The Foreigner’s Guide to Owning an American Business

The USA features one of the largest and most prestigious markets in the world today. The Internet has opened up incalculable income opportunities for the small businessperson worldwide. There is a growing list of individuals living in foreign lands that strongly desire to own an American business, tapping into this vast marketplace, while continuing to live in their homeland. This article will briefly touch on the subject of how you can setup and operate a business in the USA while living in a foreign land.

Why would you want to own an American business?

Generally, Americans prefer doing business with American companies because they expect American quality and have legal recourse if the company doesn’t deliver on their product or service as promised. This may not be true when they make a purchase from a foreign business. If you market your goods through your American business, you can overcome this limitation.

The American buyer needs to have confidence in a company they wish to make a purchase from and image is of paramount importance. You may live in a foreign land, but if your business has its address, bank account, and phone number in the USA, you have already laid substantial credibility to your company. Also, American suppliers may be more cooperative with your company in America than overseas.

Overcoming demographic issues

It may seem overwhelming to you when considering the idea of setting up your own American company. Actually, most steps are rather simple and it isn’t too difficult to find qualified services and consultants that can walk you step-by-step through the complete process for a reasonable startup fee.

Meeting legal requirements

It isn’t a requirement to be an American citizen or even live in the USA to own a company here. You can hire agents to setup your corporation or LLC (Limited Liability Company) for you for less than $700 (US Dollars), and maintain your own business address with receptionist for about $200 – $300 per month. Your phone number will cost about $30 per month. Business licenses are low cost and renewed annually. Your company will be required to obtain an Employer’s I.D. from the U.S. Internal revenue Service (IRS) since it must pay taxes it earns. If you setup your company in the state of Nevada, Delaware, or Wyoming, you won’t have any state corporation or personal state income taxes.

One problem that faces a foreigner establishing an American business is the establishment of a business bank account in their state of business. It’s important for the corporation to have a bank account in its home state (the state of its incorporation). This is one of the tests to validate that the business is legal.

Most banks here require the business owner to open their bank checking account in person. The individual that is authorized to sign checks on the account must sign the required bank signatory card in person. Normally, this requirement would necessitate a trip to the USA by the foreign business owner. But, there are creative ways to circumvent this issue. Some small Internet companies even utilize their PayPal Premier Business Account to handle many international sales payments, though a bank checking account is still necessary.

There are various legal structures for American companies, but you will likely use either the “C” corporation or LLC (Limited Liability Company) structure. The “S” corporation structure isn’t available to nonresident corporate owners. The service or consultant you select to assist you in setting up your new business will help you understand what you need so you can make an intelligent decision as to the best way to proceed.

Once your business is established, it isn’t to difficult to maintain its legal status. Don’t be overwhelmed with this process. It’s more than worth the effort to establish your own business in the USA. It can open many business opportunities that simply are not available to nonresident businesses. Even many established and successful companies like Sony, Mitsubishi, Panasonic, Honda, and Hitachi have opened up American branches and businesses for these reasons. Learn from their examples and gain many of the same benefits.

Building Business Credit

Need a business loan but you’re not sure how to build a business credit profile?

Financing is a critical part of growing a small business. Nothing is more important to the health of a small business than having the right financing in place.

Building business credit is about establishing on time, or early, payment histories and having those payment histories reported to the three business credit reporting agencies. Therefore, building your business credit takes time, careful planning, and being educated on what steps to take. The following are steps to Building Business Credit.

1. Create a Legal Business “Entity”. In order to create and build a “business credit profile” that is separate from your personal credit, you will need to structure your business as a Corporation or LLC. If you need help establishing your business entity, go to http://www.mycorporation.com and review your online options.

2. Apply for an EIN. Business credit is tracked using your business name, business address and employer identification number (EIN). You may apply for an EIN from the IRS online at http://www.irs.gov. Every corporate entity must file a SS-4 form with the IRS to obtain their EIN. Make sure you have properly established both your Federal and State business tax ID numbers under the exact business entity name.

It is important that every agency and trade credit vendor has your business listed with the SAME exact legal name and tax identification number. It is equally important that your exact legal name is consistent with the State, IRS, 411 Directory, power bill, phone bill, etc.

3. Establish a presence. Your business must have a physical office space that receives regular mail, even if it is at your home. The telephone number must be listed under the business name in the 411 directory and be answered in your business name. Also, your business should have its own email address and web site. Visit http://www.godaddy.com and register a business domain name.

4. Obtain Licensing. Following proper regulatory guidelines for operating in the City or Jurisdiction where you do business is critical for building good business credit. Obtain a business license, permits, registrations, etc.

5. Gather Financials. Begin to build your financial statements from the day you begin your business. A business should have a balance sheet and income statement for at least the last two years. If your business entity is brand new, but you’ve been operating as a sole proprietor or partnership, you may use those financials.

6. Get Bank References. Open a checking account under the exact legal name of the business and correct physical address with at least one bank. Ideally, a business will have a bank account that is a minimum of 2 years old. Moreover, having an average daily balance of $7,000 plus for the last three months will put the business in a good lending position.

Your banking history reflects how well you manage your cash flow. Lenders want to know the money made by your business is consistently capable of paying the debt in incurs.

7. Get Tracked. Dun & Bradstreet is the largest tracker of business credit in the United States. Once your business is setup and has been issued a Federal tax identification number, establish a profile with D&B and receive your FREE D-U-N-S Number at http://www.dnb.com. Most banks and lending companies will ask for your DNB number when applying for credit.

8. Begin Building. Once you have received your DNB number you are ready to apply for business credit. The idea is to establish five (5) favorable trade references. Trade references are just vendors such as; Office Depot, UPS, Stables, Fedex/Kinkos, T-Mobile, Chevron Oil, etc. To avoid getting your business profile flagged, do not apply with these vendors all at one time.

As your business begins to develop a credit profile, it will be ranked with a Paydex Score. A Paydex Score is the equivalent to your personal FICO score, but is calculated differently for a business. Business Paydex Scores range from 0 to 100. Unlike your personal FICO score, it makes a difference for every day you pay earlier than the actual due date. A Paydex Score of 80 or more will qualify your business for the best rates and terms.

In the steps above, I have guided you through building a favorable and separate business credit score. If done properly, it will take about six (6) months to have a decent score and in two (2) years your business credit should be able to stand on its own.

Best of luck.

What If Your Business Goes Away?

As a home-business entrepreneur you have spent a lot of time and money building your company. You have advertised, built and promoted one or more URLs, and maybe developed an e-mail list. Repeat customers for your products have been your constant goal.

Suddenly your company tells you it can’t afford to continue in business. It will close its doors and shut down all websites tomorrow! Just as bad may be an announcement they have sold out to another company.

Sales and mergers are seldom beneficial to people (other than the owners) associated with the sold company. Usually many company operations are already in place with the new owner. People performing the same tasks in the bought company are terminated.

New compensation plans are put in place. If you are an affiliate or associate a new plan may reduce or eliminate your income. That is your worst fear!

Should your product or service become obsolete you will be out of business. Technology is developing so rapidly that many things are quickly outdated. Even if your product is still useable people will buy the latest versions rather than your old one.

The company supplying you with merchandise may execute actions beyond your control which are illegal. Some government body like the Federal Trade Commission or the Food and Drug Administration may put them out of business. You will have nothing to sell.

These are all worst-case scenarios but they happen many times every day. Probably someone you know has experienced some of these. With the advent of thousands of Internet business opportunities the possibility of disaster is multiplied many times.

A prime idea behind a home-based business is never having to work for an employer. You control your destiny and you get all of the rewards. Entrepreneurs must concentrate on only a few things. Stay focused on your business and avoid going off in all directions at once. With all the hype about great opportunities it’s easy to be distracted.

While you remain focused on only a few things you still need to utilize the methods of very wealthy people. They all have several different “streams of income”. So should you. The reasons we’ll discuss are much different from merely making money. What we’re talking about is continuing to have any money at all!

Some of the newer business opportunities are filled with many risks. They are subject to the same financial and market risks that have always been associated with every business.

Everyone knows about the disasters of many dot.coms whose leaders thought the Internet was different from basic economics. Some of you may have suffered if your business was built around one of these companies that failed.

Network marketing, or MLM, is another very effective business model for many people. Those who have been in this kind of business long enough have seen many network companies bloom and quickly fade away. Imagine if you had put in a great amount of time, effort, and money, built a successful down line organization, and suddenly your company goes away?

The Internet has provided the concept of affiliate business programs. Some of them are very profitable. But, who owns the companies offering these affiliate opportunities?

Most of them are individuals with an uncertain life expectancy just like you and me. Even if incorporated, they are still owned by one person or family. When the owner dies, the company dies. Or it may be sold to an unknown party whose attitudes and methods you know nothing about. The new owner may abolish the affiliate program or make it so you can’t make any money.

There are many ways your business can go away, but these should make the point.

Don’t put all your business eggs in one basket. If you do, and you drive over a bumpy road, you’ll have a big basket of broken business eggs!

What can you do if your business fails?

1. Failure of your business causes personal devastation as well as financial distress. You may need professional counseling. The hard thing to remember is it’s not the end of the world.

2. Get up.

3. Start moving.

4. Move on with your life.

5. Treat losing your business like you would losing your job. See what you have and begin to rebuild.

These are some resources you can salvage:

1. Your business knowledge and abilities. Consider these while you look for a new business.

2. The mailing list from your old business has all your customers and contacts. This information places you way ahead with whatever you do next. You won’t need to begin from nothing; you have a list!

3. If you were a MLM operation you still have a down line of contacts for your new project. They already know you. This makes it easier for you go get them involved with you again.

4. You have met many other people just by having been in a business. They may be able to help you.

5. Because you already have an office you don’t need office equipment. The place for your new endeavor is all ready to go.

6. If your business was your only income source you will need to curtail spending for a while.

7. The new opportunity will require some amount of money. Keep it small until you can see things beginning to work.

8. Immediately stop expenses specific to the failed business.

9. Budget whatever financial resources you have and live on these.

10. Choose a few people to consult. Outside experts are best if you can find them. Friends and close acquaintances will keep you from starving to death; they are not good about helping you get ahead. They don’t want you to be more successful than they are, so go outside if you can.

Look for one or more businesses to replace your lost income:

1. Spend some time searching the net for businesses that interest you and perhaps you know something about. Don’t waste time learning entirely new stuff. Your time will be better spent working your main businesses which should all require somewhat similar knowledge to operate.

2. Pick three or four to thoroughly investigate. Stay away from those requiring a lot of individual effort unless the unit value is very large. You can only do so much by yourself. It is better to let your website or your down line help you do the work.

3. You may have to go through this looking process several times before you find one or two businesses that will work for you. After a close look just a few will pass your test.

4. When you finish looking you may have a number of prospects. You must restrict the number of things you are doing. All of us have seen websites with banners and buttons flashing all over the place advertising many different companies. These are distracting and ineffective.

5. Find three or four substantial products, services, or opportunities you can build, over time, into the kind of income you want. Then, if one of them goes away, you can find another but your income will continue from the streams that remain with you.

Where can you find businesses? These sources will get you started:

1. This is a site where you can find a lot of different business ideas to replace those you have lost. They have a forum so you can ask others about a business or find answers to business questions( businessownersideacafe.com/bizidea/Welcome.html).

2. You will find reviews of many top-notch affiliate programs here. These are mostly very heavy hitters run by the likes of Ken Evoy, Mark Joyner, and Declan Dunn (ejobsrus.com/listings.htm).

3. Here you can lean about thousands of affiliate and associate programs. You ought to find one or two you like (associateprograms.com/search/index.shtml).

The best thing is for none of this to happen to you. But if it does perhaps this report will help you.

By reading this you will have found some good business ideas if nothing else.

© Yank Elliott. All rights reserved worldwide.