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Buying a Business In The United States

How to Buy a Business in the U.S.

Many people dream of having their own business, which can offer greater personal flexibility and financial freedom than a corporate job. While founding your own startup is one option, you can also consider buying an existing business. Buying a venture that is already up and running can be a savvy investment for many reasons.

An established, successful business will provide an immediate cash flow minus the hassle of setting up a startup. You will not have to deal with tedious tasks like establishing vendor relationships, hiring staff, or buying equipment. There is also an existing customer base, minimizing the need for marketing required by a new business. In short, the framework for success is already set up.

If you are looking to pursue this path, you have undoubtedly already thought of buying a business in the United States — a land renowned for its entrepreneurial grit. But can you buy a business in the U.S. if you are a foreigner located outside the country? It is possible, but there are a few technicalities to consider.

This article provides details about buying a business in the U.S. as a foreigner located outside the country. It is geared toward people who are considered foreign nationals (not U.S. citizens, permanent residents, or green card holders). If this applies to you, read on to find out how you can become the business owner of a U.S. company.

Why Buy a Business in the U.S.?

There are many countries in the world where you might buy a business. Why choose the U.S.? There are a few advantages of setting up shop in the U.S., including:

  • A strong economy: Historically, the U.S. has a strong economy. The country also rebounded more quickly than some other nations following the COVID-19 pandemic, thanks to minimal lockdowns (e.g., compared to some European countries, where many types of businesses were forced to close for months) and a fast vaccine rollout. Looking ahead, the U.S. economy is set for growth.
  • Stable, skilled workforce: The U.S. is a massive country with a growing population of some 332 million people. A strong, stable workforce is available. The country is home to some of the best colleges and universities in the world, giving business owners access to an annual crop of fresh, eager, and talented young graduates every year.
  • Entrepreneurial mindset: America is often known as the country of entrepreneurs — and for a good reason. Jeff Bezos, Steve Jobs, and Mark Zuckerberg got their start in the country. The U.S. generally embraces startups and small business owners and is a place where the entrepreneurial mindset is championed.
  • Small business support: The U.S. is generally supportive of smaller businesses and larger corporations. Government agencies like the Small Business Administration (SBA) provide significant guidance for business owners and practical support like grants. During the COVID-19 pandemic, the government offered many benefits to help businesses stay afloat, from tax credits to the Paycheck Protection Program (PPP).
  • Tax benefits: Business taxes in the U.S. are often lower than in other countries, although details vary slightly between states. On average, small businesses pay about 19.8% in taxes. Compare this to other modernized western nations like France (28%), Portugal (31%), or Germany (30%). However, do your research into U.S. state taxes before buying a business, as rates do significantly vary between states.

These are just some of the practical reasons you might have for buying a business in the U.S. You might also simply feel a connection to the country or like the American mindset or culture. Every person has their own unique motives.

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Can a Foreigner Buy a Business in the U.S.?

While the benefits of buying a business in the U.S. might be clear, the question remains: If you are a foreigner, are you even allowed to buy a business in the country? Technically, yes. The government does not restrict foreign ownership of a legally registered business entity, like a corporation or a limited liability company (LLC). As a foreigner, you can take over ownership of such a business without any special visa.

However, simply owning a U.S. business does not entitle you to work in or live in the country. If you want to work for your business, you will need to obtain a separate visa. There are visas available that can help you achieve this, such as the E-2 Treaty Investors visa. However, for the purposes of this article, we are going to stick to the topic at hand: buying a U.S. business as a foreigner.

###The Process of Buying a Business in the U.S. Since you do not need any special visa or permission to conclude a business purchase in the U.S. as a foreigner, the process is similar to what it would be for a person already located in the U.S. Of course, since you are located abroad, some elements will inherently be more complicated.

For example, conducting site visits or interviewing the current owner in person will require travel, taking up time, energy, and money. However, if you want to fulfill your dream of U.S. business ownership, the effort might be worth it. There are also professionals who can help streamline the process, such as business brokers. Browse qualified Advisors like these in the U.S. on Relocate.

Here is a general overview of how to buy a U.S. business.

There are many different types of businesses available to purchase. Narrow down your options. It is best to focus on industries that you are knowledgeable about and have some experience in. Even if the business is already up and running, you will need to maintain oversight of operations and finances and be prepared to handle hiccups, like supply chain interruptions. Having relevant experience will help.

Once you have an idea of what type of business you want to buy, you can start your search. There are many ways to find businesses for sale, including internet marketplaces, business brokers, and your professional network. As a foreigner, international conferences that include U.S. participants can be one way to build your contact list and scout out future opportunities.

Purchasing a Business in the United States

Closing the deal when buying a business involves more than simply signing on the dotted line of a single contact. There is a lot of paperwork involved. While it might seem tedious, it is important to get all the documentation you need to legally transfer the business and its assets to you.

In addition to a bill of sale formally transferring the business to you, you will also need to have a document specifying the final purchase price and detailing exactly what is included (e.g., inventory) in that price. Other considerations include:

  • Real estate transfer: If you are taking over a rental property, the lease needs to be transferred to your name.
  • Vehicle registration transfer: If the business owns vehicles and these are included in the sale, ownership transfer must be registered with the DMV.
  • Intellectual property: Get documents outlining any copyrights, trademarks, and patents being transferred, ensuring that you are allowed to use them.
  • Non-compete agreement: This prevents the former owner from opening up a similarly competitive business (e.g., within a certain time frame or location).
  • Franchising agreements: If you are taking over a franchise, additional paperwork dealing directly with the parent company is needed.
  • Employment agreement: Since you cannot work for your business as a foreigner, hiring the former owner in a managerial role can be useful.
  • Financial regulatory paperwork: You will need to complete IRS Form 8594 specifying your asset acquired. Further, the local and federal financial authorities usually need to be notified about the sale.

Get Business Support and Consulting From Advisors on Relocate

There are many business opportunities available in the U.S. As a foreigner, you are allowed to purchase a U.S. business. We encourage you to dig-deeper into relevant topics, browse qualified Advisors and get answers to your specific questions about buying a business in the United States.

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