Jurisdiction guide: United States 🇺🇸
This jurisdiction guide is written by Sam Crawford.
Note: Below this introduction to the US you’ll find all our articles and guides about US.
As the largest economy in the world, as well as generally being a vast and diverse country, there are many reasons why you might want to consider the US as an option for establishing your business, banking, investing, or relocating.
Fact box 🇺🇸
- Population: 328.2 million (2019)
- Area: 9.834 million km2
- Capital: Washington, D.C.
- GDP/capita (PPP): $62,682.80 (2019)
- Government: Federal presidential constitutional republic
- Language: English (although they have no official language)
- Currency: USD
- Human Development Index: #17 (2019)
Here are some of the advantages which draw some people to the United States:
- You have 50 states to choose from, all with a variety of rules and regulations as well as people of different income levels, demographics, and interests. So, setting up a business in the US leaves you with lots of possibilities.
- Slightly lower income tax rates compared to European Countries. As well as added financial privacy, as the US is under no obligation to share your financial data with other countries.
- US banking usually has quite favorable interest rates compared to international rates.
- It’s straightforward to set up a US LLC and manage it outside of the US.
Moving to the US
As it currently stands there are no special visa programs in the US as attractive as the Portuguese Golden Visa. If you are willing to make a very sizable investment, there is the EB5 program. For this, you need to invest either a minimum of $900,000 to one of the listed targeted employment areas, or elsewhere, a $1.8 million investment. Unless you are willing to invest so much money, or have a family member who can sponsor you, a skilled worker visa will be the best and in most cases the only option.
While it is possible to get a tourist visa to the US for up to 6 months, it is a better option for digital nomads to settle for the 3-month ESTA visa waiver (where applicable). The reason for this is that you may be considered liable for taxes if you meet the so-called substantial presence test. While the terms of this are laid out in full on the IRS website, generally if you spend more than an average of 120 days per year in the US, you will be at risk of taxation. So to be on the safe side, the ESTA visa waiver is more worthwhile for digital nomads.
Of course, if you do go to the US on a tourist visa, working on one is still a bit of a grey area of the law. As long as you are not working for a US employer or earning undeclared US income while you are traveling, it is permitted to work while on a US tourist visa, although, even still it is probably best not to mention that you are working there at all (even if your work has no connection to the US whatsoever). Not every immigration officer will understand your intentions, and ultimately it is up to them to decide whether you are there for work or pleasure. So, it’s best to either be cautious how you phrase your answer so they understand or just don’t mention it.
Business in the US
If you want to expand your business to the US as a foreigner, it is quite straightforward. You will need to set up a Limited Liability Company (LLC), which can be done online in a very short amount of time. An LLC doesn’t grant you permission to obtain a visa to work in the US, but it’s a great way to get access to the US market, hire US talent, and a US business bank account all without being based in the US.
The best states to register your LLC as a foreigner would probably be either Delaware, Wyoming, New Mexico, or Nevada. They have the most business-friendly laws, low filing and annual fees, low or in some cases no state taxes, making a huge advantage.
Another option is a C-corp. The difference lies in how your business and yourself are taxed. With a C-corp you are double taxed unlike an LLC which is taxed once on the company profit. In a C-corp you will be taxed both on the company profit and then again when the profit is paid out as dividend income. The upside to this however is that you do not have to pay taxes on reinvested profits like an LLC. This makes it a more attractive solution if you are self-employed and want to grow your business. It’s also easier to get investors on board with the structure of a C-corp.
Banking in the US
Non-residents can get a US bank account, whether it is for business or personal use. However, it isn’t always as straightforward for personal use. Most banks will want you to have a tax-identification number such as a social security number (SSN) or Individual Taxpayer Identification Number (ITIN).
Taxes in the US
Finally, Taxes! The US has to be one of the most complicated tax jurisdictions in the world. It’s one of only two countries worldwide where citizens and green card holders need to report and pay tax on their worldwide income, even if they live abroad..
If you are a digital nomad this is no doubt a real headache. It is too much to cover in this jurisdiction guide alone, however, we have a detailed tax guide for American nomads and expats. We hope that this should help you reduce the amount you have to pay without being at risk of paying huge fines or penalties.
