How to Create a Company in the United States as a Foreigner

Are you thinking of setting up a company in the United States but you are not a citizen or resident? The good news is that non-US citizens are fully permitted to own and operate a business in America. In this article we explain the key regulations, the advantages of registering in Texas, and how the IRS can affect the process.

Requirements to Set Up a Company in the USA as a Foreigner

While the process is more straightforward than many people expect, there are several essential requirements every foreign entrepreneur must meet before launching a US business:

• Employer Identification Number (EIN)

  Your first step is obtaining an EIN — a federal tax identification number issued by the IRS. This number is required to open a US business bank account, hire employees, and file taxes. Foreign nationals without a Social Security Number can still apply for an EIN by submitting Form SS-4 directly to the IRS.

• Choose a state and business structure

  You must select which US state to register in and which entity type best suits your needs — LLC, Corporation (C-Corp or S-Corp), or other structures. Each has different tax and liability implications. An LLC is the most popular choice for foreign entrepreneurs due to its flexibility and simplicity.

• Registered Agent

  Every US business must have a registered agent — a person or service with a physical address in the state who receives legal documents on behalf of the company. As a foreigner living abroad, you will typically hire a registered agent service.

• State and local permits

  Depending on your industry and location, you may need specific business licenses or permits to legally operate. Your state's Secretary of State office is the starting point for most registrations.

The Role of Texas in Business Formation for Foreigners

Texas is consistently ranked among the best states in the US for business formation — and for good reason. If you're considering where to register your company, Texas offers significant advantages:

• No annual renewal requirement

  Unlike many other states that charge annual renewal fees of up to $150 or more, Texas does not require businesses to renew their registration every year. This reduces your ongoing administrative burden and costs.

• No state income tax

  Texas has no personal or corporate income tax, which can result in significant savings compared to states like California or New York. You'll still owe federal taxes, but your state tax burden is minimal.

• Open to foreign ownership

  Texas explicitly allows foreigners to create and own companies in the state. There is no citizenship or residency requirement to register a business entity with the Texas Secretary of State.

• Business-friendly environment

  Texas is known for its streamlined regulations, strong infrastructure, and large economy — making it an attractive hub for international entrepreneurs looking to enter the US market.

To register your business in Texas, you'll file a Certificate of Formation with the Texas Secretary of State, pay the applicable filing fee, and designate a registered agent with a Texas address.

How the IRS Affects Business Formation for Foreigners

Beyond state registration, the IRS has specific tax requirements for businesses owned by non-US citizens or residents. Understanding these obligations is essential to staying compliant:

• Form 5472 — Reporting Transactions

  If you are the sole owner of a US LLC and are not a US citizen or resident, you are required to file Form 5472 with the IRS each year. This form reports transactions between your US company and any related foreign parties — including yourself. Failure to file carries penalties of $25,000 per violation.

• Corporate income tax return (Form 1120)

  Foreign-owned US corporations must file a corporate income tax return annually, even if the company had no income during the year. LLCs treated as disregarded entities also have filing requirements when foreign-owned.

• ITIN vs EIN

  If you need to file personal US tax returns in addition to business returns, you may also need an Individual Taxpayer Identification Number (ITIN). An EIN is for the business; an ITIN is for the individual owner.

• Withholding obligations

  If your US company makes payments to foreign persons or entities, you may have withholding tax obligations under US law. A qualified tax advisor can help ensure you are meeting all your federal requirements.

Next Steps: Start Your US Business with Confidence

Setting up a company in the United States as a foreigner is achievable — but navigating the IRS requirements, state regulations, and entity structure decisions is much easier with the right guidance. At Loyal Services LLC, our business consulting team helps foreign entrepreneurs establish their US companies the right way, from entity selection and EIN application to ongoing compliance support.

We speak English and Spanish, and we serve clients across Texas and beyond. Whether you're in the planning stage or ready to file, we're here to help you take the next step.