Do I have to be a citizen of the US to register a small business?

May 13, 2007 11:39 AM

Do I have to be a citizen of the US to register a small business? I want to keep everything legit and above-board and recently I have been thinking of registering a small business to represent all the online activities that make me money, like hosting a couple of people, designing and fixing wordpress blogs etc. The question is - do I have to be a US citizen to register myself as a small business.

Extra points for anyone who has been through this process who can explain why registering is a good idea.

If you can convince me that registering as a small at-home business is a bad thing, and save me work and trouble, then I will personally eat a huge bowl of ice cream in your name :)

posted by carthik to law & government (15 comments total)

Computer says nooo... (sorry, Little Britain inside joke)

No. In fact you do not have to be a US citizen. (You don't have to be a US citizen to own stock, either.) I assume this applies to LLC's as well. Yep, it does. Registering an LLC is not a bad thing. It keeps your personal assets protected, but keep in mind how your are taxed I believe varies from state to state. (And yes, you can register out of state.)
posted by phaedon at 11:50 AM on May 13, 2007

Certainly not! In Ireland, at least :-) .

We need more information to answer this question. Where are you living? If you are living in the US what is your residency status (green-card? in the process of becoming a citizen? overstaying your tourist visa?)

From following a few links, you appear to be from India, and possibly still there; if that is the case, there shouldn't be any obligation to register as a business in the US, any more than there is an obligation for Barnesandnoble.com to register as an Indian business if someone in Hyderabad orders something from them.
posted by Aidan Kehoe at 11:55 AM on May 13, 2007

(IANAL) My understanding, at least where I've looked into it, is that the main means by which people 'register a business' in the US is by creating an LLC. This tends to be cheap and easy to do yourself. My understanding is that the main reason for doing so isn't because it is required, but is for personal liability purposes (i.e., if someone goes after the LLC, your personal assets are safe(r).) However, yeah, there may be tax disadvantages, and, for example, I believe that you can't represent yourself in court as an LLC (you'd need a proper attorney.) If you start hiring people, you might have to do something with the IRS, too. And, obviously, doing certain kinds of business (i.e., Law, Medicine, Contracting, Hairdressing, etc.) may require special certification depending on what state/county/city/etc. you're in.
posted by blenderfish at 12:55 PM on May 13, 2007

Ahh. You might be looking to file a 'DBA' so you can do business under a fictitious name (like 'Sunflower Consulting', instead of 'Joe Smith.') Yeah, you should do that. Should be easy to do yourself.
posted by blenderfish at 1:06 PM on May 13, 2007

By 'should do that', I mean 'should do that if you are legally required to.' (which, I don't know is the case, since IANAL.)
Anyway, purely for reference, here's the L. A. 'fictitious business name' form.
posted by blenderfish at 1:13 PM on May 13, 2007

(last post I promise) I am assuming you are in the US.

If you are not, you should clarify.
posted by blenderfish at 1:31 PM on May 13, 2007

I live in the the US, and have been here for the past 5 years - just making things clearer, since some seem to think I am in India still :)

So, yes, I live in the US - hence the question. :)
posted by carthik at 1:32 PM on May 13, 2007

Also, I am an international student - F1 Visa, though that might change in the future to some sort of visa that lets me work here in the US.
posted by carthik at 1:34 PM on May 13, 2007

Also, I am an international student - F1 Visa, though that might change in the future to some sort of visa that lets me work here in the US.

Hmm. You sure running your own business doesn't run afoul of your student visa?
posted by blenderfish at 2:01 PM on May 13, 2007

For many people, there is little need to register a home-based online business. You may need to register a fictitious name (also called a DBA for "doing business as"), because your bank will want that before they will accept checks made out to your business name, but even that might be bypassed if your business name is something like Carthik Sharma Consulting. In any case, that's not a business license.

Incorporating is probably not necessary unless you are in a high-liability line of work -- I did freelance writing for five years and never bothered. A friend who runs his own home inspection business, on the other hand, incorporated (and insured himself out the wazoo), because people have this way of suing you if you don't find something expensive that's wrong with their house. If you do Web sites and the like, that's much less of a risk.

Another reason you might need to register your business is if you sell goods on which sales tax is collected -- you will need to pay that quarterly or annually, depending on the state and the amount of revenue.
posted by kindall at 2:48 PM on May 13, 2007

You sure running your own business doesn't run afoul of your student visa?

It probably does, unless you don't actively participate in its running. In general, it's the whole 'working' thing that runs afoul of the F-1. um.

In which case, you might actually want to talk to a commercial lawyer and accountant ASAP. Let's just say that your question was hypothetical: in which case, you might be able to wangle something in which you volunteer your time and the business provides expensable things to allow you to volunteer that time. But talk to a lawyer.
posted by holgate at 3:45 PM on May 13, 2007 [1 favorite]

My recommendation would be not to register as a business. It will be headache for you, a headache for the US government, and will just cause problems. If your goal is to expand this into a large operation, then obviously, yes you should become a business, but this is probably at the LLC stage, where you would also set up liability issues.

But for now, really, don't. I know you want to do the right thing but this is one of those times when the right thing is the wrong thing.
posted by Deathalicious at 4:27 PM on May 13, 2007

carthik, are you familiar with OPT? You don't need a different visa to work; you can work an year full-time in your field of study.
posted by Firas at 5:13 PM on May 13, 2007 [1 favorite]

Thanks folks, for the pennies I make it is clearly not worth the trouble. The point of how "employment" is perceived is a valid one. I was under the misconception that as long as you don't work for anyone else, you are ok, since buying and selling things happens in the normal course of life, etc. I may be wrong. I would like to visit a lawyer, but I am pretty certain I won't be able to foot the bill :)

(Hi Firas - nice to run into you here... :) )
posted by carthik at 11:15 PM on May 13, 2007

Registering yourself as a business is a bad idea.

The problem isn't with the corporate ownership, it's with being employed by said company and the requirement to follow the rules as a corporate owner (for example not hiring people on student visas without who don't have an EAD). OPT is not going to help you here either, that is supposed to be used for paid internships and experience building after graduation and it sounds like your business as you describe it is not really a business or employment at all really, just a tiny bit of commerce. The government, to my knowledge, has yet to terminate a student's status for how much they made on an ebay auction.

Email is username at hotmail.
posted by Pollomacho at 5:17 AM on May 14, 2007