main national economy and second largest economy in the world. This is based on the purchasing power parity (PPP), signifying 22% of nominal global GDP and 17% of gross world product (GWP).
Experts have estimated The United State GDP to be $17.914 trillion. Also, the U.S. dollar is the currency most used in international dealings and is the world’s leading reserve currency. There are countless people who throng the United States every year to do business.
Furthermore, numerous countries of the world use it as their official currency, whilst for others it is the defacto currency. Yet another reason why you should consider doing business in the united states is the fact that there is the existence of a mixed economy that has maintained a stable overall GDP growth rate, a moderate unemployment rate, and high levels of research and capital investment.
Conversely, there are countless business ideas that you can act on in order to make good money from this country. Every day more than ever before, millionaires are being made. A tiny though that has been developed into a business idea have gone ahead to make people popular and well known all around the world. You too can become that millionaire if you start a trade.
Why Start a Business in the United States of America?
- General Overview
The U.S. is the world’s chief manufacturer of oil and natural gas. It is one of the major dealing nations in the world, as well as the world’s second largest producer, signifying a fifth of the global manufacturing production. Yet another fact worthy of note is that the US not only has the largest internal market for goods, but also controls the skill in services. Research showed that in 2012 alone, US total trade amounted to $4.93T. Also, one the world’s 500 largest companies, 128 are headquartered in the US.
The United States possesses one of the world’s largest and most powerful financial markets. The New York Stock Exchange is without a doubt one of the world’s largest stock exchange by market capitalization. Foreign reserves made in the US total over $2.trillion, while American savings in foreign countries aggregate over $3 trillion. The economy is one of the most reliable around the world, as it leads in international ranking on venture capital, and Global Research and Development funding.
The United States possesses the biggest consumer market in the world, with a domestic consumption outflow five times larger than Japan’s. It is no wonder why the labor market has attracted immigrants from all over the world and its net migration rate is amongst the uppermost in the world.
Facts and Figures of the United States of America That Will Interest You as an Investor/Entrepreneur
There are loads of facts and figures that make the United States of America tick. It is no wonder that people throng the states to do one form of business or the other there. This is because of the vast minds and resources that the country possesses. Here are some good facts that you might find handy;
- The US has plentiful natural resources, a well-built groundwork, and high production
- Findings have shown that it has the world’s ninth-highest per capita GDP and tenth-highest per capita GDP.
- It was also found that Americans have the maximum typical household and employee income. In 2010, it had the fourth highest median household income.
- The U.S. is the world’s major fabricator of oil and natural gas.
- It is one of the leading dealing nations in the world, as well as the world’s second principal producer, signifying a fifth of the global manufacturing output. In addition to what the US has, it also has the largest internal market for goods, and also leads the trade in services. In 2012, findings have it that the US total trade amounts to about $4.93T and more.
- There are fifty states in the United States of America.
Factors or Incentives Encouraging Investors to Venture into Business in the US
It is the wish of investors to reap when they sow, as such it would be really vital that the country to be invested in has a highly fertile ground that can cause a yield on returns. There are several incentives that attract investors in the United States of America. Here are some of the benefits of investing in the United States of America;
- Strong economy
- Solid infrastructure
- Large market
- Economy of scales
- Strength of the dollar currency
- Government support to economic development through infrastructure development, facilitation, amongst others
- The accessibility of infrastructure and utilities such as good roads, power, communication facilities, and lack of corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurship.
- Economic freedom in the form of promising legislation and few hurdles to start and operate businesses encourage entrepreneurship.
- Sound laws related to the safeguard of labor rights and the environment.
Starting a Business in the United States – Market Feasibility Research
There are more and more people who migrate to the United States of America to do business. Those who have found themselves there, are leaving no stone unturned in seeing that they continue to do what they know to do best. It is therefore no overstatement to say that the United States of America is one of the best places to plant a business in. This is one of the reasons why small brands have continued to soar higher to become a formidable force to reckon with.
The total area of the United States is 3,679,192 square miles (9,529,065 kilometers). The mainland stretches nearly 2,800 miles (4,506 kilometers) from the Atlantic Ocean to the Pacific Ocean, and approximately 1,600 miles (2,575 kilometers) from Canada in the north to Mexico in the south.
America has a liberal enterprise system, coupled with an abundance of natural resources and a highly educated work force that produces a gross domestic product of approximately $14.43 trillion based on 2009 data. The United States progressed from a primarily agricultural economy in the 19th Century to a highly industrial one for most of the 20th Century. Nonetheless, in the last few years, the country’s coordination has become increasingly service-based.
The United States, is also a major donor to international financial agencies, it created free trade agreements with Canada and Mexico (NAFTA) and Central America
10 Well Known Foreign Brands Doing Business in the US
- Lucky Strike Cigarettes – England
- Budweiser – Germany
- Vaseline – England
- Good Humor – England
- Hellmann – Germany
- Purina – Switzerland
- French’s – France
- Frigidaire – Sweden
- Popsicle – England
- 7-Eleven – Japan
- Samsung – Japan
List of 10 Well Known Indigenous Brands Doing Business in the U.S
- Google Incorporated
- United Parcel Service
- American India Movement Portland Chapter
- Apache Services Incorporated
Blue head Tequila LLC
List of 10 Most Popular Entrepreneurs in the United States
- Steve Jobs – Apple
- Mark Zuckerberg – Facebook
- Larry Page – Alphabet, Google Incorporated
- Henry Ford – Ford Motor Company
- Larry Ellison – Oracle
- Donald Trump – Trump Organization
- Robert Kiyosaki – The Rich Dad Company
- Sam Walton – Wal-Mart
Top 5 Best Cities to Do Business in America
Whilst it is okay to do business generally in the United States of America, there are however some cities and states that have an edge over others because of the very favorable conditions they offer. Different businesses have gone ahead to be borne here and they have birthed other businesses as well. Here is a list of top 5 best cities to do business in America;
- Columbus, Ohio
- Denver, Colorado
- Des Moines, Iowa
- Salt Lake city – Utah
When looking to start a business in the United States of America, a whole lot has to be looked at from the economic point of view. Some of the factors in consideration include the following; Human Capacity Building and Job creation, Social policies and corporate social responsibility initiatives, Infrastructure improvements, Technology and knowledge transfer.
An essential feature of the U.S. economy is the economic freedom given to the private sector by permitting the private sector to make the mainstream of economic decisions in determining the direction and scale of what the U.S. economy produces.
This is enhanced by relatively low levels of regulation and government participation, as well as a court system that normally protects property rights and imposes contracts. As such, at the moment, the United States is home to 29.6 million small businesses, 30% of the world’s millionaires, 40% of the world’s billionaires, as well as 139 of the world’s 500 largest corporations.
The United States is wealthy in mineral resources and fertile farm soil, and it is privileged to own a modest climate. It also possesses extensive coastlines on both the Atlantic and Pacific Oceans, as well as on the Gulf of Mexico. Rivers flow from far within the continent and the Great Lakes—five large, inland lakes along the U.S. border with Canada—provide additional shipping access. These extensive waterways have aided the country’s monetary growth over the years and helped fix America’s 50 individual states together in a single economic unit.
Possible Threats and Challenges You will face in the United States of America
- Low context culture
- Complex Tax system
- Legal complexities of international business
- Cultural Barriers
- Difference in Marketing Styles
Starting a Business in the United States of America – Legal Aspect
- Business Licenses and Permits You Need to Start a Business in America
For you to start a business in America, .you will need federal and state business licenses and permits. However, there are basic and most common licenses and permits that all businesses need. Without these licenses you risk being clamped down on by the authorities involved in the execution of business laws in America. They include the following;
- Fire department permit-: You should get a permit from your fire department if your business uses any flammable materials or if your premises will be open to the public
- Air and water control permit-: Check with the state environmental protection agency regarding federal or state regulations that may apply to your business.
- Sign permit-: check regulations and secure the written approval of your landlord, before dabbling into having a sign designed and installed.
- County permit – County governments frequently need the same types of permits and licenses as cities. As such, if your business is outside any city or town’s jurisdiction, these permits apply to you
- Sales tax license – Sales taxes differ by state and are compulsory at the retail level. It’s vital to know the rules in the states and localities where you operate your business because if you’re a retailer, you must collect state sales tax on each sale you make.
- Health department permit – This costs around $25 and differs depending on the size of the business and the amount and type of equipment you have. The health department will want to inspect your facilities before issuing the permit.
What’s The Best Legal Entity to Use in the United States of America?
- Sole Proprietorship
Adopting a sole proprietorship type of entity means that you may be looking to start on a small scale from the outset. The less complex structure is the sole proprietorship, which usually involves just one individual who owns and operates the enterprise. If you intend to work alone, this may be the way to go. The tax aspects of a sole proprietorship are particularly attractive because income and expenses from the business are included on your personal income tax return
If you are starting a business where you wouldn’t be the only one involved in ownership, then you can consider adopting the partnership style of entity. If your business will be possessed and run by several individuals, you may want to take a look at organizing your business as a partnership. Partnerships come in two variations: general partnerships and limited partnerships.
In a general partnership, the partners accomplish the company and shoulder the responsibility for the partnership’s debts and other responsibilities. On the flipside, a limited partnership has both general and limited partners. The general partners possess and activate the business and assume liability for the partnership, while the limited partners function as investors only. This means that they take no control over the company and are not saddled with the same liabilities as the general partners.
This type of entity is adopted on a very large scale and adopting the corporate structure is more complex and costly than most other business structures. A corporation is an independent legal entity, separate from its owners, and as such, it needs fulfilling more regulations and tax requirements.
List of Legal Documents You Need to Run a Business in the United States of America
- Certificate of Incorporation
- Business Plan
- Non-Disclosure Agreement (NDA)
- Insurance Policy
- Contract documents
- Patent or Copyright registration
- Operating Agreement
- Business License
List of Government Agencies and Parastatals that are In-charge of Registering businesses and Issuing Licenses and Permits in America
In different countries of the world, there are various licensing bodies. The United States of America has its own bodies that are saddled with the affairs of business permits and licensing. They see to it that before a business fully commences trade, they have to be well licensed.
Here is a brief list;
- Farm Service Agency (FSA)
This is a United States Department of Agriculture agency and it was merged with numerous forerunner agencies, including the Agricultural Stabilization and Conservation Service (ASCS). The ASCS was, as the FSA is now, mainly saddled with the application of farm conservation and regulation laws around the country. The Administrator of FSA reports to the Under Secretary of Agriculture for Farm and Foreign Agricultural Services.
- The Food Safety and Inspection Service (FSIS)
This body is an agency of the United States Department of Agriculture (USDA). It is the public health regulatory agency accountable for safeguarding that United States’ commercial supply of meat, poultry, and egg products is safe, wholesome, and correctly labeled and packaged. It is also accountable for the safety of public food-related establishments as well as business investigation.
- The Small Business Administration (SBA)
The SBA is a body that is saddled with the responsibility of bringing together innovative entrepreneurs, corporations, universities, foundations, and others to increase the prevalence and success of America’s entrepreneurs.
- The Food and Drug Administration (FDA)
This body is a federal agency of the United States Department of Health and Human Services. The FDA is in charge of protecting and endorsing public health through the regulation and supervision of food safety, tobacco products, dietary supplements, prescription and over-the-counter pharmaceutical drugs (medications), vaccines, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices (ERED), cosmetics, animal foods & feed, as well as veterinary products
- Inland Revenue Service (IRS)
The Inland Revenue service is a very important parastatal of the United States federal government. The government agency is a bureau of the Department of the Treasury, and is lower than the immediate direction of the Commissioner of Internal Revenue. The IRS is answerable for collecting taxes and the administration of the Internal Revenue Code. It has also overseen various benefit programs, and enforces portions of the Affordable Care Act.