How to Start a Startup in the U.S. as a Foreign Founder

Starting a company as a foreigner is the American dream in action—but making it a reality requires navigating legal, financial, and immigration complexities. From selecting the right business entity to securing visas and raising capital, every decision impacts your startup's success.

This guide outlines the key steps foreign entrepreneurs must take to launch and scale a startup in the U.S.

1. Confirm Your Business Name is Available

Before incorporating, ensure your startup name is:

• Unique – Search Google and check domain availability.
• Legally Available – Verify name availability with the Delaware Secretary of State (you can check and reserve the name here) and the state(s) where the founders reside.
• Trademark-Safe – Conduct a trademark search on the USPTO website (uspto.gov) to avoid conflicts.

💡 Why this matters: If your name is already trademarked, you risk receiving a cease and desist letter, forcing a rebrand that can disrupt your business.

2. Choose Your Business Structure & State of Incorporation

Your business entity affects fundraising, taxation, and governance:

• LLC – Best for consulting or small businesses without venture capital ambitions.
• C-Corp (Recommended for Startups) – Preferred by investors because it supports scalable equity compensation plans and enables venture-friendly governance. Certain tax benefits, such as the Qualified Small Business Stock (QSBS) exclusion, may also apply.

Most venture-backed startups incorporate in Delaware.

3. Incorporate Your Company

Once you've chosen an entity, follow these steps to legally form your startup:

• Hire a Registered Agent – Required for official legal correspondence.
• File a Certificate of Incorporation – Submit to the Delaware Secretary of State.
• Appoint Directors & Approve Bylaws – Formalize your corporate governance.

4. Issue Founder Stock & Assign Intellectual Property (IP)

Proper stock issuance ensures legal clarity and prevents ownership disputes and derailed fundraising:

• Founder Equity – Set up vesting, generally 4 years with a 1-year cliff, to align incentives.
• IP Assignment Agreements – Ensure all intellectual property belongs to the company.
• 83(b) Election – Must be received by the IRS within 30 days of board consent approving the stock issuance to avoid higher tax liabilities. If you plan on relocating to the U.S. during your vesting period (even if your company is incorporated elsewhere), you may be subject to U.S. tax on unvested stock. Filing an 83(b) election can help prevent a surprise tax bill.
  • 📉 Real Case: A UK founder at a German startup skipped the U.S. 83(b) filing, assuming their home country’s tax rules applied. Their startup raised $30M in six months, leaving them stuck with a massive U.S. tax bill on unvested stock—without liquidity to cover it.
  💡 What happens if you miss the 83(b) deadline? You’ll owe taxes on stock as it vests, meaning you could get taxed on millions in gains later, instead of pennies now.

5. Get an EIN & Open a U.S. Bank Account

An Employer Identification Number (EIN) is required to:

• Open a U.S. business bank account.
• Accept payments and process payroll.

💡 For foreign founders: Neobanks like Mercury and Brex simplify account setup.

6. Prepare for Fundraising

Before seeking investment, ensure your legal and financial foundation is solid:

• Set Up a Data Room – Store all incorporation, legal, and financial documents.
• Create a Strong Pitch Deck – Clearly present your vision, market opportunity, and business model.
• Choose the Right Investment Structure – SAFE, convertible note, or priced equity round.

💡 Most early-stage startups use a SAFE for simplicity.

7. Hire Employees, Advisors & Contractors

Hiring requires proper documentation to avoid future disputes:

• Advisor & Consulting Agreements – Clearly define roles and compensation.
• Employment Agreements – Include state-specific IP clauses to protect company assets.
• Payroll & Compliance Setup – Services like Gusto and Rippling streamline hiring and tax compliance.
• To issue equity to service providers, you need an Equity Incentive Plan and board consent approving the grants (just executing agreements or adding Carta entries does not equal a valid stock issuance).

Actionable Step: Gain insights from our article on How Much Equity Should Startups Give to Employees, Consultants, and Advisors? to structure competitive and fair incentive plans.

8. Stay Compliant & File Required Reports

After incorporation, ongoing compliance is critical to avoid fines or dissolution:

• File a Beneficial Ownership Report (BOIR) – Required within 30 days of incorporation.
• Securities Compliance – You might need to file Form D and state securities filings when raising capital.
• Delaware Franchise Tax – Due by March 1st (for corporations) / June 1st (for LLCs) every year to maintain good standing.

💡 Missing compliance deadlines can result in thousands in penalties or even company dissolution.

9. Immigration Considerations for Foreign Founders

Starting a business in the U.S. as an international founder comes with unique immigration challenges. Whether you’re planning to establish your presence in the US, it’s crucial to understand the visa landscape and corporate structure considerations that can impact your immigration journey.

Here are some top visas available for founders and what you need to qualify

H-1B Visa (Self-Sponsoring H-1B for Entrepreneurs)

The H-1B visa is a popular option for skilled professionals, including startup founders. H-1B now allows for majority ownership by the employee, making it suitable for founders who hold significant equity in their companies. To self-sponsor, you must establish that the company is a separate legal entity from yourself. This often means demonstrating that the company’s board has the power to hire and fire you, even if you’re on the board, proving a valid employer-employee relationship.

Unlike regular H-1Bs, the self-sponsoring H-1B for entrepreneurs is typically granted for only 18 months rather than the usual three years. Despite the shorter duration, it can be renewed, but it requires careful planning to maintain compliance and eligibility. It involves several key factors:

1. Proper Corporate Structure: The entrepreneur must demonstrate that the U.S. entity they are working for has the right corporate structure to establish an employer-employee relationship.
2. Job Role and Responsibilities: The job duties outlined in the H-1B petition must remain consistent throughout the duration of the visa. Any significant changes in responsibilities or job titles may require filing an amended petition.
3. Maintaining Specialty Occupation Criteria: The role must continue to meet the specialty occupation requirements, meaning that the job should still require a degree or specialized knowledge, and the entrepreneur must continue to perform those duties.
4. Timely Extension Filings: Since the self-sponsoring H-1B is typically granted for only 18 months, entrepreneurs must plan to file for extensions well in advance. Extension petitions should include updated documentation proving that the business remains operational and that the position still qualifies as a specialty occupation.
5. Ongoing Compliance with Labor Conditions: The employer (the startup) must continue to comply with the Labor Condition Application (LCA) terms, including paying the prevailing wage. Any change in work location or salary could necessitate an LCA update or an amended H-1B petition.
6. Evidence of Business Viability: Extensions or renewals often require evidence that the startup is thriving or at least operational, which may include financial documents, revenue records, and proof of sustained operations and funding.
7. Record-Keeping and Reporting: Entrepreneurs must maintain thorough records of their employment, corporate structure, and any changes that occur during their H-1B period. This documentation is essential if U.S. Citizenship and Immigration Services (USCIS) conducts a site visit or requests evidence during the renewal process.

The H-1B visa is subject to an annual lottery due to high demand, with only 85,000 visas available each fiscal year. Startups looking to hire or sponsor founders must navigate this lottery process, which typically takes place in March for the upcoming fiscal year beginning October 1.

If you already hold an H-1B visa and wish to transfer it to your company, the process is generally faster and does not require entering the lottery again.

O-1A Visa (Individuals with Extraordinary Ability)

The O-1A visa is an excellent option for founders who can demonstrate exceptional achievements in business, science, or technology. You must provide evidence of your accolades, media coverage, membership in prestigious organizations, or notable contributions to your field. This visa allows significant flexibility in how you structure your involvement with your startup. You will still need someone to hire/fire you and act as a signatory.

The O-1A visa is granted for an initial period of up to 3 years, with the possibility of indefinite extensions in 1-year increments as long as you continue to meet the eligibility criteria and maintain your extraordinary ability status. Additionally, the O-1A visa can serve as a strong foundation for pursuing a green card through the EB-1A (Alien of Extraordinary Ability) or EB-2 NIW (National Interest Waiver) categories, making it a valuable long-term pathway for highly accomplished founders.

EB-1A Visa (Extraordinary Ability Green Card)

The EB-1A visa offers a pathway to permanent residency for those with extraordinary abilities. Like the O-1A, it requires demonstrating exceptional achievements, but with a higher evidentiary threshold. Successful applicants often showcase a combination of awards, leadership roles, published material, and a substantial impact on their industry.

Unlike the H-1B, the EB-1A does not require an employer or a formal employer-employee relationship, so you are not required to set up a board of directors. You can self-petition and demonstrate that you intend to continue working in your area of extraordinary ability.

Corporate Structure Considerations for Visa Applications

Your company’s corporate structure plays a crucial role in your visa eligibility. Key aspects to consider include:

• Ownership and Control: Employment based visas, like the O-1A and H-1B visa, require a clear separation between the founder and the company to establish a valid employer-employee relationship. Setting up a board of directors with independent members who have the authority to hire and fire the founder is essential to demonstrate this separation. There’s no such requirement if you get a green card like EB-1A.
• Board Composition: Including U.S.-based board members and advisors not only strengthens your case but also signals operational legitimacy. The employer-employee relationship must be maintained throughout the duration of the visa. To minimize risks, it’s best to maintain the structure as initially presented in the visa application.

Officer Roles:

Clearly defining your executive role within the company can help avoid potential conflicts in visa applications, particularly for employment based visas like H-1B and the O-1A.

For founders choosing H-1B, this means that their executive role should align with the skills and qualifications they acquired through their degree(s). For example, if a founder has a degree in computer science, the executive role they take on in the company (such as Chief Technology Officer or CEO of a tech startup) should be related to their technical expertise.

The role doesn’t have to be a direct match, but it should clearly align with the skills and knowledge that the degree represents. This is important for ensuring that the H-1B petition is compliant with visa requirements.

For the O-1A visa, the role does not need to be directly related to the applicant’s degree, as the visa is based on extraordinary ability in fields such as business, science, technology, or the arts, rather than a specific educational requirement.

Avoiding Common Mistakes That Cost Founders Millions

🚨 Costly Mistakes to Avoid:

❌ Not issuing founder stock properly → Leads to ownership disputes and derailed fundraising.

❌ Failing to file an 83(b) election on time → Can create major tax liabilities as your stock appreciates; due diligence red flag.

❌ Skipping trademark registration → Risks receiving a cease and desist letter and having to rebrand.

❌ Raising funds without securities compliance → Can result in SEC penalties.

❌ Structuring your company incorrectly for immigration → May prevent you from legally working in the U.S.

❌ Ignoring compliance deadlines → Risk of fines or company dissolution.

FREE Startup Launch Checklist

To make this easier, download the complete startup launch checklist so you can track each step and ensure everything is in order.

📥 Download our FREE Startup Launch Checklist

This checklist includes every step from this guide, making it easy to follow as you launch and scale your startup in the U.S.

Do you need a lawyer?

Some founders DIY their incorporation, but if you want peace of mind and to avoid costly mistakes down the line, check out our Startup Launch Package. Experienced startup lawyers handle everything—from checking company name availability to creating a data room ready for investor due diligence—so you can focus on growing your business.

Ready to take the next step? Check out our Startup Legal Resources to access key legal tools and guidance tailored for foreign entrepreneurs.

Immigration Legal Services

Aizada Marat, Co-founder and CEO of Alma, is a Harvard-educated attorney dedicated to transforming immigration services. Her personal challenges navigating U.S. immigration inspired her to start Alma, simplifying the process for global talent.

Alma offers best-in-class U.S. immigration legal services to founders, critical employees at start-ups, technological workers, etc. serving them with a host of visas, including O-1A, H-1B, L-1, EB-1A, EB-2 NIW, among others.

Alma has worked with multiple founders from top accelerators, VCs, and entrepreneurship ecosystems such as Y Combinator, Techstars, Stanford, Pear VC, etc., helping them immigrate to the U.S. to start their companies or expand their businesses with 99% approval rates. Schedule a free immigration consultation.

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