The United States of America is undoubtedly one of the world’s powerful countries. Politically, strategically and economically it is one of the best.
It is considered as the country where more investments are made worldwide. Because it provides both local and foreign investor protection systems and legislation.
It is worth mentioning that due to its large area of territory and its large population, it is a prodigious market for any type of business. It is a country practically driven by immigrants and businesses created by foreigners are very well received.
- Mentioned this, I want to show you what advantages and disadvantages the United States presents to invest.
- Before investing in the United States, consider the following aspects:
- Consider these ten profitable investments in the United States
- Programs and incentives to invest in the United States
- Visas in the United States
- Types of companies in the United States
- Steps to open a company in the United States
- United States taxes
Mentioned this, I want to show you what advantages and disadvantages the United States presents to invest.
Advantages of investing in the United States:
- A solid and stable economy, fast growing.
- Large amount of skilled labor.
- The Ministry of Foreign Trade provides federal protection systems, laws, incentives and programs for the development and promotion of foreign investment.
- Stimulates free trade.
- It has one of the strongest currencies worldwide such as the US dollar, without risk of devaluation.
- It is an industrialized country with high production of machinery, plants and equipment of any kind with unsurpassed quality standards.
- The vocation of service is one of the best in the world.
Disadvantages of investing in the United States:
- The regulatory and tax policies of the United States provide foreign investors with great freedom and ease of business management. However, in the current security field, investments controlled by foreign governments are sometimes denied as considered high risk for the national interest.
- The financial system has been affected by the financial crisis. Due to the crisis of high-risk financial loans. Which have put an end to significant investment projects.
- The United States has the third highest corporate tax rate.
- The US market is highly competitive. Consumers and users are accustomed to having many options, in terms of prices and quality. In addition they are not exactly loyal to brands.
Before investing in the United States, consider the following aspects:
- The legal currency is the US dollar.
- Its inflation rate is 2.4%.
- The consumer price index (CPI) has a year-on-year variation rate for October 2019 of 1.8% and monthly of 0.2%.
- Gross Domestic Product (GDP) is 4,747,768 million euros, varies 2% annually.
These economic data indicate that the North American country has the world’s first economy. Their indexes are technically perfect, when evaluating the financial feasibility of any investment project.
It has the highest GDP on the planet, with an ideal inflation rate for a country’s economy, and anchored to a CPI conducive to the free fluctuation of supply and demand.
If you want to expand this data you can consult the Expansión Journal for PIB and Expansión for IPC.
Consider these ten profitable investments in the United States
The United States offers thousands of options to invest, I only recommend that the business you are going to undertake is super original and that it stands out from others so that you succeed. For that, it evaluates the competition well and exceeds them in customer service, prices and quality.
But I will mention ten types of investments or businesses that are currently the most profitable in that country:
- Sale and rental of real estate in reference to premises, homes or buildings.
- Manufacture and sale of women’s lingerie, as well as the production of swimsuits.
- Investments in the stock exchange, you can go directly to invest or make a distance through the forex, which with only investments of 100 dollars you can participate, but instruct yourself well in terms of trading before investing.
- Opening Spas and beauty centers.
- Fast food franchises.
- Buy merchandise in bulk and resell it online.
- Pet care services and veterinary centers.
- Translation agencies that offer several languages.
- Advice on immigration, business and taxes.
- Organization of events, fairs and exhibitions.
Now if you want to be more dated, as to which sectors are more profitable and productive in the United States. There are data from the Foreign Direct Investment report in the United States 2018. Prepared by the Global Investment Grows America’s Economy (OFII).
The data produced by this report are presented below:
|Main investment sectors 2017||2017, in %|
|Insurance and finance||16,0|
|Holding companies (non-banking)||6,0|
|Professional, scientific and technical services||6,0|
|Transport and storage||2,0|
|Real estate, income and rent||2,0|
Programs and incentives to invest in the United States
In reference to the protection offered by the North American country to foreign investors, it is subscribed to bilateral investment conventions. Which are 47, if you want to know more about them go to the following link list of conventions signed by the United States, provided by The United Nations Conference on Trade and Development (UNCTAD).
In addition, the United States belongs to the Multilateral Investment Guarantee Agency (MIGA). Responsible for offering guarantees to foreign investments in that country.
On the other hand, it offers incentives that facilitate investment procedures such as:
- The granting of guarantee in reference to the freedom to settle in North American territory.
- The existence of regulations regarding the acquisition of participation in local companies. This allows the foreigner to have a majority interest in the shares of a local company in the United States.
- The United States has a document that regulates foreign investments called the International Investment Act of 1976, although each state has its own regulations to captivate foreign direct investment.
- The disposition of a competent body to declare foreign investment called International Trade Administration.
You can also check more about these facilities at International Trade Service Providers.
There are also other mechanisms that encourage foreign investment such as:
- At the federal and state level, foreign investors can receive financing such as subsidized loans (delivery of money or goods and services) in the long term. In order to stimulate the creation of new businesses in their territory, the states have undertaken a great initiative to provide investors with the best possible services and advantages.
- Privileged areas: foreign investors enjoy subsidies, reductions, tax exemptions and bank loan facilities.
- Free zones: among them is the state of Arizona, which provides a unique Foreign Trade Zone Program, which provides companies that meet the requirements of the lowest property taxes in the United States.
- Privileged geographical areas: these are less populated areas in the United States, which require investments in clean and renewable energy, the environment, fisheries, rural development, research and new technologies.
Finally there are federal agencies that help foreign investors in financing and advice such as:
The Economic Development Administration (EDA) offers long-term loans, with a preferential interest for the creation projects and the expansion of activities that give rise to new immobilizations and job creation.
The Administration of Small and Medium Enterprises SBA (Small Business Administration): provides guarantees for loans contracted by Small and Medium Enterprises and can finance construction plants, or the purchase of materials in the medium and long term.
The USDA Office of Rural Development (under the US Department of Agriculture): can guarantee up to 90% of the credits or loans granted to companies that generate employment in rural areas.
Visas in the United States
The United States of America is one of the most complex countries in terms of visas, since in order to enter and perform any activity, you have to request it beforehand.
You can request guidance and assistance through the US government portal.
This other ideal web portal to know what type of visa to apply according to your nationality and the activity you will be doing there.
In the United States there are visas for non-immigrants and immigrants. Non-immigrant visas are those cataloged for foreign investments.
Generally, the B1 visas that are for business and the B2 that is for tourism, are the most requested non-immigrant visas. They are available for the countries: Mexico, Colombia, Argentina, Guatemala, Peru, Ecuador, Venezuela, Uruguay, and other Latin American countries. The procedures and requirements depend on your country of origin. These visas allow changes in immigration status and can last up to 10 years.
Immigrant visas are the work visa and the Green Card. Those are for residence application.
There is also the ESTA program. Which is available for 39 countries that belong to the Visa Waiver program, including Spain and Chile, without the need to process a regular visa through the embassy. The ESTA request is made online only. This visa is for business too. This visa does not allow changes in immigration status and is valid for 2 years.
Now I will name the types of visas for business:
- Visitors for business will require the B-1 visa (you can open companies).
- Employees of an international organization, and NATO will require visas G1-G5, NATO.
- Foreigners with extraordinary skills in Science, Arts, Education, Business or Sports, you will require the O type visa.
- Professionals of a free trade agreement (FTA): Chile, Singapore, you will require the H-1B1 visa.
- Merchants or investors in treaties, you will require the type of E visa.
Among the most general requirements to apply for a visa are the following:
- DS-160 visa application form
- Valid passport
- A 5 × 5 cm color photo with a white background
- Proof of visa payment
Sometimes they request accessory or support documents such as:
- Original birth certificate or certificate or certified copy
- Marriage certificate, divorce, de facto relations
- Proof of employment, employment contract
- Bank statements from the last three months
- Mortgages or housing lease contracts
- Family book in which the children consist
Also if you want more specific requirements and information regarding procedures visit the web portal for visas in the United States.
Types of companies in the United States
In the United States there are ten types of companies, which offer multiple advantages or disadvantages, depending on the business in which you want to invest.
Also the costs of the procedures and constitutions, depend on the state where you are going to open your company.
- Sole Proprietorship: It is that business figure where the owner is the same company, they are the same entity and share the same social security number. This is the cheapest to create. Where the owner responds with his personal assets to the possible losses of the company.
- General Association (General Partnership): this company is constituted by two or more people, each of the owners can sign independently, contracts in the name of the company. The partners respond with their assets the losses that the company may have.
- Limited Liability Partnership: it is formed by the unification of professionals in the area of law, engineering, medicine or accounting. This type of company cannot be created in some states of the country, and each partner is responsible for the mistakes and negligence of other partners.
- Limited Partnership: This figure is ideal for opening construction companies, its constitution is very expensive. The partners do not respond with their assets to the debts incurred by the company, with the exception of the partners involved in the management of the company.
- Corporation C (C Corporation): they are companies that sell and buy shares in the stock exchange of that country, taxes are attributed to both the company and its partners. The owners do not respond with their personal assets to the debts that the company may incur. It also has no membership limit.
- Small Business Corporation (S-Corp.): It is ideal for creating coffee shops, laundries, bookstores, hairdressers, everything related to small businesses. Its constitution is the most expensive.
- Limited Liability Company (LLC): This can be considered as a corporation or partnership, as assessed by the US state. Here the partners respond to the company’s debt only with the capital invested and not with the personal assets.
- Professional Limited Liability Company (LLLP): this can be constituted only in very few states belonging to the United States and its partners are not responsible for the debts of the company with its own assets, nor does the company respond to the debts of the partners With your earnings.
- Joint Venture: These companies are created to execute certain specific projects, in which two companies join to carry it out, where the capital of each company is separated from the company.
- Non Profit Entity (Non Profit): This company is in the public domain, cannot be sold for profit, can join other organizations similar to it, and is exempt from taxes.
Steps to open a company in the United States
Each type of company has its opening process, and the regulations to which its constitution will be governed will depend on the state and locality where the company is located. In addition, the prices to constitute will depend on the state where your company will operate.
Particularly in the case of the Sole Proprietorship type company, the same owner must address the court, and with an identification record the name under which he wishes to operate. With that he culminates his opening process.
In the cases of the other companies there are a series of generalized steps for its opening and constitution, which we will name below:
- Conduct a market research, along with a business plan that supports and demonstrates the feasibility of the business you wish to open in the United States.
- Process your business visa and have it ready.
- Choose the state of the North American country that is most convenient for you to open and start your business. There are very attractive states to invest either by its legislation, taxes or the simplification of procedures, these are: Delaware, Florida, California and Nevada.
- Select the legal figure of your company, if it is going to be a corporation or association of which we name in the previous segment.
- Hire and name a registered and authorized agent with a valid postal address in the state where you will open the company. The function of this figure is to act on behalf of the company. The agent can be a partner or business owner. And also, it can be a third party with authorization to receive legal documents on behalf of the owner.
- Choose the name of your company.
- Request the registration of the company in the state registry, with the help of a lawyer.
- It requires a negative denomination certification to ensure that the company name has not been previously registered.
- To register the articles of incorporation or organization of the company with the competent organism of the state, is to register basically the constitutive act of the company.
- You must open a bank account in a financial institution that operates in the United States. For this procedure all the partners of the company must be present, physically in the bank, there is no minimum opening amount.
- Process the EIN number (Tax Identification Number). This is done by registering the business with local and state tax departments.
- Specify the commercial licenses that are required for the operation of your company, in accordance with the commercial activity to which the company will be dedicated. Likewise, the type of licenses differs depending on the state in which the company is established.
- Process the commercial license, so your company will be ready to launch it.
It is worth mentioning that the procedures can last between 11 or 12 days for the opening and constitution of the company, this is in the case of being a foreigner. If you are a resident it takes between two and three days.
United States taxes
The subject of taxes for companies in North American territory is quite complex. Because the legislation and requirements at the level of taxes are made statewide and will depend on the state where the company operates. It will also depend on the type of society.
In the United States there are in general ninety-seven types of taxes, if you wish to consult them, enter America’s Taxes.
In general, all companies pay the federal tax or corporate tax whose rate varies according to the company’s profits. There are also state and local taxes, which societies are required to declare and pay.
Keep in mind that federal taxes are paid at the Internal Revenue Service (IRS) and state taxes at the Department of Revenue (DOR) of each state.
Among the most common taxes a company must pay are:
Federal income tax or Federal Income Tax
The amount you will pay for this tax varies according to your company’s profit. In general, the rate is 21%.
It is also important to note that Limited Liability Company (LLC) companies do not have to pay this tax at the corporate level. The charge will be made at the individual level of each partner, that is, it has to be divided by 100% of the partners, once they have shared the profits.
Finally, a corporation will pay 21% of the corporate income tax. Shareholders, after receiving dividends, will pay between 10% and 37%.
State Income Tax or State Income Tax
The rates and rates will depend on the state where your company is located. Also certain regions of the country do not charge this fee.
Similarly, state and local governments impose income taxes, ranging from 1% to 12%.
Sales Tax or Sales Tax
The sales tax is a tax paid by the consumer at the time of purchase of consumer goods.
This tax belongs to a state legislation, so each of the fifty states of the United States has different rules.
In general, sales and use tax rates vary from state to state and generally range between 2.9% and 7.25% statewide.
Tax withholding and estimated tax payment or Tax Withholding and Estimated Tax Payment.
In the United States, the tax return is annual, made at the beginning of the next fiscal year. But tax collection must be done quarterly throughout the current year.
It is worth mentioning that it is not an additional tax, it is the name given to these tax collections that occur proportionally during the fiscal year.
This withholding tax or proportional payment, your rate may vary between 10% and 37% of the period profit, depending on the corporate structure of your company and the tax status of each member.
Income Effectively Connected or Effectively Connected Income.
It is important to note that foreign companies with offices in the United States are subject to a 30% branch income tax, called (Effectively Connected Income).
This tax is not invested in commerce or in American business. Its treatment is like a withholding tax that does not come from the United States (such as: dividends, interest, income, royalties).
In conclusion, my advice is that you should study very well the particularities, advantages and disadvantages of each state belonging to the United States, before investing or opening a company. And be clear that the US market is very competitive, so innovate and reinvent yourself with your business as well as possible.
I also tell you that soon we will make more articles about the most interesting states to invest in the United States.
I hope it has been very useful.
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