How to Start a U.S. Business in 2025: A Practical Guide for International Companies

Introduction: Why 2025 Is the Right Time to Enter the U.S. Market

The United States remains one of the most attractive destinations for global business expansion. It's been easy for U.S business owners to set up a U.S. company in 2025 because of digital incorporation tools, remote hiring, and an improved tax compliance system.

The U.S market provides access to top-notch infrastructure and a customer base that values quality and innovation. The secret behind long-term success, no matter whether you are an Asian manufacturing company or a European tech startup, is knowing how to legally set up your presence in the U.S. 

In this blog, you can explore the tax compliance requirements and understand the process of setting up a business in the US in 2025.

Understanding the U.S. Business Landscape

Before launching a business in the US market, understanding the legal and regulatory structure that controls companies owned by foreigners in the United States is a must. Each state has its own system, and there is a quick impact on taxes if you select any legal structure

Common Business Structures:

• Limited Liability Company (LLC): It offers a range of taxation and flexibility.
• Corporation (C-Corp or S-Corp): It is best for growing capital and attracting investors.
• Branch Office: Operates as an extension of a foreign parent company.
• Subsidiary: A separate U.S. entity owned by a foreign parent, providing liability protection.

Your business model, plan, and strategy will be affected by your selected business structure.

Step-by-Step Process to Register a U.S. Company as a Foreign Entity

Step 1:Select your incorporation state

Texas's tax system, California's tech access, and Delaware's business-friendly laws are all popular options.

Step 2: Appoint a Registered Agent

Lawful and tax documents must be received by a U.S.-based registered agent on your behalf.

Step 3: File Formation Documents

File the Articles of Organization (for an LLC) or Articles of Incorporation (for a Corporation) with the Secretary of State.

Step 4: Obtain an EIN (Employer Identification Number)

This is your business’s tax ID, which is required to open bank accounts and file tax returns.

Step 5: Register for State-Level Taxes

You are required to contract income tax, sales tax, or franchise tax, depending on your place of operation.

Choosing Between LLC and Corporation: What Works Best for Foreign Companies

• Select an LLC if you prefer flexibility, lower costs, and simple tax filing.
• Select a Corporation if you plan to raise capital, issue shares, or expand globally.

The Process of Opening a U.S. Bank Account as a Foreign Company.

It is not impossible to open a bank account as a nonresident.

Requirements:

• EIN (Federal Employer Identification Number).
• Articles of Organization/Incorporation.
• Passport or government-issued ID.
• Evidence of an international or U.S. business address.

Pro Tips:

• Some banks require an in-person office visit, while others can be remotely verified. 
• Cross-border banking is being made easy by fintechs such as Wise, Mercury, and Brex.

Foreign entity tax registration and compliance, U.S. Tax.

After registration, the federal and state tax obligations need to be met.

Key Tax Requirements:

• Federal Taxes: Register with the IRS with your EIN.
• State Tax: Depends on the state (income, franchise, or sales tax).
• Sales Tax Nexus: Learn about remote sales in case of interstate online sales.
• Payroll Taxes: You have to pay these in case you hire staff in the United States.

Important IRS Forms:

• Form 5472 -Reporting by foreign-owned United States entities.
• Form 8832 -Entity classification election.
• Form W-8 -Foreign status and withholding.
• FEIN / ITIN Identification of non-resident

The avoidance of a situation where you are taxed twice in case of cross-border operations is possible through cross-border tax treaties that determine the Permanent Establishment (PE) status.

United States Payroll Establishment in case of an international employer

In the U.S., it is necessary to abide by the payroll laws in hiring employees or contractors.

Steps to Set Up Payroll:

1. Register with IRS and state tax authorities (EDD, state withholding).
2. Profiling workers (employee vs contractor).
3. Payroll taxes (social security, Medicare, and unemployment) are withheld and remitted.
4. Submit regular payroll forms and end-of-year forms (W-2, 1099).

Tools for Global Teams:

Services, such as PayProNext, Gusto, Deel, and Rippling, can be used to automate American payroll, compliance, and tax submissions on behalf of foreign employers.

Compliance and Continuous Obligations.

Being compliant is not limited to incorporation.

Annual Requirements:

• Appeal to your state with annual reports.
• Pay franchise or state fees.
• Keep proper books & accounts.
• Renew licenses and permits.
• Be a data privacy advocate (particularly in the case of online business).

Periodic reporting and audit needs will make sure that your company is not in bad shape.

Useful Advice in an Easy U.S. Market Entry

• Collaborate with local professionals: Collaborate with the U.S. accountants and attorneys who have experience with international business.
• Know cultural contexts: Form connections with the local stakeholders.
• Take advantage of digital solutions: Stripe Atlas and Firstbase or Doolo are websites that make it easy to incorporate a company in the U.S. as a foreigner.
• Be active: Monitor new regulations and changes in the IRS in 2025.

Conclusion: Developing an Effective and Legal U.S. Presence.

It is both achievable and rewarding to establish a business in the U.S. as a foreign company in 2025. You just need to select the right business structure, get an EIN, and register for taxes to remain compliant; that's all, and then you can scale and maximize your profit with the world’s largest economy.

Your US business awaits. Start your journey now with TaxProNext, it is the best all-in-one tax and business solution, especially for those who want to grow in the US market but don't know how.