Having a Small Business in a US Territory

When we think of sole proprietorships, limited liability companies, C and S corporations, and hybrid business entities, we normally think of the United States. But what about businesses in US territories? In fact, US territories (Guam, Puerto Rico, American Somoa, Northern Mariana Islands, and the US Virgin Islands) are big proponents of small businesses. (Which is what you’ll notice when you do a Virgin Islands secretary of state business search.) In this article, you’ll learn:

• How much small businesses matter to the US territories
• How to File Self-Employment Tax When Moving to a US territory
• How to start a business in a US territory

Small Businesses Matter in US Territories

According to the US Small Business Administration Office of Advocacy, in 2014, the US territories saw a 4% increase in small business growth, with $234.1 million worth of new business loans taken out. Even more dramatic 87% of employees were more likely to work at small business in a US territory versus in the states (87.7%). From these statistics, we learn two things: If a majority of the labor force in US territories are more likely to work at a small business, it’s safe to say small businesses have a large impact on the economy of those territories—perhaps much more so than small businesses in the US. Which means a 4% growth in small business is huge for economies in US territories (however statistically broken up between the territories some countries showed more small business growth over others— such as Northern Mariana Islands (3%) and Guam (1%) versus American Somoa, Puerto Rico, and US Virgin Islands, which all showed negative growth for that year). Nonetheless, the point is, small businesses are essential to the economic health of US territories.

Running a Business Overseas: Moving to a US Territory

Residents and business owners of American Somoa, Guam, Northern Mariana Islands, Puerto Rico and US Virgin Islands do pay taxes to the US given their status. That being said, let’s say you recently moved to one of these territories, do you have to pay self-employment taxes? Unfortunately, yes. According to the Internal Revenue Services (IRS), if you made $75,000 (or more), you have to pay notify the IRS of your move, filling out the designated form to the Department of Treasury in Philadelphia. If you’re married, the IRS specifies that the $75,000 applies to you and your spouse individually.

How to Start a Business in a US Territory

Starting a business in a US territory is similar to beginning one in the states. Still, there are several differences you should be aware of if you are taking this step.

US Virgin Islands

The US Virgin Islands business page stipulates that you should first create a business plan before filing your business with the Office of the Lieutenant Governor. Doing this will give you an idea of financing options and prospective expenses. (If you need business financing, consider looking into the Virgin Islands Economy Development Authority for financing options such as collateral support program and small business development loan program.) Register Your Business Name After this, choose a business name (check if your business name is available by conducting a Virgin Islands Secretary of State business search) and register it with the Office of Lieutenant Governor. What You Need to Do If You are Planning on Opening Up a Storefront If you are intending to have a storefront or rent an office space in the Virgin Islands, you must have an unsigned copy of the lease or hand over a letter of intent, which is filled out by the owner of the space. Do You Need a Business License? Do research to determine if you need a business license. If you do, visit the Virgin Islands Departments of Licensing and Consumer Affairs to get it.

American Soma

If you want to open up a small business in American Samoa, like the Virgin Islands, first create a business plan. Then, according to its business page, print the online business license form, fill it out, and submit it to the Department of Commerce. The form lists information such as doing business as (DBA), applicant name, ownership type, and business location. Other than the license, you’ll also need to see if you should provide worker’s compensation (or workmen’s compensation). The American Samoa business site specifies that you will need to do this if you have at least 3 employees working for you and/or employees that work in a dangerous environment. In addition, depending on your line of work, you may need a professional license too. Such licenses are required for attorneys, notary public, marine inspectors, contractors, and insurance agents wanting to work in American Samoa. (For the full list, visit the government website.)

Guam

After coming up with a business plan, obtain a business license either at the Department of Revenue & Taxation or the One Stop Licensing Center (which can normally process applications within a day unless you work in the healthcare industry). Know that all business licenses in Guam expire on June 30th every year, and that the renewal time period is between June 1st to 30th. If you are registering a sole proprietorship, you don’t need to pay a registration fee; registering other business entities, however, cost anywhere from $50-$1,000. (Besides business registration and obtaining a license, you may also need a professional license.)

Northern Mariana Islands

The Northern Mariana Islands site specifies that you may want to write out a business plan, which includes items like a business summary and request for financing. If registering for a sole proprietorship, you’ll need to apply for a business license from the business license office. You also need an application for letter of compliance. Depending on the business, you also may need a Tax Clearance from Division of Revenue and Taxation. Plus, you’ll need a workers comp certificate clearance from the worker’s comp commission, along with a sketch of the business location.

Puerto Rico

After creating a business plan, check in with the OGPE (Permit Management Office) to see if and/or what permits you need. Also, make sure you submit a business license application before going into operation. Have any questions or concerns? Leave a comment!

Want to Conduct a Virgin Islands Secretary of State Business Search?

What about a Puerto Rico entity search? Or a California business search? Sec State, a database of secretary of state pages, can help you out.

© 2007-2024 SecStates.com, privacy policy.