Things I Wish People Told Me When I Started Setting Up My Business In The US
A few years ago, I decided it would be a dream to travel back and forth from Australia to US as if America were a second home. But I’m not a US citizen. I’m an Aussie. And I run my own business. How could I do this legally and still work for myself, at the same time?
Well, with some careful planning, a fiery entrepreneurial spirit, and a few thousand dollars set aside for legal fees, I figured out how to register a related US entity and become a somewhat functioning member of US society as a foreign national. It’s not easy, and I’m only a few months in. But this is my story, and I hope the experience helps you figure out how a similar move could work for you.
DISCLAIMER: Please be mindful my experience won’t necessarily be the same or the right approach for everyone. Always seek legal advice and check with authorities for the latest rules and regulations.
1. America is like 50 countries. You have to choose a state.
If you’re thinking you’d like to spend some time in the US each year, you probably already have your heart set on a particular state. If yes, great! If not, then you better decide, because this is where your business will be registered (more on that below).
While you’re not limited to doing work with clients in one state, things start to get very complicated if you’re stretched across different cities. That’s not to say you can’t expand later but focusing on one state first will save you a lot of stress at the start of your journey. I chose Austin, Texas.
As a side note, I think it’s definitely worth spending a few weeks in your proposed location before making a decision. I spent several few weeks in Austin in 2019 to network, suss out business opportunities, see if people were friendly, and research if housing was affordable. I also wanted to check out public transport. Would I need a car? Getting a sense of how much money you’ll need to budget for living expenses comes in handy, later.
2. Accept you can’t run away from administration
Okay, I hate administration. This part of my journey was probably one of the worst.
Just like in Australia, there are several different business structures in the US. Many Aussies choose to set up an LLC (Limited Liability Company) as registration is pretty easy, but this wasn’t right for me. I chose a “Corporation”.
One thing to keep in mind is that you’ll need a US address for this. Ask someone you can rely on with a safe mailbox to accept mail on your behalf (then obviously tell you about it). If you don’t have any friends in the area, find a local mail service. Some co-working spaces offer baseline memberships that entitle you to use their address. The good news is that after all this, you receive a Federal Employment Information Number (FEIN), which is your Tax ID, an important key to unlocking other things you’ll need once you arrive.
3. Choose 2 allies for a Board of Directors
To make the business as robust as possible in the eyes of US law, I needed to set up a Board of Directors. This involved formally appointing two other trusted people who would have the right to make decisions in my business if there was a conflict (i.e. so there’s not always just one person calling the shots). In my case, I asked my Australian accountant and one of my peers. Board members are not employees or equity holders — you do not pay them a salary or owe them shares. I took out management insurance to minimise risk for all parties involved.
4. There will be bills, bills, bills
To make all this happen, I needed a corporate attorney that specialised in cross-border affairs and trademark law. Sadly, I suggest budgeting at least $4,000 AUD for this. I was charged $2,500 AUD for an initial workshop and roadmap, then sent several other bills as paperwork was processed over time.
At least once you have a business name (and hopefully clearance from your corporate attorney to use it!), you can get cracking on all the fun stuff, like creating a logo and building a website.
5. You can use your ESTA to get traction
You are legally allowed to perform certain permissible business activities in the US on the ESTA visa waiver program for up to 90 calendar days (this is the legal limit per visit when you enter on an ESTA). These activities include market research, meetings with business partners, setting up professional services (i.e. accountant, lawyers, etc.). You CANNOT perform substantive work, even for your foreign business — this requires hiring US employees or setting up a formal trade agreement between your Australian and US entities. Be sure to speak to immigration lawyers and corporate tax attorneys about the best strategy for you before making any plans. I’ve been working with Immipartner, who have been great.
6. Save at least 3–6 months of runway and look into the EMDG
Although I was thinking about my finances from the very start, it was only once I was ready to go that I realised how quickly I burn through my funds. So, have a serious think about living costs in your proposed city and have at least 3–6 months runway to get by until you start winning enough work.
Something I recommend every Australian entrepreneur look into is the Export Market Development Grant (EMDG). If you’re eligible, it pays a huge contribution to your marketing and operations expenses. Businesses get on average $40,000 (!) back at the end of each financial year. Be sure to chat with an EMDG consultant before you leave. I’ve been working with Treadstone in Melbourne.
7. You can open a bank account without a SSN
I found that opening a US bank account was ridiculously complicated without a US-registered ID number. Typically, banks ask for your Social Security Number, or SSN, which you don’t get unless you have a US work visa.
After hitting my head against a brick wall many times, I found one bank that could help me: First Republic. In my experience, First Republic was incredibly open and willing to assist foreign nationals trying to do business in the US. All I had to do was compile all my documentation (most importantly, the Federal Employment Identification Number (FEIN) my corporate attorney gave me) and head into a branch. Once I had my corporate bank account set up, First Republic also helped me set up a linked personal bank account (once again, without the need for an SSN). Voila! Too easy.
Please note at the time of writing this article, First Republic only has branches mostly in California and New York (and a couple of other cities in between), so you’ll need to make a visit if you’re elsewhere in the US or still in Australia. If this is out of reach and you need help, I strongly suggest contacting Cosec Corporate Services, a firm that specialises in helping Australians and Americans do cross-border business. You can nominate them to go into the bank on your behalf and sort everything out for you.
8. You must change your iTunes account region to the US
Without updating my iTunes settings, I wasn’t able to download Venmo (more on that below). I also wasn’t able to activate my Google Fi mobile plan (more on that also below). Please keep in mind I had to have my US bank account organised first, as iTunes links to your US debit/credit card. A bit of a pain, I know, but just do it.
9. Download Venmo and say yes to the chequebook at the bank
Not many Aussies realise how advanced our banking system is compared to the rest of the world. Instant transactions? Mobile payments? Tap and go? Woah. Not in the US. That’s why everyone here has Venmo — an app that allows you to transfer money to contacts in your phone.
You should also refrain from laughing when your wonderful First Republic Bank representative offers you a chequebook for your account. While this may seem ridiculous, there are some places here that don’t accept debit/credit card. At the time, I said no. There were several times I regretted it.
10. Google Fi might be your best mobile plan option
There’s nothing more annoying than having to change your SIM card or phone number each time you leave a country. I found Google Fi to be a pretty compelling option; it offers cheap international calling and roaming rates, so you can keep your number when you travel. It starts from just 20 USD per month, and you can pool people on your plan too (this was good for my partner and I James to track spending in one app). You can order a SIM card online and have it sent to your accommodation in advance, or simply buy one from Best Buy or Target once you arrive.
11. Research cars before going to dealerships — but skip CarMax
If you don’t want to rely on rideshare services like Uber, you may consider hiring a car each time you visit the US. But this can get really expensive, especially when you factor in insurance. My partner James and I decided to buy a car instead.
Unless you have access to a car when you arrive, it’s probably easier to buy new wheels from a car yard than buying second-hand from Craigslist or Gumtree. Often, car yards are located in the same area, so research a few dealerships in the same area and shortlist a few cars you’d like to inspect in advance. This will save time; James and I turned up to several dealerships unannounced and their employees took forever trying to find keys. They also don’t really give you much input, you may as well check the exact car you’re looking at on Car Guru to make your own decision. One thing worth noting is that well-known car chain CarMax won’t let you test drive any of their cars without an SSN, so don’t bother going.
As a foreigner, it makes more sense to buy a car outright than to finance it via a loan. When you buy the car, they’ll ask you for a cheque (see, I told you so). If you’re like me sans chequebook, you’ll need to ask your bank to do a wire transfer for you. It’s highly unlikely any car dealership will accept debit/credit card for large sums of money. You’ll then shake hands, drive out with a smile, and expect your papers and proper license plates in the post in 6–8 weeks’ time.
12. Get a broker for insurance
Once again, as you’re a foreigner with no credit history, you may find it hard getting car insurance via more popular channels. Ask your car dealer to recommend a broker they work with that can find coverage suited to your circumstances.
If you are in America as a couple, put both names on your policy. We were quoted $1500 USD to cover James solo. Putting my name on the policy halved the quote to $750 USD — apparently bachelors are at much higher risk of claims than men in a relationship!
About the author: Natalie Khoo built her business in Australia off the back of the 2008 recession. Having made all the mistakes since day one, she’s passionate about sharing her learnings with other business owners on a similar journey. Natalie’s career highlights include taking a 3-month scuba diving vacation in 2019 and not checking her emails once. She travels between Melbourne, Australia, and Austin, Texas, with her partner James.