I often get asked by clients if it's possible to open an online university in the US if you're not a US resident. The simple answer to this is yes. However, there are some complexities you'd need to navigate from state to state, and in some cases, these requirements could be difficult for non-residents to achieve.
In this post, I'll outline what some of these challenges are and how you can best navigate them as a non-resident. Of course, you can always email or call me with any specific university license-related questions.
License Difficulties for non-Residents
Before you begin operations, most states require that you post a surety bond. The purpose of the surety bond is to guarantee that students are paid back if your business closes for any reason. Most surety bond companies want you to have a decent credit score, and as this is based on your social security number, which is only available to US citizens, it can cause some issues.
We can help you locate a surety bond supplier even if you aren't a US resident. They can be difficult to find, but we know where to look.
Background checks on the institution's owners are popular in several jurisdictions. I propose that you employ knowledgeable leaders for your organization who are US residents so that the state may conduct background checks on them rather than on you.
If you don't plan on directly managing the university and are going to be a silent owner, most states will be happy doing the checks on the Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Academic Officer (CAO). At Expert Education Consultants, we can put you in contact with suitable US-based individuals who can fill these positions.
In some cases, you'll be expected to attend meetings in person with the relevant approving bodies. The reason for an in-person meeting is to provide the evaluators with an opportunity to judge you as a person and see if you have the right skills for the role.
Hiring competent administrative staff to attend on your behalf and advise you is definitely an option. It is of course, essential that these individuals be US residents with suitable qualifications for the role. As mentioned earlier, if you don't have access to these resources yourself, we can help you find the right people.
Other Considerations to Keep in Mind
Setting Up a Business
It's possible to own and run a business from outside of the US, but incorporation can be complicated without a social security number. As a non-resident, you can only incorporate a C-Corporation and cannot have an LLC or S-Corporation. For further details on these and their differences, please drop me an email, and I'd be happy to provide more information.
Point of Contact Person
While you might be making all of the decisions, you'll need a local person that lives in the state that regulators can communicate with. In some US states, this person will be required to attend committee and board meetings to answer questions related to your application. The selected individual needs to understand the application process and be aware of the requirements to respond to any questions asked.
You'll also need to have an "agent of service of process.” This can either be a person or an approved corporation that can act as the point of contact for communication with the government, IRS, and courts about your corporation.
Obtaining an EIN
An employer identification number (EIN) typically takes 24–48 hours for US residents with a social security number. As a non-resident, this process is significantly longer if you don’t have a social security number. You can expect that it could take from 6–9 months for the EIN to be issued, and while this won't stop the application process for getting a license, it'll delay the start of any operations. It's possible to work around this limitation by hiring resources through a third party until the EIN is issued.
To open a new account, the account owner needs to be physically present in the US. It's possible to work around this requirement with a trusted local executive. They'll need the company's EIN and articles of incorporation and will need to show a contract indicating their position as an executive in the corporation. It's important to realize that technically this person will "own" the account and any funds. As such, it's critical to have a legally binding contract that clearly details both parties’ expectations.
It's essential to know and follow all local laws when working through this process. Failure to understand isn't an excuse, and any transgressions could leave you liable to penalties. Some common examples of this are:
- As a corporation, even if you don't generate any income, you still need to file a tax return. If this doesn't happen, you'll incur fines.
- Having liability insurance is an absolute must. If a customer files a complaint against the business, they can file a lawsuit, and if you don't have insurance, there's nothing to cover the damages.
These are just two simple examples of issues you might run across if you try to do it all independently.
To open an online university in the US, you must have a solid team of people on your side. You'll need the skills of a consultant that understands the in's and out's of the whole process as well as legal representation, accountants, and licensing and accreditation specialists on your side.
Hiring the right people upfront will help guarantee that not only will you set everything up for the lowest cost, but you’ll also build a foundation that will stand the test of time. An experienced team has the power to provide a safety net that protects everyone from costly mistakes.
The last thing you want is to have your online university wiped out because of a law or licensing issue change!
Are you thinking of opening your university in the USA? My team of experts and I can help with that. Get in touch with us today for your free consultation call.